A Baltimore grand jury indicted a city councilwoman and a developer with close ties to Mayor Sheila Dixon yesterday on bribery charges related to tax breaks for luxury buildings under construction on the city waterfront.
The indictments of Councilwoman Helen L. Holton and developer Ronald H. Lipscomb are the most prominent charges to emerge to date from a wide-ranging probe by the Maryland state prosecutor into corruption at City Hall, an investigation that included a search of the mayor's home last summer.
Prosecutors say Holton, head of a committee that oversees tax incentives, approved breaks worth millions of dollars for projects involving Lipscomb at Inner Harbor East, after he paid $12,500 for a political survey for Holton last year.
Holton, first elected in 1995, was also charged with perjury, for failing to include the payment on her annual financial disclosure statement, and with misusing her office. In a statement issued by her lawyers, she said she was "disappointed" by the grand jury's decision and would continue in office while legal proceedings continue.
The development stunned City Council members, who have been in recess for the past month, and fueled speculation that the nearly three-year investigation might be reaching its climax. The current grand jury expires tomorrow. To date the probe has seemed to focus on contracts and hearings held by Dixon while she was president of the City Council and on her relationship with Lipscomb.
"The public's trust in their elected officials is essential to the proper functioning of government," State Prosecutor Robert A. Rohrbaugh said in a statement that accompanied the two indictments. "The citizens of Baltimore have every right to expect their public officials will not be influenced by personal motives, greed or gain."
In her 2007 financial disclosure statement, Holton, a West Baltimore Democrat, said she received gifts from "various" sources related to "events for which all council members were invited."
In those forms, which Holton signed under penalty of perjury, she "failed to disclose the payments Lipscomb allegedly made on her behalf" to the polling company, according to the state prosecutor's office.
Dixon and her attorneys declined to comment on the developments.
It is highly unusual for City Council members to commission polls for their races, elected officials said. Holton faced nominal competition for her council seat in 2007 but was considering a run for comptroller if current Comptroller Joan M. Pratt ran for mayor.
Lipscomb's name has long been connected with the probe as well as an earlier federal investigation. He dated Dixon when she was City Council president in late 2003 and early 2004, and other projects he has worked on have received millions of dollars in city tax breaks.
Lipscomb's East Baltimore offices were searched by the state prosecutor's office in November 2007. The prosecutor wrote at that time: "Your affiants believe that a corrupt relationship exists between City Council President Sheila Dixon, developer Ronald Lipscomb, and Dennis Cullop." Cullop works for Lipscomb's company, Doracon Contracting.
Gerard Martin, an attorney for Lipscomb, said in an e-mail: "Mr. Lipscomb is innocent and wants to tell everyone that but we, as his lawyers have instructed him to defend himself at his trial and not in the press."
Other allies of the developer were more blunt. Former City Councilman Anthony J. Ambridge, who works with Lipscomb, said: "He pays for a poll. Why is that illegal?"
"It's a bull crap indictment," Ambridge said. He called the state prosecutor "a guy trying to save face on millions of dollars he wasted" during the lengthy probe.
All of the charges against Holton and Lipscomb are misdemeanors.
Holton cannot be removed from office unless she is convicted of a felony or of a misdemeanor that relates to her elected office.
City politicians reached by phone yesterday expressed shock. "Oh, my goodness," said Pratt. "That is terrible. That is not good."
Stephanie C. Rawlings-Blake, the City Council president, said in a statement that she was "deeply troubled" by the charges but was reserving judgment.
Councilman Bill Henry, who has sparred with Holton over tax breaks for developers, said he hopes "for the sake of my colleague and her family that this is not as bad as it looks right now." Henry said he expected the charges to be a distraction for the council.
Bribery charges are tricky to prosecute, said Byron L. Warnken, a law professor at the University of Baltimore. "Bribery is when you have a public official and you have a quid pro quo," Warnken said. "You are making that offer to someone in a public office because they have the power." But it is hard to establish the parties' mental state, he said: "Usually we have to infer it."
The charges against Holton stem from two tax credits awarded to the Inner Harbor East project while she headed economic development committees.
Lipscomb has a financial stake in a section of the Inner Harbor East development known as "Parcel D" that includes a planned Four Seasons Hotel and Legg Mason Office Tower, according to the indictment. Lipscomb's job was to "manage and deliver public incentives" for that part of the project, according to the indictment.
Kimberly A. Clark, executive vice president of the Baltimore Development Corp., said tax breaks known as a payment in lieu of taxes, or PILOT, were approved by the City Council for Parcel D but have not been approved by the Board of Estimates.
Lipscomb also had a financial stake in another part of the development, known as Parcel B, an area to include space for the education firm Laureate. Clark said that in Parcel B, a PILOT was approved by the city and used to encourage Laureate to stay.
As one of the tax breaks went through the City Council, Holton and Lipscomb were also allegedly discussing a poll for her by a political survey company. The company initially billed Holton for the work, but in July 2007 she requested that the $12,500 bill be reissued and sent to Lipscomb's office, according to the indictment.
Prosecutors began a probe of City Hall contracts after articles in The Baltimore Sun in February 2006 revealed that Dixon had questioned Comcast about why that company was not giving more work to Union Technologies, a firm also known as Utech that employed her sister. Utech President Mildred E. Boyer was indicted by a city grand jury and pleaded guilty to filing a false tax return in March 2008.
Also, The Sun reported in March 2006 that Dixon steered $600,000 in city work over six years to her former campaign manager, Dale G. Clark. Dixon's office directed him to submit bills in increments lower than $5,000 to avoid scrutiny by the Board of Estimates, a city spending panel. In September 2007, Clark pleaded guilty to three counts of failure to file tax returns.
Holton's name had never surfaced publicly as a part of the state prosecutor's probe. Holton is a certified public accountant, with a firm run out of her West Baltimore home, and is a deacon at Payne Memorial AME church.
Baltimore Sun reporters Gadi Dechter, Scott Calvert and Nicole Fuller contributed to this article.
A Baltimore grand jury charged Councilwoman Helen L. Holton with:
• Bribery: receiving a $12,500 bribe, in the form of payment to a political pollster; possible sentence of 2-12 years in prison and/or a fine of $100-$5,000.
• Malfeasance in office: soliciting the $12,500 gift with a company seeking to do business with the city; no specific punishment.
• Perjury: willfully and knowingly failing to disclose a gift on a financial disclosure form; punishable by up to 10 years' imprisonment.
• Nonfeasance in office: failing to disclose gift on disclosure form; no specific punishment.
Developer Ronald H. Lipscomb, owner of Doracon Contracting, charged with:
• Bribery: paying pollster $12,500 to influence Holton's official duties; punishable by 2-12 years in prison and/or a fine of $100-$5,000.
Grand jury: Continues meeting this week, expires tomorrow; more charges possible.
Holton: Could be removed from office if found guilty.