Baltimore City

Paterakis pleads guilty; will pay $26,000 in fines

John Paterakis (left) is driven from the garage of the Mitchell Courthouse in Baltimore after pleading guilty to two campaign finance violations, both misdemeanors.
John Paterakis Sr., the baker and well-connected developer who bankrolled Harbor East, pleaded guilty Friday afternoon to two misdemeanor campaign finance violations and will pay $26,000 in fines and be barred from donating to Baltimore politicians until his probation ends in January 2012.

Paterakis had been indicted on charges that he exceeded the allowable donations limits by contributing $6,000 toward a re-election poll commissioned by City Councilwoman Helen L. Holton.

A major political and business power broker, Paterakis usually stays behind the scenes and on Friday declined Circuit Judge Dennis M. Sweeney's offer to address the court. "I think the attorney talked for me," he said in court. He also refused to speak with reporters after the proceedings.

His lawyer, Charles Scheeler, a partner at DLA Piper, issued a statement saying Paterakis "accepts full responsibility for his mistake" and that "while regrettable," the guilty plea "does not diminish John's achievements over a 60-year career."

The 80-year-old Paterakis, wearing a tan suit, used a walker for support as he entered and exited the courtroom Friday afternoon. He stood when Sweeney entered the chamber, but Scheeler requested permission for Paterakis to remain seated during the proceedings because he "has difficulty standing for extended periods of time."

Paterakis rose from humble beginnings, transforming his family's shop into one of the largest bread suppliers in the country and becoming something of a legend in the city's political circles. He has given tens of thousands of dollars to political candidates, his mere attendance at a campaign event can drive up donations and he has had close ties to every Baltimore mayor since William Donald Schaefer.

State Prosecutor Robert A. Rohrbaugh said in a statement that "cozy relationships" between developers and elected officials are "devastating to the public confidence in the honesty and fairness of our governing institutions."

Paterakis' guilty plea is the second and highest-profile plea in a set of four City Hall corruption cases pursued this year by the state prosecutor's office. Developer Ronald H. Lipscomb pleaded guilty to a similar campaign finance violationfor also contributing toward the $12,500 political poll for Holton's campaign. Maryland law prohibits donors from giving more than $4,000 per candidate per four-year election cycle.

In another of the investigations, Mayor Sheila Dixon has been indicted on unrelated charges that she stole gift cards intended for poor families and that she perjured herself by failing to report lavish gifts from her then-boyfriend Lipscomb.

Lipscomb, who has a small stake in Paterakis' Harbor East development, had been accused of bribing Holtonfor the portion of the poll he funded. In July, on the day his bribery trial was to begin, he pleaded guilty to a single campaign finance violation and pledged to cooperate with the state's investigation. He has not been sentenced.

Holton had been charged with bribery for accepting the poll Lipscomb funded in exchange for helping him secure tax breaks for Harbor East. At the time, she chaired the Taxation, Finance and Economic Development Committee. But Sweeney dismissed the bribery charges, a ruling that the prosecutor is appealing.

Holton still faces charges that she violated campaign finance rules for the portion of the poll funded by Paterakis. Her lawyer, Joshua R. Treem, said Friday that the new development would not be significant in his client's case. "Regardless of what Mr. Lipscomb has had to say or Mr. Paterakis has had to say, Ms Holton is not guilty of any of the charges."

In court Friday, Assistant State Prosecutor Tamara Gustave read an agreed statement of facts, saying that Paterakis, Lipscomb and Holton met in Baltimore to discuss the poll that the councilwoman wanted done over objections from her campaign treasurer, who felt it was an unnecessary expense.

Paterakis recalled, according to the statement of facts, that Holton "asked about the status of the pending real estate projects in Inner Harbor East." Holton then requested that the two developers fund the poll, according to the account Lipscomb gave prosecutors.

Ronald Lester, the pollster, billed Lipscomb for the poll and picked up a check from his firm, Doracon Contracting, on July 30, 2007. The next month, Lipscomb asked Paterakis to reimburse him for a portion of the poll, according to court papers.

Paterakis said little during his court appearance, answering most questions Sweeney asked by simply replying: "Yes, sir."

In one case, Sweeney asked Paterakis if he was on probation in the summer of 2007 when the crime occurred.

Paterakis quipped: "Not knowingly." Paterakis' attorney, Scheeler, quickly added: "He was not."

Later Sweeney said: "There will be no trial. You are admitting your guilt."

Paterakis said: "Yes, sir."

Prosecutors asked that Paterakis pay the maximum fines - $25,000 for one charge and $1,000 for the other. The plea deal allows him to avoid a possible penalty of one year in prison. He also has agreed to cooperate in the state's case against Holton.

Sweeney added the condition that Paterakis be barred from contributing to Baltimore elected officials for the term of his probation, a prohibition that Scheeler said Paterakis "agrees with" and "embraces."

Scheeler asked the judge to clarify if he meant Baltimore officials running for city offices or if the ban also included city politicians pursuing state or federal posts.

Sweeney said his ruling applies to candidates for citywide races but added: "My suggestion is that you not skate close to the edge on this one."

Sweeney agreed to grant Paterakis probation before judgment, which means Paterakis' record could be expunged if he completes the terms of his probation.

State prosecutors said that federal and state background checks revealed Paterakis had no criminal record. However, in 1963, John Paterakis, then 34, pleaded "no contest" in a federal court to bribing a Fort Meade commissary officer and paid a $2,282 fine, according to a Sun article from that time. The officer had threatened to stop selling H&S bread unless he was paid. Paterakis said at that time he was unaware he was paying to get H&S bread on their shelves until the final payment was made.

The fine imposed by a federal judge was three times the bribe amount and the maximum the court could impose, according to the Sun article. Recalling the events in a 1996 Sun profile, Paterakis said the bills still had flour on them when they were presented as evidence and that he had learned his lesson from the experience.

After Friday's proceedings, Paterakis fished what appeared to be a money order out of his pocket. He has a week to pay the fine. Scheeler, his attorney, said that Paterakis did not pay it yesterday.

Paterakis took a court elevator to the basement and climbed into a blue Cadillac Escalade waiting in a court garage and sped off. Judge Marcella A. Holland, administrative judge for the city's Circuit Court, said he had permission to be dropped off and picked up in the garage because of his health.

Baltimore Sun researcher Paul McCardell contributed to this article.