When a drug lord is your landlord; Housing: Criminals' property investments block dreams for renewal of East Baltimore.


In the most dismal slums of East Baltimore, on narrow alley streets where sunlight barely shines, George A. Dangerfield Jr. roams like a feudal warlord.

He is only 29. But he controls an empire of more than 120 rental houses that includes long stretches of Biddle, Duncan, Eager and Regester streets. In the 400 block of East Federal Street alone, he holds the keys to seven rowhouse doors.

Dangerfield cruises his domain on rent day in a midnight-blue Rolls Royce touring sedan, shadowed by a squad of armed bodyguards in a white Humvee military vehicle. He points his finger, and a private army springs to do his bidding.

"Don't tell me about the law," witnesses recalled Dangerfield telling one tenant as his troops smashed the man's furniture and threw it into an alley. "As far as you're concerned, I am the law."

Dangerfield is among a little known subculture of property owners standing in the path of what many believe is East Baltimore's last shot at redemption.

Backed by the U.S. Department of Housing and Urban Development, city officials are preparing to buy, demolish and renovate entire blocks of slum housing at a cost of $35 million -- more than 1,000 buildings in all.

But an extensive review of property records by The Sun reveals that an unforeseen pitfall threatens the plan from the outset.

Long exploited by tax cheats and slumlords, the city's worst ghetto has been infested in recent years by drug dealers, embezzlers and bankruptcy fraud artists using illegal profits to buy up rental properties.

Dispersed throughout the east side's 12,500 buildings, they lurk like wolves in tall timber.

Housing Commissioner Daniel P. Henson III is adamant that using tax dollars to purchase houses from predatory landlords is unconscionable.

But no one in city government has begun to grapple with the high concentration of felons who have invested in East Baltimore real estate, even as the city was laying plans to fix it.

"Unfortunately," Henson says, "this state is one of strong property owners' rights. So as deplorable as it may seem to taxpayers, we may end up having to buy these guys out.

"It's not something I'm happy about. But you can't hope to have a successful urban renewal project with a bunch of dope dealers and embezzlers in the middle of it."

Dangerfield is but one example.

A convicted cocaine dealer, he has been charged with eight drug offenses since 1992. He has been prosecuted as a slumlord at least 18 times and awaits legal action by the city on six dozen more housing violations.

And he now stands accused by federal prosecutors of masterminding a conspiracy that plowed untold thousands in dope profits into slum houses.

"I ain't saying nothing about that," Dangerfield told a reporter after a recent appearance in housing court. "No more questions!"

Epicenters of crime

The tale of Dangerfield's rise in the real estate market hardly surprises police, who speak with weary resignation about how self-styled gangsters have turned certain sections of the city into strongholds for illegal commerce.

Beset by caravans of suburban drug buyers, addicted squatters and gun-wielding enforcers, once-picturesque enclaves of working-class families have disintegrated, leaving behind blocks of empty houses that become epicenters of crime in the region.

In one east-side neighborhood known as "Zombieland" -- where police recently arrested 200 people on drug and weapons charges in a series of raids around Dr. Rayner Browne Elementary School -- felons have bought up no fewer than 39 houses, records show.

A mile away, near Baltimore Cemetery, the scene is the same.

In one of the busiest and most violent drug corridors in the city, dope dealers and other felons hold title to at least 32 properties in the neighborhood around Lake Clifton-Eastern High School.

No one knows how serious the problem is citywide, mostly because overwhelmed officials have done little to identify and pursue pirate owners. But court, property and tax records suggest that the problem may be worse than previously understood.

Among recent cases:

Milton Tillman Jr., 42, is a nine-time convicted escapee, perjurer and tax evader who illegally skimmed profits from his bail bond business and nightclub, plowing the money into 31 slum dwellings. Although he was imprisoned in 1996 for income tax evasion, his houses continue to blight the east side -- including a gutted heroin den on Chase Street near Rayner Browne on which he owes $7,462 in unpaid city property taxes.

Darryl Jamison, 29, had been arrested nine times for robbery, assault and drug possession when federal agents raided his West Baltimore apartment in 1995 -- seizing $60,000 in drug profits and a 12-gauge shotgun. He was only 25 at the time, but he owned three impeccably restored rental houses and had set up a company called Jamos Properties Inc. with the expressed purpose of acquiring more when he was sent to prison for drug dealing.

Handy C. Phyall, 37, had been convicted on 21 drug, weapons and theft charges by the time he was imprisoned in 1997 for trafficking in marijuana and cocaine -- abandoning two rundown rental houses he owned in East Baltimore. One of them, a dilapidated hovel on Bradford Street, had to be demolished last summer at a cost to taxpayers of $6,000.

The result of these and similar real estate schemes is amply demonstrated in the 2000 block of Edmondson Avenue on the city's west side. Here, narcotics dealers traded property deeds like baseball cards for two decades, leaving in ruin a street once famed for its brand name "Cronick" heroin.

"Most of the guys who operated down here, they're all dead, incarcerated or run out of town by now -- and we're stuck with all their rotting buildings," says Waymon LeFall, who runs a barber shop a few doors from a defunct auto supply store owned by jailed heroin kingpin John Edward "Liddie" Jones.

Jones, now 57, sits in the Baltimore Detention Center, awaiting trial on charges of scheming to smuggle dope and other contraband into the jail. Notorious for decades as the godfather of a heroin-dealing family, he has owned at least 14 bars, apartment houses and storefronts on and around Edmondson Avenue since the 1970s.

"It was his corporate headquarters, his power base," recalls Sgt. Jack Hergenroeder, a bald and rumpled drug investigator in green army fatigues who has worked these streets for more than a decade.

"On that one block, he owned a bail bond agency, a clothes store, the car shop, a beauty parlor, at least two bars that I know of."

To disguise his ownership, Jones has used shell corporations, fictitious names and third-party owners who held the titles for him. According to a 1996 police intelligence report, he owned buildings in his wife's name, his son's name, his brothers' names, his tenants' names and four different variations of his own name.

"How many he still owns is anyone's guess," Hergenroeder says. "Doing a paper trail on his properties has always been a nightmare, and we're not exactly experts on real estate."

Barrier to renewal

Across town, Michael Seipp is living the nightmare.

A bespectacled former housing official, he heads a nonprofit group called the Historic East Baltimore Community Action Coalition.

Operating from a converted Formstone rowhouse at 808 N. Chester St., it serves as the hub of the long-awaited $35 million renewal campaign that will buy, renovate or demolish entire blocks of rundown east-side rowhouses over the next few years.

The group came under fire in December by the city comptroller's office for falling behind schedule in the acquisition of properties. But Seipp points out that buying a house in East Baltimore is no longer a simple proposition.

"We're taking heat for not moving fast enough," he says. "But it's nothing compared to the heat we'd take if we started using tax dollars to buy houses from people who are, let us say, less than honorable.

"It's a problem that's not very well understood at certain levels of city government."

On foam boards against Seipp's wall, color sketches abound of a "new" East Baltimore -- an open, airy residential preserve dotted with parks, recreation centers and civic produce gardens designed to attract new businesses and decent jobs.

It is the Clinton administration's fondest gift to the city.

It is also exactly half as much as necessary to save East Baltimore.

"People hear $35 million, and they think all their problems are solved," Seipp says. "The fact is, it's 50 cents short on the dollar compared to what we're facing out here.

"Every nickel has to count. Every block we fix has to serve a much larger purpose within the overall plan. And the ones that don't will have to be bought up and torn down."

With the stakes so high, even a few criminal property owners pose a threat. But there are more than a few in East Baltimore.

Consider that within two blocks of Seipp's door, felons own at least seven of the most blighted houses in the neighborhood. Consider further that George Dangerfield owns property on more than 25 blocks currently slated for renovation.

Presented with the numbers, Seipp sags in his chair.

"If we can't figure out how to get rid of them," he says flatly, "this project is meat."

Through the narrow window of his cramped third-floor office, Seipp gestures eastward over a panorama of staved-in roofs, crumbling warehouses and graffiti-scarred blocks as forlorn as any vista of Newark, N.J.

It is the side of town seldom seen by the tourists and sports fans basking in the bright lights of the Inner Harbor.

Here, U.S. Census reports and city records show, one out of every four houses is a vacant wreck -- 3,300 in all.

One out of every six owners has stopped paying taxes.

One out of every four residents is addicted to drugs or alcohol.

One out of every three families lives on less than $15,000 a year.

Half of all adults are high school dropouts.

Half do not own a car.

Half live in rental houses.

It is a dream come true for anyone seeking to launder the profits of crime, police say.

Not only can houses be had cheap -- as little as $3,000 on some blocks -- but the east side also represents a market of more than 10,000 captive tenants so poor that they will accept the most deplorable living conditions without complaint.

Further, any drug dealer, embezzler or fraud artist with a stack of deeds can easily set up a bogus real estate company and report vast sums of illegal cash on tax returns as legitimate rental income -- and then spend it.

"If you're even halfway smart about it, your chances of getting caught are practically zero," says Hergenroeder, the veteran drug investigator. "Even if you did get audited by the Internal Revenue Service, there's no way some accountant at IRS headquarters is going to have any idea what it looks like out here.

"You could wash $700 or $800 a month through one of these rowhouses, collect another $300 in rent from your tenants, and use the place as a stash house for your drug operation as a bonus. It's perfect -- a win, win, win situation."

Major property owner

Amid the poverty and wreckage in East Baltimore, George Dangerfield Jr. has thrived for a decade.

Despite mounting drug charges that brought him to the attention of narcotics investigators from Baltimore to Towson, his east-side slum empire continued to grow until it dwarfed all but the city's largest landlords.

Most days, he can be found in his offices at 1747-1749 E. North Ave., a pair of two-story rowhouses near Broadway with a black awning running from the door to the curb.

By neighborhood custom, the parking space out front is kept open for his emerald green Cadillac, his Rolls Royce or his Humvee. As the boss steps from his car, he passes beneath his trademark -- the letters "EM" emblazoned in gold script on the awning.

It is here that Dangerfield operates Estate Management, the headquarters for 22 holding companies with such names as Sweet Pea Investors, Jaguar Inc. and Crucify Realty. Through these corporate shells, records show, he has held the deeds for 127 rental houses he began buying when he was 20 years old.

He purchased most of them from one man, James M. Stein, a well-known real estate speculator and one of the largest operators of low-rent housing in East Baltimore over the past two decades.

Stein did not answer five letters requesting an interview to his various business and home addresses in Baltimore, Lutherville, Ocean City and Bethany Beach, Del., over the past two months. But his attorney denied that Stein ever knew anything about Dangerfield's involvement with drugs.

"To Mr. Stein, these were just a handful of transactions among many over the years -- among hundreds, I dare say," said David Cohen, a former public defender turned real estate lawyer. "To suggest that he was close to Mr. Dangerfield or that he knew anything about his private affairs is simply not accurate."

Along the way, Dangerfield was acquiring a reputation as one of the most ruthless scofflaw landlords in the city -- a fixture on the list of owners of 40,000 vacant properties, the $100 million roll of delinquent taxpayers, in lead paint lawsuits and police reports.

"He is, without a doubt, among the top five most flagrant violators of the housing code," says Denise DuVall, chief of the Department of Housing and Community Development's enforcement unit. "He also demonstrates an arrogance that is almost unbelievable."

Convicted no fewer than 28 times in the past three years of violating basic safety and health standards, Dangerfield has had to make thousands of dollars in court-ordered repairs in his rise to the top of the "most prosecuted" list. As of last April, he had also racked up more than $50,000 in unpaid property tax bills.

But it has not dampened his enthusiasm for the business.

After successfully postponing repairs on four of his slum houses at a recent hearing in housing court, he sent a dozen roses to the prosecutor in the case -- along with his best wishes for her continued good health.

"It was like something from a bad Mafia movie," DuVall says. "We, of course, sent them right back. But it gives you a sense of who we're dealing with here."

It was not his first such flourish.

In June 1997, two of Dangerfield's tenants complained that he had refused to fix a broken-down rowhouse at 1943 N. Patterson Park Ave., where they were renting a room for $55 a week. The plumbing leaked. Wires hung out of the walls. Gas hissed from the broken stove. Rats and roaches teemed in the basement.

Perusing the long list of deficiencies, a housing court judge ordered the landlord to fix the property and barred him from evicting his renters in the meantime.

Two weeks later, on a hot July night, Dangerfield eased his Rolls Royce onto Patterson Park Avenue, parked it under a street light and watched in a pinstriped suit as five of his men tore the door off its hinges and herded the occupants into the street, witnesses later testified.

"I felt like less than a man that night," recalls Eric Holmes, a 41-year-old disabled Army veteran who lived there with his wife. "But there was nothing I could do. They dragged us out of bed. One guy had a gun in his belt. The rest of them were all crowding around us, knocking stuff over and yelling. You ever seen a barroom brawl? That's what it was like.

"Next thing I knew, I was on the sidewalk in my underwear. And George was laughing at us. They all were laughing at us."

As his troops shoved Holmes' belongings out a rear window into a garbage-strewn alley full of chained guard dogs, Dangerfield leaned on the gleaming hood of his Rolls out front, holding court for his many tenants on the block of rowhouse shells, court records show.

Dangerfield owns four houses there, partitioned into tenement flats for three families, all sharing the same kitchen and bathroom and paying their rent week-to-week in cash.

Called into court for violating the judge's order, he pleaded guilty to wrongful eviction and received a $500 fine -- small consolation to Holmes and his wife.

"It's like something out of a Charles Dickens novel," says Kenneth M. Walden, a poverty lawyer with the Public Justice Center who is now suing Dangerfield for assault and trespass in the incident. "We deal with some fairly desperate clients, so we're used to seeing bad conditions. But this is a new low.

"That Mr. Dangerfield can get away with using tactics like these is a sign of how bad things are out there."

Federal confiscation

In the U.S. District Courthouse on Lombard Street, the exploits of Baltimore's criminal landlords come as a distressing revelation to the one man in town who has the most power to do something about it.

Stephen Schenning is the second-highest-ranking federal prosecutor in Maryland -- the chief deputy of U.S. Attorney Lynne A. Battaglia.

Since 1977, Congress has passed no fewer than six laws authorizing him to strip certain defendants of their worldly possessions and auction off any assets purchased with the profits from a crime.

In this manner, the federal government reaps more than $200 million a year nationwide from the liquidation of ill-gotten real estate, cars, jewelry and other goods. But such sales are rare in Baltimore, according to a recent audit by the U.S. Department of Justice.

Records acquired under the U.S. Freedom of Information Act show that federal prosecutors have confiscated fewer than a dozen houses in the city since 1993, at a time when drug dealers and other felons were accumulating scores of properties.

Criminals have been left in possession of their rental portfolios while they serve their sentences -- allowing them to resume careers as landlords once they're paroled. And others have gone undetected, even as they cut a wide swath across the real estate market.

This occurred, Schenning says, during a particularly trying time for federal prosecutors in Baltimore.

Faced with a crush of drug and insurance fraud cases in 1992, the U.S. Attorney's Office disbanded a team of lawyers who specialized in sifting through property records looking for criminal assets to seize and reassigned them to handle new cases.

The result: Individual prosecutors and investigators were suddenly left to do their own property research.

"Unfortunately," Schenning says, "it's a fairly arcane skill. And when you're already swamped with a desk full of new cases, it's probably not going to be your first priority.

"You lose the consistency and focus."

Battaglia reconstituted the unit in October after the audit. But Schenning notes that major hurdles remain.

For one thing, prosecutors are supposed to seize only properties that can be sold at a profit -- the point being to fund additional investigations. They are also supposed to avoid seizing anything that is hazardous.

By that standard, few Baltimore rowhouses qualify.

Not only are they laced with lead paint, asbestos insulation, degraded brickwork and antiquated wiring, they also are often burdened with city claims for back taxes that far exceed their value.

"We stand in the shoes of the property owner whenever we seize a building," Schenning explains. "We become liable. And with the real estate market in parts of Baltimore as depressed as it is, you're often looking at a pile of debt. So we have to be very careful."

On the other hand, he says, the seizure laws also aim to stop malignant owners from using their houses as launching points for further criminal enterprises.

Such was the case in 1993 when Prince George's County police asked federal agents in Baltimore to help save a crime-weary Laurel neighborhood. The feds responded by seizing a notorious clapboard house just off U.S. 1 that was the hub of the local drug trade, evicting the owners and restoring the peace.

"It's not unprecedented," Schenning says. "We do have enough discretion in the law to use it for those purposes.

"We also have the discretion to give the properties away outright if the city housing department or some nonprofit group is willing to assume responsibility for them.

"But nobody from Baltimore has ever brought the idea to us, and we can't just assume the risk."

Says Commissioner Henson: "If I could get my hands on some drug dealer's house without having to pay for it, I'd be glad to talk to the U.S. attorney about it."

Luck runs short

With federal prosecutors occupied elsewhere, Dangerfield's business was booming.

While collecting thousands in rent from his impoverished tenants, he had beaten seven state drug charges over the preceding five years -- keeping a small army of lawyers on virtual retainer.

His only serious brush with the courts came in 1994 when undercover detectives caught him red-handed outside a Rosedale diner selling more than 3 ounces of cocaine to a couple of customers from the front seat of his Volkswagen Passat sports car.

As detectives closed in to arrest him, however, the president of Estate Management gunned his car in reverse, bounced up onto the sidewalk and sent them diving for cover.

Then he tore off down Old Philadelphia Road backward, whipped the wheel around and veered up a ramp onto the Baltimore Beltway, where he led state and local police on a high-speed chase that ended with his car spinning out of control and cracking up near the Back River Bridge.

For all of this, he was sentenced to six months in jail, records show.

Then, Baltimore County police and federal drug agents began tapping the phone lines at Estate Management.

One year later, Dangerfield is facing the fight of his life in federal court -- charged as the central figure in a drug-trafficking organization that brought a flood of cocaine and heroin to town by train and car from New York and New Jersey.

In a 33-page affidavit, investigators allege that Dangerfield used Estate Management as the headquarters for a distribution network that employed more than 20 ex-convicts as couriers, enforcers and sales agents.

From his offices on North Avenue, the man known to his staff as "G" purportedly made more than 1,000 phone calls coordinating the transportation and sale of pounds of drugs across the city and suburbs. Into Estate Management flowed tens of thousands of dollars in profits, authorities say.

In the course of their investigation, detectives tailed Dangerfield to New York City -- where he allegedly purchased a half-pound of cocaine from a wholesale supplier. They watched his office for hours at a time, recording the comings and goings of his motorcade. And they trailed him across East Baltimore on his rent-day collection rounds.

"G owns a lot of real estate," a confidential informant told investigators, adding that Dangerfield bragged of buying it with drug money.

To date, however, federal prosecutors have made no move to confiscate his houses in East Baltimore or to charge him with money laundering.

"To tell you the truth," said one source close to the case, "they got one hell of a drug case against him. But they haven't looked much at his properties."

Research librarian Robert Schrott and electronic news assistant Genice Owens contributed to this article.

Pub Date: 2/14/99

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