On Oct. 20, 2008, Mayor Sheila Dixon stood on a makeshift stage in the parking lot of Northwood Plaza, just off Loch Raven Boulevard in the city's Hillen neighborhood. Behind her sat several City Council members, a community activist, and the authors of the press conference's subject, a 60-page study that, among other things, claimed to find $1.2 billion of additional spending money in the 13 city neighborhoods studied. Behind the stage, brightly-painted cars with expensive 22-inch chrome wheels cruised by noisily, and behind those, a long-shuttered anchor store slouched.

Former City Councilman Kenneth Harris was gunned down on Sept. 20, during an early morning robbery of the New Haven Lounge jazz club, a few hundred feet away. The murder--the city's 158th last year--galvanized the community to push even harder for the redevelopment city officials believe will stifle and remove the violent crime that has plagued the surrounding blocks. The newly minted economic report, called the "Baltimore Neighborhood Market DrillDown," was presented by the mayor as the evidence needed to convince national retailers that Baltimore City is underrated as a market. The key metric: $872 million of previously uncounted income from what the report calls the "informal economy."

Presented by Social Compact, a Washington, D.C.-based nonprofit that specializes in these studies, the DrillDown "validates what we already knew through intuition and observation," Dixon said, "that Baltimore is a strong market."

Yet "intuition and observation" have also told generations of Baltimoreans that the city is full of drugs, with perhaps 50,000 addicts served by thousands of street-corner drug dealers. It's a substantial business, and not the kind of enterprise near which grocery store owners want to locate. So it is perhaps not surprising that DrillDown's authors finesse the question of just how that $872 million of "informal" income is earned.

"We quantify the informal economy, but we don't say what kind of jobs go into it," says John Talmage, Social Compact's president and CEO.

That admission leads to more questions. How much is Baltimore City's drug economy worth? Who profits?

Over the past year, City Paper has published a series of loosely related stories about what we've come to call the "shadow economy." The articles spotlighted the ostensibly legitimate business interests of those charged and/or convicted with crimes relating to dealing drugs or laundering drug money, and the way that those interests intertwine with the more respectable aspects of the city's economy. As we pursued these stories, politically connected bail bondsman Milton Tillman Jr.'s name surfaced again and again. There remain more questions than answers about the city's drug economy and who its players are, but with a new year dawning, and with hard numbers quantifying the city's "informal economy" in hand, it seems like a good time to examine the situation.

 

Understanding Baltimore's drug market requires knowing its size, yet despite Baltimore's reputation as a town with a serious and long-standing drug problem, government and law enforcement officials at all levels say they have no idea how much money Baltimoreans spend on illegal drugs.

"It's just an impossible figure to guess," says Baltimore Police spokesman Anthony Guglielmi. "How would you do it? Look at tax returns? I did check with our Violent Crimes [division] and they said there's just no way to speculate."

"Baltimore society is heavily influenced by drugs, but I'm not sure how I could break out the question as to the economy," U.S. Attorney Rod Rosenstein told a City Paper reporter in early 2008. According to a Nov. 1, 2008, Baltimore Sun article, the Governor's Office of Crime Control and Prevention and the University of Maryland claimed that 1,800 Baltimore residents belong to 45 known street gangs, but Kristen Mahoney, who heads the office, offers no figures regarding the value of drugs sold in Baltimore. "It's not something that we capture--street value--at my office," she says. A spokesman for the U.S. Drug Enforcement Agency, Ed Marcinko, concludes a weeks-long phone and e-mail exchange on the subject with a succinct, "At this time we can not assist you with your request."

Three years ago Baltimore Health Department Commissioner Joshua Sharfstein estimated the number of Baltimore addicts at 50,000 ("Scoring Data Points," Mobtown Beat, June 14, 2006). Assuming he's in the ballpark, and assuming each drug-dependant individual must raise $50 each day to pay for drugs (half the figure that the Greater Baltimore Committee, a business group, used in its 2005 report "Smart on Crime"), Baltimore's heroin and cocaine market would be worth $912 million annually.

The U.S. Census Bureau estimates that in 2002 "accommodation and food service sales" in Baltimore were worth about $1 billion.

In other words, the drug trade generates a revenue stream comparable to the city's hotels and restaurants, an industry so important politically that the city government pledged $305 million in revenue bonds to build a downtown hotel that opened last year.

Not surprisingly, nobody wants to talk about the drug market in terms of the city's economic development. Social Compact's Talmage, interviewed by phone on Jan. 8, is at first reluctant to speak plainly about the criminal part of the informal economy. "It's not illicit," he responds, but then clarifies: "We can't tell you it's absolutely not illicit. It's more likely to be that second job you do on the weekends, or daycare, or selling your services at a church or community organization."

Talmage acknowledges that his report, based not on direct observation or surveys but on statistical accounting of things like utility bills, would also, broadly speaking, measure income derived from illegal gambling, prostitution, and even receiving bribes.

"I can only make a conjecture--my feeling is that something like prostitution is more likely to count than heroin," he says. "Perhaps some of the heroin and illicit drug trade is recycled inside the community, but so much of that money is exported outside the community."

And, indeed, the nature of the shadow economy makes separating outright criminal profits from money earned honestly but under the table difficult, even in specific cases.

Consider Jose Morales, a career thief and drug dealer who presented himself during the recent housing boom as a contractor under the name Masons Unlimited ("With Impunity," Feature, June 11, 2008). He paid his crew about $12 per hour under the table for their work on jobs as varied as constructing the XS bar and restaurant and (according to charging documents) stealing scaffolding, trucks, and earth-moving equipment. The pay--whether for laying bricks or stealing skid loaders--would qualify in the DrillDown report as "informal" income. Morales is currently jailed in Texas for allegedly trying to smuggle six kilos of cocaine to Baltimore aboard a private jet ("Jose Morales Busted," News Hole, Aug. 19, 2008).

Analyzing Baltimore's informal economy surely means factoring in Jose Morales and others like him. It means tracking the money earned by corner boys up the line in drug organizations, to the men who call the shots, and beyond that to the seemingly legitimate bars, hair salons, and real estate developments that filter the money into the banking system.

It means facing not only Baltimore's well-documented addiction to drugs, but also its apparent, and seldom acknowledged, addiction to drug money, which can turn even a neighborhood cleanup project into a culture-clash.

 

Sebastian Sassi lives in Pigtown, on the opposite side of the city from where Ken Harris was gunned down. When Sassi moved into his brick rowhouse three years ago, he set about cleaning up his neighborhood. He's pushed brooms along the sidewalk, picked up trash around the block, and even got city trucks and equipment to come and aid his efforts. And he's called in tips to police about suspected illicit activities. For that, he says, he is hated.

"There's me cleaning up the neighborhood and chasing out the drug dealers, and people actually resent me for it because I'm chasing away the 'underground economy,'" Sassi says.

The DrillDown report found median household income in Pigtown in 2008 was 21 percent greater than reported in the 2000 census--the largest increase of the 13 Baltimore neighborhoods studied. Population also increased, yet the number of IRS returns from the neighborhood actually declined. This points to off-the-books, "informal" cash that DrillDown estimates makes up 7.9 percent of Pigtown residents' income. Sassi contends that some of it is tied to the drug business, and that the drug business binds many of the neighborhood's families together.

"There are people that, to my face, are extremely grateful" for his efforts in the neighborhood, Sassi, a staunch Libertarian who has run for Congress, explains. "But through the grapevine I'll hear, 'Mrs. So and So hates your guts.' Why would she hate my guts? Well, she hates your guts because her nephew just got a six-month bid in [jail] because you helped get him arrested."

For many neighborhood residents without regular jobs, Sassi says, a government check such as Social Security disability "pays for your property tax and your rent, whatever, but the cable bill and the 20-inch rims on the new car are getting paid for by the work these [drug dealers] are doing."

Whatever illicit revenue flows on Pigtown's street corners, it's not much, Sassi estimates: "These kids wear the same clothes four, five, six days in a row. And they're homeless, basically. I don't think they're actually making that much money. But it's enough to make people resent the work that I've done."

Sassi says someone threw a brick through his truck's windshield and the tires have been slashed. He carries a handgun and has obtained an unrestricted state permit to do so. "One guy told me I'm a snitch-ass, bitch-ass, lyin' police," Sassi recalls.

A group of people outside a corner store nod to Sassi as he walks past. Two teenage boys on another corner see him coming and turn around, press their cell phones to their ears, and walk quickly away. Sassi calls them by name. "He's not a bad kid," he says of one 15-year-old. "He just needs some direction."

Direction is hard to come by in Baltimore, where youth sports organizations, charitable foundations, and even churches have been linked to drug dealers. Steven "Pop" Custis, co-founder of the Leon Day Foundation and coach of the Charm City Buccaneers Pop Warner football team, pleaded guilty last January in federal court to cocaine dealing charges and was put on probation ("Does Cocaine Come With That Lexus?" Feature, July 9, 2008). In August, his business partner, Harrington Campbell, was sentenced to 11 years in prison for his part in the same conspiracy, which involved a Park Heights car dealership called Charm City Motors and the laundering of more than $1.7 million in drug cash ("Unlucky Charm," Mobtown Beat, August 13, 2008). Custis told the judge he quit dealing drugs in 2000, devoting his life instead to mentoring city youth and providing housing for recovering addicts. But in late 2001, the sole director of his company, Metropolitan Baltimore Developers, was Raeshio Rice, the leader of a violent but politically connected drug-trafficking conspiracy which dates to the mid-1990s.

Court records in a federal case filed last July, and other public records, link Baltimore nonprofit Talent Exposition Foundation to an alleged nationwide drug conspiracy. Beverlie E. Ramocan-Woodland, president and founder of the Talent Exposition Foundation, took "an active role in collecting and hiding" the proceeds of her daughter Querida Lewis' alleged drug ring, according to affidavits in the case ("Femme Fatale," Mobtown Beat, Jan. 14). Woodland has not been charged.

"Beverlie is very passionate about making a difference in the lives of at-risk youths, teens and young adults," according to the web site for the Talent Exposition Foundation, which counts as partners such Baltimore stalwarts as the Abell Foundation, the Center for Social Concern at Johns Hopkins, and the East Baltimore Police District.

Another ongoing drug case links violent drug dealers to city officials through a company supposedly formed to "give back" to the community.

Hollywood in a Bottle, a company supposedly dedicated to teaching young people how to break into show business, was funded in part by Baltimore City Comptroller Joan Pratt. Lawrence Schaffner "Lorenzo" Reeves, a partner in the enterprise, was indicted in August on drug trafficking charges along with Devon Marshall and six others ("And Then There Were Eight," Mobtown Beat, Oct. 1, 2008).

Pratt was also one of the subjects, with Baltimore City State's Attorney Patricia Jessamy, City Council President Stephanie Rawlings-Blake, and Mayor Sheila Dixon, of a planned "Women in Power" documentary produced by Hollywood in a Bottle co-founder Lavern Whitt and famed rap producer Kevin Liles, both Baltimore natives. A seven-minute preview of "Women in Power" disappeared from You Tube in the wake of the drug charges. Whitt and city officials have denied knowledge of their Reeves' involvement in the drug business, and have not been charged with crimes.

Tony Hill, bounty hunter and self-described "secret weapon" of Milton Tillman Jr., has multiple convictions (some under different names and birth dates) for bribery, forgery, theft, and weapons crimes. He also has his own church, Covenant Life Family Worship Center, where he ministers to adults and mentors wayward youth.

Hill's mentees may not be learning how to stay away from gang life. Last spring, 21-year-old Brandon Saunders, a former drug dealer, credited Hill with turning his life around ("Preacher, Teacher, Forger, Spy," Feature, April 16, 2008). But Saunders, who has not been arrested since 2007, also spoke proudly to a City Paper reporter of his continuing membership in a Bloods gang set.

 

For years Baltimore Police and city officials have contended that loosely grouped street-corner crews drive to New York City to buy drugs for resale here. Yet recent federal court cases have tied Baltimore defendants to drug trafficking organizations stretching to Florida, Texas, California, and Mexico, suggesting that a few well-connected Baltimoreans orchestrate shipments of pot, cocaine, and heroin purchased from Mexican middlemen who work for (or are part of) international drug cartels.

They have been doing so for more than a decade, according to Fred Brooks, a Remington native and Baltimore City College graduate who, during one nine-month period in 2003, shipped 600 kilos of Colombian coke direct to Baltimore ("The Dealer," Feature, Jan. 9 and 16, 2008). Assistant U.S. Attorney James Warwick, who prosecuted drug traffickers on both coasts with Brooks' testimony, said the networks disrupted by the Brooks investigation were just "the tip of the iceberg in terms of distribution of large quantities of cocaine in the Mid-Atlantic area."

Brooks, currently serving a 10-year prison sentence, says he never gave up his hometown friends. Presumably some of them are still in business.

The DEA's Heroin Domestic Monitor Program reports that Baltimore heroin is, on average, about 45 percent pure. High purity suggests Baltimore is a distribution hub for the drug, according to the Office of National Drug Control Policy, the nation's primary keeper of illegal drug statistics.

Ethan Nadelmann, a professor of politics at Princeton University and drug-policy expert who heads the nonprofit Drug Policy Alliance in New York, says the high purity of Baltimore drugs indicates a highly competitive market, with no monopoly supplier. "So," he explains using a hypothetical example, "the question in Baltimore is, if Joe Blow takes over 40 percent of the market, why is that significant? And it's significant if it's actually having some impact on the supply of drugs in the city . . . or if this person actually has some impact outside the drug market. Does this person have any influence on the legitimate world of business and politics? That would be interesting."

Operators at that level, Nadelmann says, have an interest in ratcheting down the violence and working with police to shut down rivals. "If you have anyone who's in a big enough position to think like a businessman, he wants to reduce the likelihood that people are dying," Nadelmann says. "It goes back to the idea of why were the cops working together with the mob in the old days--there was a payoff, but they also had similar interest in public order."

Baltimore in 2009 is no one's ideal of public order. Yet there is circumstantial evidence that drug dealers and law enforcement have been cooperating here for years. On one hand, according to U.S. Sentencing Commission statistics, federal prosecutors here have doled out sentence reductions for "substantial assistance"--that is, snitching--at almost double the national rate. On the other, newcomers from New York who take over drug corners on the east side tend to get shut down, as the Howard Peppers organization did in 2003, while long-time local street dealers have reportedly been seen palling around with detectives.

Nadelmann, who spent the 1980s researching the DEA's efforts in South America and wrote a book, Cops Across Borders, about how the DEA works in and around corruption in foreign agencies, says such cooperation is commonplace. "If one drug trafficking organization is giving information on others, the police target them, they get their arrests," he says. "And then they either deprioritize the other [cooperating] one or leave them alone."

During the past year or two, federal prosecutors appear to be busy dismantling a large network of related drug trafficking organizations centered in and around Baltimore. In December, for example, Shawn Green was arrested in Pennsylvania after spending more then 20 months as a fugitive ("Return Flight," Mobtown Beat, Dec. 24, 2008). An apartment building he owned in Reservoir Hill (another DrillDown star neighborhood with a thriving illegal drug economy) was seized by the government last spring and sold at auction.

Like Tony Hill, Querida Lewis, and Devon Marshall, Green also has business ties to Milton Tillman Jr., whose 4 Aces Bail Bonds, on the 2300 block of East Monument Street, sits smack in the middle of another of the DrillDown's most interesting study areas.

The DrillDown report sees the area it dubs "East Baltimore Development" as yet another strong market for a grocery store. DrillDown claims the area, an amalgam of Middle East and North Avenue-centered neighborhoods running from Greenmount Avenue to Edison Highway and Sinclair Lane to East Baltimore Street, has an aggregate income 17.2 percent greater than traditional market estimates, with more than $36 million earned annually via the "informal economy." The report claims that between 2002 and 2006 violent crime declined by 32 percent in this area, property crime by 29 percent.

Between 2006 and 2008, 88 people were murdered on the streets of this study area--11 percent of the city's total. Fourteen of the murders were in the area north of Patterson Park, south of Madison Street. It is a neighborhood Glenn Ross knows well.

"They're people of all races," says Ross of the people who buy and sell drugs in his neighborhood a few blocks east and south of the massive, and expanding, Johns Hopkins Medical complex.

Ross has been watching the spectacle for almost 30 years from his home and office on the 500 block of North Milton Avenue: the drug dealers on the corner, the drug users coming up the block, the prostitutes, the hustlers. But Ross, a community activist and sometime political candidate (he is currently a community liaison to 13th District City Councilman Warren Branch), has an eye for pattern and detail, so over the decades he's been able to track the larger movements.

Despite all the killing, Ross says the corner boys cooperate better than the community groups, in part because the community groups split along class, race, and turf lines, and in part because drug dealers sometimes chip in for neighborhood-association block parties, blunting community criticism of the informal economy. On the street, Ross says, a little money buys a lot of loyalty.

"You have drug dealers here, and so a lot of people say, 'How come residents don't tell on the drug dealers?'" Ross says. "Well, these drug dealers pay people. They pay people to hold their stash. They'll pay sometimes $200 or $300 for a basement to cut their drugs. We're talking about single mothers and even some seniors."

These arrangements are by no means universal, Ross says, but they are common. As Ross describes it, the informal economy is a continuum of hustles, from homeless men reselling donated groceries and peddling loose cigarettes for $1 each to full-sized, long-term businesses. He points up the block to an old post office, saying dirty old mattresses have been re-covered there and sold as new merchandise in a store a few blocks south. "We had two chop shops" in the neighborhood, Ross says. Theft of tools and construction supplies from rehabbers has been a popular pastime.

"We tell these developers, when you buy new kitchen cabinets, new water heaters, install them right away," Ross says. "We've seen people stealing two-by-fours, five gallon buckets of paint--anything--circular saws--and selling them up the street to the other guy redoing a house!"

The scams become a way of life. Ross describes a neighbor, discreetly omitting his name. "The guy's on disability," Ross says. "He never worked in his life. He sells drugs. He holds high-stakes card games inside his house, so he always gets the house money. The bedroom upstairs, if someone comes in with a prostitute, he rents it out." This has been going on, says Ross, for "at least 30 years."

Jefferson Street, running east-west through the neighborhood, features two drug corners about two blocks apart, one at Collington and the other at Montford, Ross says. "The Collington group, they're like older guys and they run it more like a business," he says. "They don't have the problems that the younger ones have, the fights, the break-ins." Of the Montford group, Ross says their faces change often, but they're consistently more menacing than the older dealers a few blocks away.

Ross says that the influx into the neighborhood in recent years of Hispanics, mostly men moving north from increasing rents in Canton and Highlandtown, has increased opportunities for hustlers. Slumlords pack 10, 15, and sometimes 20 people in a house, Ross says, and the drug users line up to rob the off-the-books construction workers when they get their pay. The workers who like drugs, Ross says, wait in the vacant houses and give their orders to "runners" employed by the corner boys. Prostitutes are available as runners, too. (In October, police raided a house nearby and charged the proprietor with human trafficking of Mexican prostitutes.)

Asked who runs things in his neighborhood, Ross demurs, talking about "gypsies" from out of town. Ross has a well-earned reputation as a fearless straight talker, but chooses discretion, just like other Baltimoreans who can't--or won't--say the names they've known for years.

 

When City Paper reporters have pursued stories about the city's shadow economy, Milton Tillman Jr.'s name, businesses, and associates often came up, whether anyone was actively looking for them or not. Shawn Green was part owner of The Total Male II, a branch of the clothing store in Tillman's Monument Street building. Tillman once posted his own property to bail out Otis Rich, who was indicted last fall on cocaine trafficking charges in a case linked to the cofounders of Hollywood in a Bottle ("And Then There Were Eight," Mobtown Beat, Oct. 1, 2008). Devon Marshall, an imposing figure in the drug game who was also indicted in that same case, apparently was a tenant of Tillman's ("The Hollywood Connection," The News Hole, Aug. 29, 2008). Tillman allegedly paid the rent on a house occupied by Querida Lewis, until she was arrested on drug-trafficking charges last July ("Femme Fatale," Mobtown Beat, Jan. 14, 2009). Youth mentor Pastor Tony Hill described himself as Tillman's "secret weapon," claiming the state prosecuted him for theft, forgery and bribery only because of a prosecutorial (and possibly racist) vendetta against Tillman--and not because, say, bribing courthouse employees and forging judges' seals might be contrary to the public interest. (A call to Greg Dorsey, a lawyer who often represents Tillman, went unreturned.)

Agents of the FBI, DEA, and IRS raided various Tillman properties on Aug. 18, 2008, indicating that he's under investigation, but no high-level law enforcement official has named him--on the record or off--as a suspect in any drug cases currently being prosecuted. This level of discretion has shrouded Baltimore's shadow economy for generations. Police commissioners, FBI special agents-in-charge, and U.S. Attorneys come and go, and Baltimore does not change.

This is perhaps not surprising in a city so dependent on the money generated by drug sales--and the money allocated to counteract drugs. Charitable foundations and the federal government spend $1 million per week in Baltimore on drug treatment programs, creating hundreds of additional jobs--many of them for recovering addicts--which depend on an amorphous, uncountable addict population. City police draw overtime and seize millions of dollars worth of cars, real estate, and cash every year, leaching wealth from the city's drug economy but never really wounding it.

From an economic perspective, Baltimore's relationship to its shadow economy at first appears schizophrenic: politicians dress the "informal economy" in bows and present it in reports like the DrillDown as evidence of "strong markets," then wrap it in rags for presentation to the federal government in applications for aid. But Baltimore's informal economy exists, like underworlds everywhere, in symbiosis with official institutions.

When new drug crews show up in his neighborhood, Glenn Ross says, the cops beat them, arrest them, and sometime steal from them. Yet he says he's seen drug cops smiling and joking with more established crews. He's complained about it to police officials during community meetings. "The commanders say, 'Well, they have to establish a rapport,'" Ross says. "Bullshit."