From Kovans to Patarakis to Pugh

  |   Advocacy, Baltimore's Future, Community Engagement, Featured, New Ideas

This blog series will feature several essays of Baltimore’s history of Corruption and Low Self-Esteem. These brief essays are my opinions on Baltimore’s history. 

From Kovans to Patarakis to Pugh

Kovens was looking for another figure to assist him in controlling the west side of Baltimore politically and came upon an obscure, straight-laced three-time loser of a city Councilman named William Donald Schaefer. Kovens reached the pinnacle of his power and influence by backing this obscure title research lawyer, and a man thought by many to be mentally unstable. Schaefer, as it turns out, would later be widely regarded as the most effective Mayor in Baltimore’s history, and the closest thing the city has had to a transformational one. Schaefer’s claim to fame was that he executed an idea that had been percolating for years: developing the Inner Harbor. Schaefer’s boosterism and his idiosyncratic approach to virtually everything made national news. While Schaefer was never accused of being personally corrupt, his relationship with the oligarch that put him in power and who used that fact for immense personal gain extended the long line of self-dealing that dated directly back to John Work Garrett.

Kovens was eventually indicted for mail fraud and racketeering along with several other individuals, including Governor Marvin Mandel. Kovens’ status as a felon removed him from consideration as an investor in the Harbor East real estate deals that Schaefer believed would continue the progress of the Inner Harbor towards Fells Point. So, Schaefer turned from the “furniture man” to the “bread man,” John Paterakis. As John Work Garrett was a product of an age of monopolists controlling the new technology of rail transportation, and Isaac Rasin and Sonny Mahan were products of an age of growing political patronage as the business of government ballooned in size, John Paterakis’s political influence was a product of the age of the development of Baltimore’s Inner Harbor. Like his predecessors on the political scene, his influence was ultimately self-serving and for the purposes of personal gain, and financially he was the most successful political kingmaker in the history of the city.

All that being said, Paterakis was unique in also being perhaps the most accidental and generous of the kingmakers. He was a man who seemed never to forget where he came from—East Baltimore, the second generation Greek immigrants—and he genuinely loved the work that put him on the map in the first place. That work was the H & S Bakery, which grew under his stewardship into an $800m baking behemoth, largely through making buns for all the McDonald’s up and down the East Coast. Paterakis was frequently seen with flour on his clothes and routinely visited his bakeries.

Paterakis was the most accidental political kingmaker in the sense that his power came from his control of Harbor East, the stretch of land from the Jones Falls to Fells Point, and Harbor East was an important crossroad in Baltimore. It was where the railroads going north, and northeast and west all met. The original Pennsylvania Railroad terminal stood for years at the corner of President Street and Fleet Street. By the time Williams Donald Shaefer became Mayor though, the area had been largely abandoned and was an eyesore next to the shining example of Schaefer’s vision—the Inner Harbor. Schaefer begged Paterakis to put up $11m to buy the 20 acres along the harbor, promising him that within a year or so the city would repurchase it from him for $13.4m. Paterakis, no fool, was reluctant. After all, the Jones Falls continued to be prone to floods of sewage runoff and the jewel in the crown was the W. R. Grace Superfund site. W. R. Grace had contaminated a large area of land along the inner harbor with chromium in the early 20th century. But it quickly became clear that the promise of gambling on Inner Harbor and the subsequent development of hotels and office buildings was an enormous opportunity.

Over the next twenty years, through several mayors, Paterakis worked to receive tax abatements ultimately worth hundreds of millions of dollars, on property that became worth billions. In the process, the career of one Mayor, Sheila Dixon, was brought down by her involvement and graft with a minority partner, and Ron Lipscomb brought in by the “the bread man” for appearance sake and cover. State Senator Helen Holton’s career was also brought to an end. All the while, Paterakis, like the kingmakers that preceded him, would plead to minor counts of corruption and go right back to making money as he knew best. Patarakis and his cabal make frequent and creative use of LLC’s in obfuscating political contributions to countless Baltimore politicians. Obviously, these contributions were targeted at those who could play a productive role in securing tax abatements for his real estate project, called Harbor East.

From Garrett to Patarakis, there is a direct line of self-dealing and control of Baltimore politics. These kingmakers systematically ensured that Mayor after Mayor was never powerful enough to pull the city together and transform it from a city of firsts to a first-class city. It’s a cloud that hangs over the city, like the weather in Seattle, except these clouds are caused by history, the history of human interactions and the dominance of often racist but always self-interested “dons” of the city of Baltimore.

The plague in Baltimore City government is nothing new and will continue if we don’t put policies in place that prevents the power of money to control our government. In fact, in the 2016 mayoral race, 70% of the funds raised came from white people who reside outside of Baltimore. Catherine Pugh and the University Maryland Medical Center scandal is just another black politician taken over by white business interests. How could we possibly fix the destruction in our communities if money is truly the root of all evil in our government? In order to fix the destruction in our communities, we have to reconstruct our government policies.

For generations, the locus of corruption in Baltimore came from real estate developers who in the last 50 years focused on the nine harbors seeking ownership of land and access to tax breaks. Pugh’s downfall came from a new source of corruption – the healthcare industry who sought sole-source contracts with the city. The UMMS and Kaiser (through Associated Black charities) purchase of worthless Healthy Holly books in return for business opportunities set a new standard for corruption in terms of direct payoffs of the Mayor.

The solution to the decades of political corruption in Baltimore lies in creating consequences for the business leaders who participate in the activity. John Patarakis and Ron Lipscomb suffered virtually no consequences for taking down Shiela Dixon. It seems like the UMMS and Kaiser officials will also avoid indictment. Until the business community sees tangible consequences from buying off politicians, the corruption will find new outlets, and the culture of low expectations continue unabated.