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Former president of Curtis Bay lawn care firm faces trial on fraud charges

When a 90-year-old Curtis Bay lawn care company went under, some accused the former president of theft.

A lawn and garden products supplier started 90 years ago by Russian immigrants met its end in a flurry of court actions alleging its former president, Malcomb Cork, defrauded the business and concealed his actions.

Cork has pleaded not guilty in U.S. District Court in Baltimore to three counts of wire fraud. His trial is scheduled to begin April 6.

Commerce Corp.'s demise in a 2013 bankruptcy meant the end of a family business that was one of the largest lawn and garden supplies distributor on the East Coast, with its former owner saying it had annual revenue of around $200 million and around 280 employees between its Curtis Bay headquarters and other facilities in Michigan and California.

Federal prosecutors in Baltimore and Richard Lessans, the company's former owner, accused Cork of defrauding the company of $450,000, which he "disguised" as a loan in 2010, according to the federal indictment unsealed a year ago. They further allege Cork manipulated the company's financial statements to conceal that he had taken the money.

In 2011, Cork made two more fraudulent wire transfers of $200,000 and $187,500 to his accounts, for a total of more than $800,000 allegedly stolen, according to the indictment.

The financial mismanagement of the company resulted in a $29 million loss, according to Lessans and the company's bankruptcy trustee. In 2012, when the company learned of the alleged fraud, Lessans fired Cork. The company was forced into bankruptcy by creditors in early 2013.

Lessans, the grandson of one of the founders, called the loss of the company his family built a "tragedy" and said his family has ceased the philanthropic giving they once enjoyed.

"I've only had one job and that's my family business, and that's gone," Lessans said. "We were the best at what we did."

Cork, he said, "ultimately turned out to be someone we couldn't trust."

If Cork is found guilty and the money cannot be recovered, prosecutors have filed a claim of forfeiture on Cork's property.

Cork's attorney, Howard L. Cardin of Baltimore-based law firm Cardin and Gitomer, declined to comment on his behalf.

Cork was hired as the company's president in 2004, and prosecutors allege the fraud scheme began in 2010.

Commerce began as an electrical wholesale supply business, founded in 1923 by Lessans' grandfather, Israel, and his three brothers at the corner of Pratt and Commerce streets in Baltimore. The company later became involved in housewares and hardware after World War II, then evolved into distributing lawn and garden supplies to many independent garden centers.

Troubles began to emerge publicly in late 2012 when the company notified the state it would lay off between 60 and 70 employees. Then five creditors filed an involuntary bankruptcy petition against Commerce, claiming they were owed a combined $1.73 million. They successfully pushed Commerce into a Chapter 7 bankruptcy liquidation.

In 2013, Big Lots Stores Inc. agreed to purchase inventory from Commerce for an amount expected to top $6 million, with the proceeds to go to another creditor, M&T Bank, which was owed more than $17.9 million by Commerce.

The Chapter 7 bankruptcy proceedings are continuing. In January, the bankruptcy trustee for Commerce, Zvi Guttman, asserted in a suit within the bankruptcy case that the law firm of Saul Ewing, which had been retained by Commerce, learned of Cork's actions in 2011 and concealed it from Lessans.

The lawsuit says the firm waited a year to inform Lessans of the alleged fraud, and that by then, the company had suffered irreparable financial harm. If the alleged fraud had been reported sooner, the company may have survived, the lawsuit contends.

Leslie K. Gross, a spokeswoman for Saul Ewing, which has offices in Baltimore and 11 states, declined to comment but said the firm "will vigorously defend the suit commenced by the bankruptcy trustee of our former client."

cwells@baltsun.com

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