Letter to Maryland Attorney General

Issued: July 8, 2019

Dear Attorney General Frosh,

I have been a resident of Baltimore City’s Station East neighborhood since December 27, 2017. The Station East neighborhood is the product of a partnership between the Historic East Baltimore Community Action Coalition, Inc. (HEBCAC), a nonprofit community development organization, Baltimore City, and Johns Hopkins University.

I have become aware of certain conduct and practices, which I feel compelled to bring to your attention. I consider the actions taken by HEBCAC and Eager Street Development (ESD) 28 LLC, HEBCAC’s for-profit entity, to possibly constitute unethical or unlawful conduct. I have reason to believe that Edward Sabatino, Executive Director of HEBCAC and Managing Partner of ESD 28 LLC, and Jeff Thompson, Deputy Director of HEBCAC and Managing Partner of ESD 28 LLC, have participated in collusion and misuse of city, state, and federal funds by participating in unethical business practices. I, therefore, bring the following summary of their actions to your attention to help foster community and a community organization based upon honesty and accountability.

  1. Each resident of Station East signed a Historic Tax Credit Agreement with the Seller, ESD 28 LLC. The agreement specifically states that, “in order to make the Property more affordable to Buyer, HEBCAC will advance certain funds to Seller for the renovation of the Project. Seller has agreed to sell the Property to Buyer for a refunded price because HEBCAC advanced such funds [the Maryland Historical Trust (MHT) Homeowner Tax Credit] to Seller”. However, to date, HEBCAC has not disclosed the financial discount provided to the buyers. I believe there was no financial discount. In most instances, the buyers’ homes appraised for purchase price.

  2. Edward Sabatino and Jeff Thompson fraudulently inflated expenses associated with the MHT Homeowner Tax Credit to deceptively increase the amount of the MHT Homeowner Tax Credit. As a part of the contract between the homebuyers and ESD 28 LLC, Jeff Thompson completed and submitted on behalf of the buyers the MHT Homeowner Tax Credit application. In a retrospective comparison of 5 homeowner MHT Homeowner Tax Credit applications, I discovered several areas of falsely increased prices. For example, 901 N Port and 903 N Port were charged $4500 for a basement entrance/exit way; however, 903 N port has no basement entrance/exit way. Additionally, 2324 Ashland Ave kitchen appliances cost $5,445.76, according to the December 24, 2017 receipt from Home Depot; however, their MHT Homeowner Tax Credit application reported the cost as $5,884.00.

  3. On February 28, 2019 at 1:30 pm at the law offices of Gordon Feinblatt (233 East Redwood Street), I and 4 of my neighbors met with Edward Sabatino to mediate our dispute concerning the unfair, deceptive, and inequitable deed riders placed on our homes. We also reported strikingly similar difficulties with attempting to have structural issues properly addressed with our homes under the Seller’s 1-year home warranty. In preparation for the mediation, each of us had our homes inspected, which identified numerous structural issues. Edward Sabatino disregarded the structural issues with our homes and presented a falsely inflated pricing structure to support the claim that HEBCAC and ESD 28 LLC extended us a discounted price. For example, Edward Sabatino presented that HEBCAC and ESD 28 LLC spent $31,000 each for 901 N Port and 903 N Port; however, the cost of these homes was $1000 each.

  4. Following the mediation, Edward Sabatino filed a lawsuit against 4 residents, stating HEBCAC and ESD 28 LLC made “the property more affordable” for the residents. Once again, Edward Sabatino provided false documents to support his claim. Even worse, Edward Sabatino filed the lawsuit without the approval of the HEBCAC Board. When I alerted the HEBCAC Board of the lawsuit, they immediately filed a notice of voluntary dismissal without prejudice in the Circuit Court for Baltimore City.

  5. The homes in Station East were sold to residents as “high-performance homes engineered for energy efficiency, cost savings, and comfort;” however, the homes were not built to quality. HEBCAC sold the residents of Station East homes with known structural defects in the basement and roofs. To date, my neighbors and I have an estimated $470,000 in structural repairs for 5 homes. HEBCAC agreed to pay for our repairs on April 5, 2019, using general contractors of our choice; however, HEBCAC has not released funds to fix our homes.

  6. HEBCAC and ESD 28 LLC engaged in unethical business practices, misusing city, state, and federal funds. I believe, ESD 28 LLC, a for-profit entity, used HEBCAC’s name to gain access to city, state, and federal funds set aside for nonprofit entities to provide affordable housing in Baltimore City. For example, Baltimore City sold ESD 28 LLC 31 homes for $31,000 because purchasing the properties below the appraised value enabled ESD 28 LLC to make them affordable to the prospective buyers. However, these homes are not considered affordable for the Milton-Montford community. The current sales prices start at $240,000. To date, ESD 28 LLC has sold 39 at a total cost of $7,348,143.26. Given that HEBCAC reported it would only cost $150,000 to fully rehab these homes, they’ve earned a total $1,498,143.26. This profit doesn’t take into consideration MHT Homeowner Tax Credit funds returned to HEBCAC by each resident (about $30,000 per home) or other State and Federal funds, like lead abatement (about $35,000 per home). It’s important to mention HEBCAC charged ESD 28 LLC about $30,000 per home for development fees. In essence, Edward Sabatino charged—and paid, no less!—himself for the project.

  7. Residential Title company, the title company used by majority of the Station East residents, committed cloud on title by not disclosing liens on our homes. HEBCAC and ESD 28 LLC took out a loan from Healthy Planet LLC, owned by Winstead Rouse, using 901 N Port and 903 N Port as collateral. I've found 3 partial releases for other properties in the Station East community used as collateral in this lien. What's more concerning, residential title company was the title company that initially administered the lien on my home to Winstead Rouse.

I provide these observations to you as a concerned resident, with the knowledge that a Johns Hopkins’ nonprofit designed to help the East Baltimore community is causing the constituents it’s dedicated to serve harm. I would be happy to discuss and share any details regarding the information above with you. Baltimore city is indeed undergoing a turbulent time. We’ve seen numerous examples in the past months of corruption and embezzlement in our state government. It took the courage and conviction of a few to expose the hidden corruption within; therefore, as a loyal and dedicated member of this community, I felt morally compelled to bring these issues to your attention.