A federal judge yesterday found a prominent Glen Burnie developer guilty of housing discrimination and ordered him to sell 12 condominiums to a rehabilitation program for the mentally ill.

U.S. District Court Judge Marvin J. Garbis ruled that developer Frank J. Scott violated fair housing laws by abruptly canceling a $1.4 million sales agreement with Omni House, a non-profit program for people afflicted with mental illnesses.

Scott's company, Cromwell Fountain Associates, was ordered to fulfill the contract and promptly finish building the 12 two-bedroom condominiums, part of a 900-unit complex still under construction off Ordinance Road in Glen Burnie.

The ruling gives 16 patients confinedto Crownsville Hospital Center a chance to move into homes and lead a more normal life. Omni House also plans to transfer eight clients who are living in rented apartments to Cromwell Fountain.

"Obviously, we're very pleased," said Susan Nathan, Omni House's attorney. "We're very much looking forward to moving in."

In a two-page order issued yesterday, Garbis called for completing the sale no later than July 28 and said he will consider punitive damages then. Omni House already has asked for $8,400 in lost fees, housing subsidies and expenses, along with $500,000 in penalties.

But Garbis said the requestwas premature until the condominiums are finished.

Omni House andone of its clients, James G., a 27-year-old patient at Crownsville, sued the developer April 22 for housing discrimination. During the two-day trial, witnesses testified the sales agreement was revoked amidfears of the patients "going berserk" and endangering other residents of Cromwell Fountain.

Lois Miller, the founder and executive director of Omni House, thought in December that she had found the perfect home for a group of people fresh out of a mental hospital. But four months later, her dream was in danger of being shattered by neighborhood opposition and a sudden turnabout by the developer.

When thestate approved grants to buy the 12 condominiums, dozens of worried condominium owners called the Cromwell Fountain management company tocomplain. Their protests prompted a series of meetings that ended with a hand-delivered letter revoking the contract.

Cromwell officials argued in court that they only backed out of the deal after Millerexpressed concern about the uproar and agreed to settle for another site.

To keep the mentally ill people out of Cromwell Fountain, Scott offered to build them homes elsewhere.

Scott and John Pantelides, who heads management and sales, also said they pulled out becauseof financial concerns. They blamed Omni House for failing to provideproof that it had lined up the necessary $1.4 million in government grants and loans.

But their argument unraveled when Garbis pointedout the developer must have been confident of the financing to offerto develop the same units at another site.

Under the judge's questioning, Cromwell representatives admitted they feared the project would become "commercial" when they read a newspaper account describingthe Omni House clients as "severely" mentally ill. "Severely" is used to describe people suffering from chronic conditions, such as schizophrenia or manic depression.

Miller said she decided to sue Cromwell after the developer revoked the contract without finding another suitable site. The case rested on testimony from her and other Omni House officials, who were told by Scott that he feared "future sales might be jeopardized."

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