The Baltimore City Board of Liquor License Commissioners has allowed a handful of people, many of them vendors who lease poker machines and pool tables to bars, to hold onto and sell valuable liquor licenses long after the licenses should have expired.
State law dictates that inactive licenses die after 180 days without an extension by the liquor board, or 360 days maximum. But a review of inactive licenses by The Sun shows that a number of people have gotten around the law, including Gilbert Sapperstein, owner of All-State Boiler Service Inc., who in May pleaded guilty to conspiracy, bribery and theft in connection with a scheme to defraud the city school system. Sapperstein repaid $3.3 million as part of a plea deal and is set to spend 18 months in jail.
State law requires liquor license holders to disclose felony convictions to the liquor board when they apply for a new license or renew one. But Sapperstein's status as a "secured creditor," who does not operate a liquor establishment, and whose felony conviction came after the most recent renewal period, complicates matters, said Gerald Langbaum, an assistant state attorney general who works for the liquor board.
Court records show that Sapperstein, who also runs a vending business called Star Coin Machine Co., has had an interest in dozens of liquor licenses over the years. Typically the deals work this way: Sapperstein lends money to liquor businesses and holds their licenses as collateral -- and then he takes control of the license if they default.
Liquor board records indicate that Sapperstein is trying to sell at least two inactive licenses that have exceeded the 180-day limit. Sapperstein, who has not started serving his jail sentence, did not respond to requests for comment. His attorney, Gregg Bernstein, said he did not know enough about the licenses to talk about them.
Mark S. Fosler, the city liquor board chairman, has vowed to crack down on brokers. Liquor licenses in the city sell for between $50,000 and $100,000 and are in high demand in entertainment hot spots such as Canton and . Fosler said he wants to void the illegal licenses -- which compete with legitimate licenses on the open market -- as soon as possible.
"We've got to bring those licenses to public hearings in short order," he said.
Fosler said it is impossible to say how many dormant licenses are out there because brokers' names do not always show up in liquor board files. In some cases, licenses remain in the names of the business people who held them last. In others, licenses are listed only under the name "secured creditor" or "contract purchaser."
State Sen. George W. Della Jr. sponsored legislation in 1999 that imposed the 180-day limit. He said the law was supposed to put an end to brokering licenses and protect neighborhoods from new bars.
"What you had were brokers who would buy a license in an area where a business couldn't survive, and then they would try to relocate them into neighborhoods that didn't want them," Della said.
The liquor board, a state agency, is charged with monitoring approximately 1,400 liquor licenses that have been issued in Baltimore. Past liquor boards have failed to address the problem of inactive licenses. Leonard Skolnik, a former liquor board chairman, initiated a review of such licenses in 2003, and again in 2004, but was removed from the board before he could take action.
Fosler, who took over as chairman when Skolnik left last year, has stated that he wants to bring order to the liquor board. Last month, Gov. Robert L. Ehrlich Jr. reappointed Fosler to a second term and appointed two new commissioners -- Jeffrey B. Pope and Edward Smith Jr. At their first meeting, they agreed to void three inactive licenses, including one that belonged to Sapperstein.
Liquor board records show that as long as Sapperstein and others paid annual license renewal fees or promised to sell licenses as soon as possible, the members of the old board and staff members permitted them to hang onto inactive licenses that should have been terminated.
Board records show that the following brokers held dormant licenses beyond the limit set by the 180-day law:
Carroll "Roy" Bond III, a bar vendor and owner of Carbond Inc., who has held onto at least two licenses for more than a year, liquor board files indicate. Bond is still trying to transfer a license he holds for a bar called 83 Station even though the former owner says the pub has been closed since November 2003.
John Zorzit, owner of Nick's Amusements, a vending company, who sold two licenses last year even though they had been inactive for at least two years. One of the licenses went to Ravens football star Ray Lewis and his partners for use at Lewis' Full Moon Bar-B-Que in Canton, according to liquor board records. The other was purchased by the Capital Grille of Baltimore for $50,000.
Leon Albin, a former Baltimore County delegate, who is still trying to sell a liquor license he obtained more than a year ago from the former owners of a fried-chicken restaurant in Park Heights. The license served as collateral for a $20,000 loan at 12 percent interest that he made to the restaurateurs.
Bond, Zorzit and Albin maintain that they have not violated the 180-day limit.
Asked about his license, Albin, a former Baltimore County liquor board member and longtime license broker, said: "I know the law, and I know that license is still valid."
Samuel T. Daniels Jr., the chief liquor inspector, said that during a recent review he discovered dozens of licenses that had been dormant for a year or more.
He gave his list to the state prosecutor's office last month. The agency is investigating liquor board activities, in part, because of corruption allegations Daniels made against former liquor board commissioners Claudia L. Brown and John A. Green Sr. in a lawsuit he filed in April.
Saying they wanted to clear their names, Brown and Green asked State Prosecutor Robert A. Rohrbaugh to look into the allegations. Brown and Green have since left the board: Brown moved to Texas, and Green was not reappointed by Ehrlich.
Daniels eventually dropped his lawsuit.
Rohrbaugh has declined to comment on the investigation, but his staff recently interviewed Daniels, Fosler and Nathan C. Irby Jr., the liquor board's executive secretary. The men said they were asked to provide personal financial documents, past income tax filings and telephone records.
Bond has held at least two licenses for more than a year. He obtained one license from Leatrice Williams, whose bar has been closed since at least March 2004, according to liquor board records. The board granted Bond an extension a year later.
As for the license for the bar, Bond says he also got permission from the board to take more time to sell it. "As far as I am concerned, it's all straightened out," he said.
Zorzit made $50,000 last year on the license he sold to the Capital Grille, according to liquor board records. The board's records do not show how much he made on the license he sold to Lewis' barbecue restaurant.
John Vontran, president of the Baltimore City Licensed Beverage Association, filed a lawsuit last year to try to block the sale of the licenses, alleging that they violated the 180-day rule. He eventually dropped the lawsuit when an attorney for the liquor board argued that he had not followed procedure.
Vontran said he thought the licenses should have been voided, but "the liquor board thought otherwise."
He said the liquor board told him that Zorzit's licenses were still good. But interviews with those familiar with the bars operating under those licenses said they were no longer in business.
The license Zorzit sold to the Capital Grille had been issued to a Highlandtown bar that was sold at auction in May 2002, according to Harriette DeAngelis of Courage to Change Foundation Inc., a nonprofit organization that turned the bar into a club for former alcoholics and drug addicts.
The license that went to Lewis' restaurant had been issued to a Brewers Hill bar that closed in 2002, said Jeanne Jankowski, widow of the man who used to own the place.
Said Zorzit of his dealings with the liquor board: "I have experienced nothing but fairness from them."