Two prominent Annapolis lobbyists steered a lucrative real estate commission late last year to a Baltimore state delegate whose votes they will seek on numerous issues during the coming legislative session.
Lobbying partners Gerard E. Evans and John R. Stierhoff used Democratic state Del. Tony E. Fulton of Baltimore as their real estate agent in the purchase of a $600,000 Annapolis office building in November.
Fulton, who works in Lutherville and does not routinely handle commercial real estate in Annapolis, netted a commission estimated at $9,000 in the deal.
Under Maryland's ethics law, legislators are presumed to have a conflict of interest if they have a "close economic association" with a lobbyist.
A lawmaker can, however, file a sworn statement, as Fulton did last month, disclosing the relationship and asserting that his objectivity will not be impaired by it.
Fulton defended his involvement in the transaction and insisted that he had worked mainly with a business partner of the two lobbyists.
Stierhoff and Evans also denied there was anything improper about the lawmaker's involvement in their real estate deal.
But their business relationship raises troubling questions, an advocate for stronger state ethics law said yesterday.
"The crux of the matter is you have a financial transaction that inures to the benefit of the legislator," said Kathleen S. Skullney, executive director of Common Cause/Maryland, a government watchdog group.
"And this is the very same legislator who is then going to be lobbied by the parties to the transaction in the session.
"How can this not color his judgment?" Skullney said.
Del. Kenneth C. Montague Jr., a Baltimore Democrat who is co-chairman of the legislature's ethics committee, said he was not familiar with the facts of the case, but said he saw potential red flags in Fulton's relationship with the lobbyists.
"Any time you see a lobbyist connected to a legislator in any [financial] way, that raises concerns," said Montague.
Fulton, a 12-year veteran of the House, is a real estate agent who works out of the Greenspring office of Long & Foster Inc. He is listed as a residential sales agent and primarily handles properties in Baltimore and Baltimore County, according to Long & Foster officials.
He declined to provide details of how he got involved in Evans and Stierhoff's search for office space.
For his part, Evans said he mentioned to Fulton last summer that the firm was interested in relocating from rented space on Duke of Gloucester Street not far from the State House.
"We asked him if there were any rentals available," Evans said.
Purchase rather than rental
By several accounts, Evans and Stierhoff wound up focusing on a property they had learned about through other means -- a 2,970-square-foot building at 164 Conduit St. known as the John Callahan House, which dates to the 1770s.
Evans said he could not remember what role Fulton played through the summer and early fall as the lobbyists made efforts to obtain that property.
Stierhoff downplayed Fulton's role and said the lawmaker became involved at the request of an investor who eventually joined the lobbyists in their efforts.
Fulton said he was working not for the lobbyists but for the investor, Michael S. Hegarty.
"He [Hegarty] asked me to be the agent," Fulton said. "I don't represent Mr. Evans or Mr. Stierhoff."
But that account is contradicted by both Hegarty and the agent for the sellers of the John Callahan House.
Spencer Leech, the real estate agent for the sellers, said Fulton prepared two separate offers on the property on behalf of Evans and Stierhoff over the summer, before Hegarty became involved in the deal.
Details of offers
One was a lease-purchase offer. A second would have allowed the Evans and Stierhoff firm to purchase the property through a transaction known as a land installment contract, which called for little money down, Leech said.
Under the two contracts, Leech said, Fulton would have been entitled to a full commission.
Both offers were rejected by the property's owners, John and Nancy Chandonnet of Annapolis.
After those offers were turned down, Evans and Stierhoff brought in Hegarty, a Southern Maryland builder, to finance the transaction, according to Leech.
Hegarty, who lives in Calvert County, had built a home for Evans and has been friends with Evans for a dozen years.
In late September, Evans and Stierhoff formed a partnership with Hegarty, known as Conduit LLC, the entity that ultimately purchased the property in late November.
Hegarty said he owns 52 percent of Conduit LLC, while Evans and Stierhoff each own 24 percent.
$100,000 down payment
He said he put up the nearly $100,000 down payment to buy the building. The remaining $504,000 is financed through a loan from Severn Savings Bank.
Hegarty said the 30-year mortgage note carries payments of $4,200 a month. He said Evans and Stierhoff have a separate note with him, but he declined to disclose the terms of their financial arrangement.
He also said that by the time he got involved, in September, the lobbyists had already brought Fulton in to handle the real estate transaction.
"I didn't put Fulton in," Hegarty said. "When they called me, it was to look at the building.
"They already had him. My wife's a real estate agent and I could have let her handle it, but I didn't do that because he was already on board."
Just helping out
Hegarty said his impression was that Evans simply knew that Fulton did real estate work and figured, "Why not give him the deal? It was just to help the man with his living."
Hegarty's account of Fulton's role was confirmed by Leech, the Anne Arundel County real estate agent who handled the sale on behalf of the seller.
"[Fulton] was always affiliated, as far as I know, presenting offers for Evans and Stierhoff," Leech said.
Fulton refused to confirm whether he made offers on behalf of Evans and Stierhoff before Hegarty became involved.
"I don't know anything about any other offers," Fulton said.
Evans said lease offers were made before Hegarty was involved, but he said he could not recall Fulton's role in presenting those proposals to the sellers.
Evans said there was nothing inappropriate about Fulton's involvement in the real estate deal because Hegarty and not the two lobbyists was the majority partner.
"If you bear in mind that Mike Hegarty is the majority owner of this Conduit LLC, and we're a minority participant, then I think it puts a different color on it," Evans said.
House Speaker Casper R. Taylor Jr. said there may be potential problems with the transaction, but he reserved any opinion until he learned the facts.
"The first thing I want to do is find Fulton, before I make a public statement or rush to judgment that would take sides one way or the other," Taylor said.
"I guarantee you we'll get to the bottom of it and deal with it appropriately."
Sun staff writer Gady A. Epstein and real estate editor Robert Nusgart contributed to this article.
Pub Date: 1/13/99