Probe may turn on taxes

The Baltimore Sun

State prosecutors have subpoenaed records from the Maryland comptroller's office, suggesting that the long-standing investigation into City Hall might involve state taxes.

Two people involved in the investigation - Mayor Sheila Dixon's former campaign chairman and the owner of a company that hired her sister - have pleaded guilty to tax charges since the probe began in 2006.

Comptroller Peter Franchot's office received the subpoena several weeks ago and has complied with the request, but a spokesman for the office would not provide any details about what the subpoena sought.

"The comptroller's office can confirm that it has been ordered to produce certain tax records," the spokesman, Joseph Shapiro, said in an e-mail. "We will not identify what records were requested and what, if anything, was produced."

The comptroller's office - which appears to be the first state agency to receive a subpoena in the probe - bills and collects state income taxes in Maryland as well as sales, use, gas, amusement and tobacco taxes.

An attorney for Dixon could not be reached for comment.

At a news conference this week, Dixon suggested that reporters could review her income tax returns, but her office has not made them available. Yesterday, a Dixon spokesman said the release of those returns is complicated by the fact that Dixon has filed joint returns in the past.

Though the investigation has been under way for years, it recaptured public attention last week when prosecutors conducted a morning raid on Dixon's Hunting Ridge home. Since then, prosecutors have served additional subpoenas and, this week, a grand jury began hearing testimony in the case.

For the third consecutive day, however, the grand jury appeared to have been dismissed without hearing from witnesses. At least one deposition that had been scheduled for this week has been canceled.

Dixon acknowledged Monday that she had a personal relationship with a prominent developer, Ronald H. Lipscomb, in 2003 and 2004, and that the two had exchanged gifts at the time. Dixon was the City Council president then and had a vote on the city's Board of Estimates, which approved deals benefiting Lipscomb's company during those months.

A document obtained by The Sun this week shows that Dixon used a $2,000 gift certificate traced back to Lipscomb's credit card to pay for part of the cost of two fur coats.

City law requires officials to report gifts from people who do business with the city, but Dixon has not reported any gifts from Lipscomb in at least seven years.

Dixon supporters have argued, in part, that Lipscomb's company, Doracon Contracting, was not technically doing business with the city because it was a subcontractor and had a relationship with a prime contractor, not the city.

The investigation began after a series of articles in the paper about the role Dixon played in approving contracts that benefited her sister's employer, a company known as Utech.

Utech's owner, Mildred E. Boyer, pleaded guilty to tax evasion charges in March and agreed to cooperate with prosecutors.

Separately, Dixon's former campaign chairman, Dale G. Clark, pleaded guilty to tax charges after he had received $500,000 in taxpayer money without a contract when he worked as a computer consultant to the City Council.

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