Heroin creates crowded illicit economy in Baltimore

Heroin creates crowded illicit economy in Baltimore

For Anthony Miles, Feb. 15, 2013, was a busy day of juggling calls, setting up meetings and touting a high-quality shipment he was expecting soon. Still, he found time to put air in the tires of his Mercedes and to note how well the day was going. Raising a large stack of bills in both hands, he bragged to a companion: I just made $20,000 in one hour.

Just three days later, Miles was less euphoric. He grumbled he was making "chump change" while an associate was clearing $150,000 a day "with his eyes closed."

Workplace jealousies aside, Miles and his colleagues were making eye-popping sums in their chosen profession of heroin dealing — however fleetingly. Using evidence, including audio-video recordings of Miles' conversations, federal prosecutors would indict and ultimately win convictions against him and about a dozen other members of the drug-trafficking organization, seizing some of the spoils, including more than $140,000 in cash, luxury cars, a 33-foot Doral boat and a Cartier watch encrusted with more than 20 carats of diamonds.

In Baltimore, where heroin has a long-entrenched history, the drug has created a thriving subeconomy, providing funds for dealers who buy mansions in the suburbs or simply help family members with rent and grocery money.

The size of this subeconomy is not easily calculated, though nationally, experts estimate heroin users spend about $27 billion a year on the drug.

In Baltimore, where there are an estimated 19,000 heroin users, including roughly 9,500 chronic users, annual spending on the drug is estimated to be at least $165 million. Such estimates — derived from Mayor Stephanie Rawlings-Blake's 2015 heroin task force and a 2014 study by the RAND Corp. for the White House — are imprecise given the nature of the drug market and the difficulty of surveying heavy heroin users. But experts say the actual valuation is likely much higher because of money spent by occasional users.

Sometimes indications emerge of the scale of the trade here: When the brothers of one local kingpin, Steven Blackwell, were kidnapped, he came up with $500,000 for ransom. When investigators searched a stash house and home of another dealer, Sean Wilson, who was ultimately convicted, they found $464,283 and $74,980, respectively. And when the home of a Miles associate, Antoine Wiggins, was searched, a bedroom dresser drawer yielded more than $81,000.

But as in the legitimate economy, experts say, such wealth is largely limited to those at the top levels of the heroin trade. At the bottom, the so-called "corner boys" who sell on the street can be making as little as minimum wage, according to economists who have studied the market and those who have plied the trade themselves.

"Nobody's getting [rich] if they're on the corner," said James Wooding, 51, a former heroin dealer and addict who works as a janitor at Tuerk House, the treatment program in West Baltimore that helped him get clean two years ago. "They're just making sneaker money, or for some girl, diapers for the baby."

And yet there seems to be an unending supply of mostly young men willing to do this entry-level work — however low-paying and, of course, illegal and dangerous.

Among them was Freddie Gray, the 25-year-old whose death in police custody in April triggered protests and rioting in Baltimore and led to criminal charges against six police officers. The first trial, of Officer William G. Porter, resulted in a mistrial last week when jurors could not reach a unanimous decision on any of the four charges he faced.

Gray had been arrested more than 15 times on drug and other charges, and served more than two years in jail for narcotics charges, yet he repeatedly returned to the corners. Friends and acquaintances say he was aiming to stop dealing when he was arrested in April at North Avenue and North Mount Street, an area authorities had targeted for an enhanced "narcotics initiative."

It is an all-too-familiar cycle in Baltimore: Those with little education and thus few job prospects find their way to the lowest rungs of the drug trade, touting on the corner or serving as lookouts. At some point, they are arrested and end up with a criminal record that makes them even less attractive to the legitimate economy. And so they return to drug dealing, often in the neighborhoods they live in.

"They're basically unemployable," said Peter Reuter, a University of Maryland public policy and criminology professor who founded and directed the RAND Drug Policy Research Center. "There are not many options for them."

Reuter, an economist, said there is another reason so many continue to enter what at least initially is a low-paying and highly dangerous field — the chance, however slim, of moving up the ranks to become the guy driving the Bentley rather than the one manning a corner. Economists call it the tournament model: As in an NCAA basketball tournament bracket, those in the outermost slots imagine themselves winning the championship — despite enormous odds.

"The only way to win the lottery," Reuter said, "is to get in."

Starting off young

Lamont Lewis, 43, was one of the "lucky" ones — until drugs made his life come apart. As a dealer, he amassed more than $800,000, a red Saab, a burgundy Pontiac Grand Am, a sky-blue Camaro and designer clothes, he said. Like many, he started young, but within a few years, he found himself broke and locked up on a drug distribution conviction.

On a recent afternoon, Lewis stood on a West Baltimore corner where several teenage boys were clustered in front of rowhouses; nearby, a man pushed his son on a tricycle along the sidewalk. A car stopped in the middle of the street as the driver transacted some business with the teens. An exasperated woman in the next car honked, yelling out her window, "Come on, move! I'm on my way to pick up my boy from school!"

Lewis knew the corner to be a spot to buy heroin. A teen on the corner said he started dealing heroin at age 10; an older man said he began at 14. On that day, "pee-wee" capsules were selling for as little as $6 for a small amount of diluted heroin, or $40 a capsule for raw heroin. The teen said he made about $100 from selling a "50-pack" of heroin capsules worth $500.

Lewis said the boys start selling drugs at an earlier age and face more danger than when he started in the mid-1980s. Now a father of two, he said he got out of the drug business three years ago, but the damage to his life continues. Because of criminal convictions that pop up when employers do a background check, he has a hard time finding a job that supports his family — let alone the $1,000 a day he sometimes made as a dealer.

Lewis has taken job training and computer classes at the Northwest Career Center and has applied for a number of jobs — but his last one, as a manual laborer, paid just $9 an hour. His take-home for the entire year was less than what he made in two weeks hustling drugs, the West Baltimore man said.

He was 14 when he started selling marijuana, eventually graduating to heroin and cocaine. He grew up in awe of his uncle, a heroin dealer. Even his uncle's death from a beating and stabbing proved dazzling to the young Lewis.

"Six large unmarked black vans drove up to the [funeral] service," he recalled, and several men emerged to talk with his grandmother. "They handed her $50,000 and told her, 'We gonna find whoever did this. And you don't have to involve police no more.'"

Lewis feels a bit of nostalgia as he drives past corners where he used to deal drugs. The rush of danger, the cat-and-mouse game with police, the scheming — like getting a job at a car wash so he could slip drugs to his customers as they drove through.

The business is much different now, he and other former dealers say. For one thing, heroin is cheaper and more plentiful, with Mexican farmers growing increasingly more poppies to supply a growing demand. Observers say the fight for customers and turf is fiercer than ever.

Cyril Scovens, 54, a former dealer who now works at Tuerk House, said those selling on the corner today are likely making just $1 on every $10 they sell.

"That's why you have so much competition among the drug dealers, the corner boys," said Scovens, who began dealing as a 13-year-old. "Payday may be great, but the average day, you're fighting the competition.

"In order to hold my corner, I have to be ruthless. I have to kill for my corner. I have to have you know I'm willing to kill for my corner."

Evolving global economy

What plays out on Baltimore's corners these days is the result of larger trends in the global heroin trade.

While heroin once had to make its way here from faraway Afghanistan — which remains the world's dominant producer — the U.S. supply now largely comes from Mexico and Colombia, experts say. With more marijuana being grown in the U.S. as a number of states legalize or decriminalize it, Mexican farmers who previously grew pot are switching over to poppies, the source of heroin.

Seizures of heroin are up 81 percent in the past five years, according to the Drug Enforcement Administration, which intercepted 5,014 kilograms — about the same weight as an adult elephant. Traffickers are moving the drug in larger volumes as well, the DEA says.

Dealers have stayed one step ahead of law enforcement and now order more heroin to account for expected seizures, said Neill Franklin, a retired official with the Baltimore Police Department and Maryland State Police. He grew disenchanted with the war on drugs and now directs Law Enforcement Against Prohibition, which advocates for drug policy reforms.

"So when [authorities] lay a spread of drugs and money on a table to show the loot they caught, it doesn't matter," he said. "Suppliers built it into the program."

If the supply of drugs is larger than ever, so is demand.

Users spend $100 billion on four drugs — cocaine, heroin, marijuana and methamphetamine — according to an estimate Reuter and colleagues at RAND developed for the White House last year. Of that, heroin's share was $27 billion and, by all indications, growing.

The year 2010 was the start of what many consider the current heroin epidemic. That is when alarm over overdose deaths from prescription opioids led to greater restrictions on "pill mills" and other dispensers. That was also the year OxyContin was reformulated to make it harder for abusers to crush tablets for snorting or dissolve them in water for injecting. The change came after its maker, Purdue Pharma, pleaded guilty in 2007 to federal charges that it misled regulators and the public about the risk of addiction.

Those measures had the unintended consequence of prompting many addicts to switch to the much cheaper and available street opioid, heroin. About four out of five new heroin users had previously abused prescription painkillers that are now scarcer and more expensive on the illicit market, federal officials say.

"Thirty milligrams of Oxy is $30, as opposed to heroin — for $30 you can get three bags of heroin," said Gary Tuggle, who until this summer was the special agent in charge of the DEA's Baltimore district. Each of the bags could contain about 200 milligrams of heroin, he said, or 20 times the amount of OxyContin, which is chemically similar to heroin. Whether this hypothetical drug buyer got 20 times the bang for the buck, though, would depend on the purity of the heroin as well as the way it is ingested.

Not only is heroin selling for record-low prices these days — Reuter of the University of Maryland said its price has fallen "relentlessly" for the past 25 years — it is more potent than ever.

"Fifteen, 20 years ago, 1 kilogram of heroin cost $120,000 to $160,000 in Baltimore. Today: $60,000 to $70,000. Purity then was 2 to 5 percent. Today, it's as high as 85 percent," Tuggle said.

Blue-collar decline

Tuggle, who now heads the DEA's Philadelphia field division, remembers "stepping over needles" of the drug addicts in his East Baltimore neighborhood in the 1970s.

At the time, the Baltimore region offered thousands of well-paying industrial jobs, including those at Bethlehem Steel and General Motors. "Back then, [the neighborhood] was largely blue-collar, most of the parents worked at Beth Steel and the auto plant. When that closed down, as the city transitioned from industrial to more tourism, my community couldn't make the adjustment. I saw heroin use increase."

The lack of such well-paying jobs in many city neighborhoods for decades now has only helped feed the drug trade. Philip White, now 51, remembers getting mocked for the fast-food job he took as a teenager by friends who had already found more lucrative work selling drugs after school.

"They had the best clothes, the best shoes, money, women. They had heroin," recalled White, who now works at Tuerk House.

White worked at Chicken George in Walbrook Junction, a popular Baltimore chain that went bankrupt in the 1980s. "After taxes, I would have $100 [after a week]. My friends were laughing at me. Minimum wage was $3 and change."

He started dealing drugs, and proved good at counting money. He would get paid in drugs, and eventually, his addiction took over until, about 10 years ago, he began the road to recovery.

Tuggle said that while some relatives became heroin addicts, he was never interested in drugs. Instead, he became a Baltimore police officer before joining the DEA in 1992.

Today, the heroin problem has spread to Baltimore's suburbs, well beyond inner-city neighborhoods.

After more than 30 years in law enforcement, Tuggle has seen three waves of drug addiction.

The addicts of his youth were often "generational," the offspring of older heroin addicts or veterans who had gotten hooked while serving in Vietnam, he said. Then the 1980s brought the crack cocaine era, he said, followed now by "this new generation of heroin addict, this new subculture" of converts from prescription pills.

"This heroin epidemic actually dwarfs" its predecessors, Tuggle said. "This has a feeder system."

Caught in a brutal cycle

Heroin bracketed Freddie Gray's life from the start to its abbreviated end. He was born to a mother who acknowledged using the drug, and after he turned 18, records show he was arrested more than a dozen times on drug charges. In the five months prior to his death, he was arrested three times on heroin charges.

Such is the lot of a street-level dealer, said Creston Smith, a lawyer who represented Gray in 2013.

"That is the easiest way to get arrested and the easiest way to get convicted," Smith said.

Gray was not a "big drug dealer," Smith said. In fact, in the case he handled, Gray was accused of being the lookout for a heroin deal that took place at the intersection of North Avenue and North Mount Street. The charges against Gray in that incident were indefinitely postponed when he agreed to perform 100 hours of community service, Smith said.

Street-level drug dealers tend to cycle through the criminal justice system — from arrest to prison or probation and back to streets until they get arrested again.

"These kids either end up in a morgue or detention center because once they get their first arrest — like Freddie Gray — they then get the next one and the next one," said Franklin, of Law Enforcement Against Prohibition.

"They get arrests over and over," he said, "like planes flying in at BWI."

Elizabeth Embry, director of the Maryland attorney general's criminal division, agreed. As a city prosecutor earlier in her career, she remembers handling the misdemeanor docket, through which many smaller drug offenses are processed.

"You see this assembly line," said Embry, who is currently on leave to run for mayor. "But you're not solving the problem. You have someone arrested for a small possession, they get a little sentence. It's very frustrating."

Embry, who served on Gov. Larry Hogan's heroin task force, said a longer-term solution is "not getting people into the system in the first place" — with more effective treatment for addiction, for example, and better schools and job opportunities.

The gubernatorial task force concluded its work early this month by recommending expanded access to treatment, tighter monitoring of prescription drugs and greater focus on groups like inmates and ex-offenders. On Thursday, a bipartisan General Assembly panel called for a dramatic reduction in sentences for drug offenses — part of a plan to imprison thousands fewer people and use the savings to help others stay out of jail.

Changing the state's approach to drug dealing is admittedly a huge undertaking, but then, drug trafficking has ripple effects beyond simply the buyers and sellers, Embry said.

"When you're in the black market economy, you can't sue someone for being disrespectful," she said. "If someone steals your car, instead of reporting it, you go and shoot them."

Well-organized crime

While the exact size of Baltimore's heroin economy is hard to measure, authorities like the DEA's Tuggle say trafficking of the drug is "a major source of revenue" for gangs. They run their organizations in a business-like, albeit violent, way, he said.

"They protect the brand, protect the territory, hence the violence, he said. "You have to be a financier, a marketer. You have to have business skills to maintain a supply chain."

A federal indictment earlier this year of members of the Black Guerrilla Family — which gained much notoriety in recent years for taking control of the Baltimore City Detention Center — offers a glimpse into how such organizations operate.

"BGF controlled drug territories called 'shops' and permitted only BGF members to sell drugs in these shops," according to charges filed in June against Timothy Michael Gray, identified as the citywide commander of the gang, and 13 other men. "Any non-BGF members who wished to distribute drugs in these shops were forced to pay a tax or were targeted for violence by BGF members." (Gray has pleaded guilty to racketeering and will be sentenced in February.)

The indictment said the gang was organized into geographical "regimes" or "bubbles" and controlled by a commander, lieutenant commander and ministers of justice, defense, education and finance. One member, nearly daily over a seven-month period, supplied "wholesale quantities of heroin" to someone who then resold it to customers in Howard County, the indictment said.

The document went on to detail gang's leaders' various activities, many of which mirrored those of conventional businesses: holding regular meetings, collecting payments, serving as middlemen between wholesale distributors and retail customers, and handling quality-control issues with their product.

But their business was drug trafficking — heroin branded with names like "Hitman" and "Body Bag," crack and pills — and some customers were ripped off or, worse, died of overdoses. Gang members themselves faced violence from within, with punishments for infractions including beatings or even death.

At least one member, though, was dealt with more tamely: after an unspecified infraction, he was ordered "to write an essay about every position in the 'bubble.'"

The most detailed portrait of a drug-dealing gang's operations likely is a paper published in 2000 by Steven D. Levitt, of "Freakonomics" fame, and Sudhir Alladi Venkatesh in the Quarterly Journal of Economics. The paper was based on four years of ledgers kept by the bookkeeper of a Chicago crack-dealing gang and given to Venkatesh, now a Columbia University sociologist who has long researched and written about the underground economy.

The gang's monthly revenues, which rose from $18,500 to $68,400 over a four-year period, came from drug sales, member dues and "street taxes" — money extorted from those doing business on gang territory, according to the paper. Expenses included wages, lawyers fees, bribes, mercenaries and inevitably, members' funerals.

Whether all drug dealers keep such good track of their in- and outflow is unclear. But among the exhibits entered in the trial of Savino Braxton, 58, of Baltimore in U.S. District Court this year was a tally sheet he used to track customers — first names and nicknames scribbled on a scrap of paper with stars next to some of them. Another exhibit was a back-of-an-envelope calculation of what he would make selling 1,128 grams of heroin at $75 per gram rather than $70 per gram — a total of $84,600 versus $78,960.

His math was good, but ultimately, he was convicted and sentenced to 20 years in prison.

Spreading epidemic

Heroin has been much in the news in recent years, fueled by an alarming spike in overdose fatalities and a sense that it was no longer "just" an inner-city problem and had spread to suburban, and increasingly, white populations. According to research published in the journal JAMA Psychiatry last year, nearly 90 percent of people who began using heroin nationwide in the previous decade were white.

A study led by Dr. Devang H. Gandhi, an associate professor at the University of Maryland School of Medicine, found a similar ratio at a heroin detox program in downtown Baltimore — 94 percent of the 18- to 25-year-olds who sought treatment were white.

Baltimore is a city in which heroin has remained a constant over the years, though like other parts of the country, it has seen a jump in overdose death rates as purer forms of the drug, sometimes laced with the potent opioid fentanyl, have entered the market.

Such is heroin's role in the city's history that the recent death at age 73 of "Little Melvin" Williams, the West Baltimore drug kingpin alleged to have grossed $1 million a day before being imprisoned and turning his life around, drew mostly generous, nuanced commentary from civic leaders. People still talk about Williams and other traffickers, such as Maurice "Peanut" King, who headed a multimillion-dollar drug organization in the 1980s and is considered among the first to break an unofficial code of the streets.

"The thing the drug dealers didn't do was use kids in their drug organization," the DEA's Tuggle said. "Maurice 'Peanut' King, he started using kids in his drug organization. Went out and gave mopeds to the kids to run the money and drugs."

The advantage: If police caught the kids speeding through the streets and alleys, there was little penalty because they were juveniles, Tuggle said.

Drug dealers also had a certain status in their impoverished neighborhoods — Williams, for example, was credited with helping to disperse crowds during the 1968 riots that followed the assassination of the Rev. Martin Luther King Jr.

Former dealers note that, for good or ill, they were a part of their communities, and among the few living there who had money to spread around.

"We'd do block parties, buy football equipment for kids," recalled Scovens, of Tuerk House. "You're not seeing that anymore."

"None of the money stays in Baltimore," he said, adding that he believes many of the dealers higher up in drug rings "don't live in Baltimore City — they live in the counties."

Scovens characterized his drug-dealing group as a neighborhood crew rather than as a gang. "It was guys who lived in Park Heights. We grew up together," he said. "Someone needed money to pay the rent, we'd pay."

He doesn't sugarcoat the immense harm caused by the drug trade — he fell into addiction so deeply he wasn't worth much as a dealer, became homeless and lived in cars and abandoned houses for years. He nearly stabbed his own brother in a fight over drugs, but instead drove himself to a hospital and demanded to be admitted to the psychiatric ward.

"Death is around you all the time," Scovens said. "There's a culture based on violence."

jmarbella@baltsun.com

crentz@baltsun.com

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Intractable problems

As part of its continuing coverage of Freddie Gray's death, The Baltimore Sun is examining some of the intractable problems that affected his life — and still trouble thousands of city residents. This series of occasional articles has focused on lead poisoning, segregation in public housing and other topics.

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