Fired loan aide alleged to get $45,200 in 'fees' City sues to recover funds charged clients for loans she reviewed

THE BALTIMORE SUN

For people with an interest in rebuilding Baltimore's neighborhoods and a need for a low-interest loan to do it, Deborah Bass was an important person to see.

As a loan officer for a city-backed agency, she was one of only a handful of people assigned to process and recommend applications for the coveted funds. It was an important job.

But at the same time she was handling loans for the Baltimore Community Development Financing Corp., she had quietly set up a separate consulting business and collected more than $40,000 in fees from the people whose loans she was reviewing, her bosses allege in a civil suit filed June 14.

Her lawyer, Robert Dashiell, says the business wasn't really hers and she did nothing wrong. The loan consulting business -- incorporated as El' Bam -- is actually run by her 29-year-old son, Dashiell says. He predicted the allegations will "wither on the vine."

"It was much ado about nothing," said Dashiell, adding that he did concede to agency officials, "that to an onlooker it might flunk the smell test. I will concede that there was an appearance of a conflict, but in fact there was no conflict."

Though the allegations are to be aired in court, they have had an effect:

Bass lost her job June 12 for what agency officials describe as receiving "covertly appropriated consulting fees" in violation of the organization's rules.

The FBI is actively looking into the allegations, trying to determine if federal law was broken.

The development agency says it is going to try to recoup the consulting fees paid to Bass through its lawsuit in Baltimore City Circuit Court.

Agency officials apparently uncovered the alleged scheme after a complaint by a loan applicant and by reviewing official documents filed in connection with loans the agency issued. Those loans, according to the civil suit, are financed from federal, state and local funds.

In addition to Bass, Michael D. Lee, the former executive vice president at the agency, was dismissed recently.

Asked about his departure and the reasons for it, Lee declined to comment, stating that he was negotiating a settlement with his former employer.

Dashiell, who also represents Lee, said the former executive was wrongly accused of insubordination. He said the alleged incident was not related to the allegations against Bass.

Unrelated firing

Wayne R. Frazier Sr., the agency's vice president, also said the dismissals were not related.

The community finance agency, which was established in 1989 to fulfill a campaign pledge of Mayor Kurt L. Schmoke, has dispensed hundreds of loans designed to promote the renovation of vacant properties.

For some, the agency's money is a decided boon.

In a recent interview, Jay French, a developer who has used the program, strongly defended the financing agency.

"It's one of the best things the city has ever done," he said, adding that the reduced interest rates on agency loans are "rates you cannot get in the market."

Because other housing programs have been either eliminated or sharply curtailed, French said the agency is the only way a company like his can continue to provide inner-city housing.

"Everything I do, I take through there," French said.

As to the consulting fee allegations, French said, "I have never heard anything like that." He said his firm, the French Cos., had not paid fees to either of the firms named in the suit, El' Bam and AB Construction and Development.

Computer data deleted

Two days after Bass was fired, records show the agency filed its civil suit and was granted an injunction, ordering Bass to stay out of its offices and barring her from altering or destroying "in any way information, files and data relating to BCDFC business transactions."

Agency officials alleged that Bass, immediately after her June 12 termination, removed property belonging to the agency and deleted data from agency computers relating to "past, present and future loan transactions."

Bass never responded to the allegations outlined in the suit. Moreover, Dashiell, Bass' lawyer, insisted that the judge never granted an injunction, though court records show an injunction was issued the day the suit was filed.

Frazier, who joined the community development corporation a little more than a year ago, said the agency will try to recoup improper consulting fees paid from loan proceeds.

Warned about fee

The suit alleged that Bass on June 5 charged a $5,000 consulting fee to a loan applicant, a firm headed by Randy Wells. The fee charge was made after Bass was expressly ordered not to do so by agency officials May 28, the suit claims. Wells did not return phone calls.

Documents filed in the suit show that the fee was to be paid to a company called El' Bam. State records show Bass incorporated El' Bam, but not until Oct. 22, months after her June 12 dismissal. The only name appearing on the incorporation papers is Deborah Bass, who is listed as the resident agent for El' Bam. Dashiell insisted it was Bass' son who set up El' Bam.

"Miss Bass had nothing to do with that," said Dashiell, referring to El' Bam. It was not Bass, but other agency officials who made out checks for El' Bam, he said.

Agency officials also charged in the suit that El' Bam collected a $17,700 fee from another loan applicant, Michael Tisdale.

Tisdale said he couldn't recall who he dealt with at El' Bam or why the firm was hired. He denied any direct contact with the firm and promised to check his records, but as of yesterday he had not called back.

In a third case, BCDFC charged that Bass got a $22,500 consulting fee through a fictitious corporation called AB Construction and Development. That fee came on a loan granted to Ayo Banjo Inc.

"AB Construction and Development is also believed to be a fictitious corporation established by Bass as part of her scheme to obtain loan proceeds," the suit claims.

Records show AB Construction is at 1268 E. North Ave. in a building owned by Allen and Company Moving and Storage. The moving firm got a $468,059 loan from BCDFC in late 1993 and it was boosted to $488,059 on Feb. 1, 1994. AB Construction and Development has a listed phone number at the North Avenue address.

Referred to AB Construction

Ayo Bango, the man whose company got the loan, said in an interview that he was referred by a friend to AB Construction and Allen Burrus, who heads Allen and Company Moving and Storage. He said he went to AB because he knew nothing about putting together an agency loan application.

"A friend of mine introduced me, and [Burrus] put it together for me," Bango said.

He said his only dealings with Bass were at BCDFC offices. Burrus did not respond to repeated messages left at his office.

Dashiell said Bass also had "no interest" in AB Construction and Development.

Frazier, the development agency's vice president, said an audit of loan records by an outside firm had turned up no other cases of improper loan consulting fees.

Frazier said the matter had been referred to state and federal law enforcement officials, but those officials, he said, decided not to pursue it.

Sources said the initial contacts with agency lawyers led U.S. government investigators to believe they had no jurisdiction in the matter because no federal funds were involved. Subsequently, the FBI learned otherwise and is investigating the case.

In its suit filed against Bass, the development agency said it "receives financial assistance and support from both federal, state and local governmental agencies." Other records filed with the lawsuit as well as Baltimore City land records show that federal funds were used in at least two of the three projects on which consulting fees were paid.

Records show Bass received an agency loan on a property at 5426 Clover Road that she purchased for $55,000 on Oct. 19, 1994. She originally financed the purchase with an $80,000 loan from Harbor Bank, but later refinanced with a $122,700 loan from her own agency on July 11, 1995. In addition, she got a $2,500 second mortgage from the agency, involving funds from the U.S. Department of Housing and Urban Development.

Dashiell said there was nothing wrong with Bass getting a BCDFC loan.

"She received a loan from the vacant property program. Anybody can apply. She applied just like anyone else," Dashiell said.

Lacked demolition permit

A permit has been issued for the Clover Road property to construct a new building, replacing a house that had been built on the property in 1943. That house had been demolished about a year ago, apparently without a required demolition permit.

Bass is not the only agency official to have a BCDFC loan. Another loan officer, Reginald Stanfield, received a mortgage for property at 2411 Talbot Road. The original loan was for $139,200, but it was increased March 20 to $146,231.

Frazier said there was nothing improper about agency employees getting loans from BCDFC. He said the loans were "performing" and had been reviewed and approved by a loan committee.

Pub Date: 12/10/96

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