Nearly three years into a City Hall corruption probe, the only charges leveled so far against an elected official appear difficult to prove, veteran attorneys said yesterday. And some wondered why a prominent developer also indicted would resort to a questionable political payment, given his long experience using campaign finance loopholes.
Baltimore City Councilwoman Helen L. Holton stands accused of accepting a bribe from developer Ronald H. Lipscomb in exchange for tax breaks on valuable waterfront property at Harbor East, a prime redevelopment neighborhood.
Prosecutors face a steep challenge in convincing jurors that Lipscomb tried to influence Holton's decisions by paying $12,500 for a political poll before a city primary, said David Irwin, a Baltimore attorney with more than two decades of experience as a white-collar attorney. "There are other plausible scenarios. Was he getting anything for this, or was he paying because he's a nice guy?"
"And would the outcome [of City Council votes] have changed had he not paid? This is an obvious project, helping Baltimore City," Irwin said, theorizing defense strategies. Irwin is not representing anyone in the case.
Bribery is the only charge filed by state prosecutors this week against Lipscomb and the most significant of four charges against Holton, carrying a maximum penalty of 12 years in prison.
This week's indictment stunned City Hall observers who had long expected that prosecutors were weighing charges against Mayor Sheila Dixon, who had a personal relationship with Lipscomb.
The Baltimore grand jury hearing evidence from State Prosecutor Robert A. Rohrbaugh will be dismissed today. It has reached the end of its four-month term, and more indictments are possible.
Holton was removed yesterday from her post as head of a powerful city tax breaks committee, a day after being indicted on charges that included perjury and malfeasance.
The West Baltimore Democrat became chairwoman of the Taxation, Finance and Economic Development Committee in January 2007, after serving for years on another City Council finance committee. Those committees awarded millions of dollars in tax breaks to the Inner Harbor East project, in which Lipscomb had a financial stake.
Holton and Lipscomb have said through their attorneys that they are innocent.
Lipscomb, 52, and Holton, 48, are scheduled for their first appearance in Baltimore Circuit Court in early February, when they will enter pleas.
As their cases proceed, the challenge for prosecutors will be to keep the presentation "simple and focused," said Isabel Cumming, head of economic crimes for the Prince George's County state's attorney's office and a former state prosecutor. She praised Deputy State Prosecutor Thomas "Mike" McDonough, the lead prosecutor in the Holton-Lipscomb case, calling him "methodical."
McDonough has been a state prosecutor since 1984 and has worked on numerous high-profile public corruption cases.
University of Baltimore law professor Byron L. Warnken said the case is a good example of the cynical view that there is a fine line between lobbying and bribery. "If I'm defense counsel, I'm saying to the jury, 'Look, anybody who is dealing with the government is constantly trying to meet with politicians, call them, give money to them. It's how the system works.' "
To prove the bribery charges, Warnken said, prosecutors will have to show that the $12,500 was spent explicitly to buy Holton's favor.
Campaign finance rules allow businesses or people to contribute $4,000 per election cycle. Major donors - particularly developers - have routinely funneled contributions through limited liability corporations with slightly different ownership structures, thereby avoiding the limits.
Over two campaign cycles, Holton received $11,500 from Lipscomb, his wife, Zaiafanice, and limited liability corporations listed in court papers as affiliated with Lipscomb, campaign finance records show.
Lipscomb and businesses connected with him have given almost $500,000 to politicians, nearly all Democrats, over the past 10 years, records show.
By contributing through a multitude of limited liability corporations, as Lipscomb has done for years, a developer can increase his giving power dozens of times over. The key technicality is that each LLC must have a slightly different ownership structure.
Warnken said that disconnect - Lipscomb would have been making an amateurish mistake if the allegations against Holton are true - "doesn't make sense."
Whether bribery or not, the payment of the bill for the political survey would have been a violation of state election law. Paying a bill on behalf of a campaign is considered an "in-kind" contribution subject to the same limitations that apply to cash donations. And the limit on gifts from one donor to one candidate in any four-year election cycle is $4,000. The limit on one donor's gifts to all campaigns over the course of a cycle is $10,000.
So, if Lipscomb had simply wanted to help Holton with her polling bill, he could have told her to pay it out of her campaign account and have arranged to have four or more entities that he controlled send her campaign account a total of $12,500.
An explicit quid pro quo would still have been illegal, but in Maryland politics, deals are rarely that clear-cut. In legal terms, bribery can be difficult to prove when it involves campaign contributions.
If Holton is exonerated, she can return to her post on the finance committee, said City Council President Stephanie C. Rawlings-Blake, who stripped Holton of her leadership position.
Through a spokesman, Rawlings-Blake said she took Holton off the taxation committee because council members "must abide by the highest ethical standards." Rawlings-Blake said that she was "deeply troubled" by the allegations. Holton will remain on two other committees, executive appointments and public safety.
The indictments Wednesday marked the most significant progress in an investigation that has spanned nearly three years - and the charges against Holton, a council member since 1995, came as a surprise. Last summer, state prosecutors searched Dixon's home and seemed to be focusing on her contracts and hearings that she held while president of the City Council.
Dixon has acknowledged dating Lipscomb socially in late 2003 and early 2004, a time when the developer was receiving millions of dollars in tax breaks on other city projects.
The mayor declined to comment on the state prosecutor's investigation of her dealings, but when asked yesterday about the tax breaks that Rohrbaugh is investigating, she said that they are common. "I don't think they understand how government is working," she said.
The charges against Holton and Lipscomb involve two parcels of land in the fast-growing Inner Harbor East at the end of President Street. Lipscomb has a financial stake in the project and his job was to "manage and deliver public incentives," according to the indictment.
Neither of the City Council bills mentioned in the indictment encountered opposition during council hearings or from city agencies charged with scrutinizing the tax deals. One bill approved a $3.4 million tax break to keep Laureate Education Inc., formerly Sylvan Learning Systems, in Baltimore. The other provided $33 million in tax breaks to developers building a Legg Mason tower and a Four Seasons hotel.
The indictment alleges that Holton accepted payment from Lipscomb for the poll at the same time her committee was considering tax breaks.
According to public records, Holton did not claim the payment as a political contribution. Prosecutors alleged that it was instead a personal gift and that the councilwoman did not report it on a required disclosure statement that she signed under penalty of perjury, which became one count in her indictment.
Neither defendant was charged with violations of Maryland election laws, which carry mostly civil penalties and almost never lead to jail time.
Baltimore Sun reporters Gadi Dechter and Timothy B. Wheeler contributed to this article.
What prosecutors say
July 2003: Developer Ronald H. Lipscomb has responsibility to "manage and deliver" tax breaks for the Four Seasons Hotel/Legg Mason project at Harbor East in Baltimore, according to memorandum.
December 2005: Bill to provide tax breaks to different Lipscomb-related project at Harbor East introduced at City Council and sent to subcommittee headed by Councilwoman Helen L. Holton.
May 31, 2006: Telephone call between Holton and Lipscomb on day before public hearing on tax break bill.
June 13-20, 2006: Seven telephone calls between Holton and Lipscomb and/or Doracon Contracting Inc., his company.
July 10, 2006: City Council approves first tax break bill; Holton abstains.
January 2007: Holton named chair of Taxation and Finance Committee
June 4, 2007: Tax break bill for Four Seasons parcel introduced at City Council and assigned to Holton's committee.
Summer 2007: Holton contacts unnamed survey company, Company Z, for election polling.
July 2007: Company Z sends $12,500 invoice to Holton; Holton asks company owner to reissue invoice and send it to Doracon.
July 19, 2007: Holton and two other committee members vote to approve second tax break bill.
July 30, 2007: Doracon writes $12,500 check to survey company.
Aug. 9, 2007: Holton receives survey results; forwards them via e-mail to Lipscomb.
Sept. 24, 2007: Full council approves second tax benefit bill; Holton votes yes.
April 30, 2008: Holton files financial disclosure form for 2007, does not disclose polling payment as gift.
Sources: Maryland v. Helen L. Holton; Maryland v. Ronald Holt Lipscomb