True story: On a Saturday evening in mid-September, a middle-aged white man of unremarkable appearance bought a 12-pack of Heineken at the Mount Vernon Food Mart on North Charles Street. He asked the store owner for an opaque bag, explaining that he wanted to sneak the beers up to his room in the nearby Peabody Court Hotel.
This struck a reporter standing behind the man in the register line as curious. Does the hotel have restrictions against guests bringing in their own booze? Might be a story there. Surely he didn’t plan on drinking a dozen beers alone? Might be a party. The reporter ditched his soda on the counter and followed the stranger outside.
“They must be giving away something good,” the reporter said to the man a moment later, by way of introduction, gesturing to the bedraggled line of people queuing up outside the United Methodist Church on East Mount Vernon Place.
“Heroin, probably,” the man said with a laugh.
“Mm.” The man’s smile faded and he quickened his pace.
“If it were heroin,” the reporter quickly added, “the line would be longer.”
The man laughed again. They strolled toward the Washington Monument, trading more immoderate remarks about junkies and the homeless, the man said that his name was Mike. As they neared the hotel, the reporter asked, “So, what brings you to Baltimore?”
Mike said that he was in from Houston on business, and only staying at the Peabody because the Inner Harbor hotels were all booked up. He said he was in real estate.
“Well, what we do is we come in and take properties off the tax rolls,” Mike cheerfully explained, launching into a technical description the reporter didn’t quite comprehend at the time, and certainly can’t transcribe in retrospect, but there was mention of auctions, unpaid water bills, foreclosures . . .
“And then we flip ’em,” Mike said. “Well, here I am. Nice chatting with you.”
He stepped off the curb and walked toward the burgundy hotel awning, about to disappear forever and with him the mystery of the beer. And apparently a terrific property-flipping scheme.
The stranger swiveled around in the middle of the street. “Hey, man, you should really get in on it,” he called out. “It’s a great way to get property.”
“I’d . . . really like to,” the reporter lamely returned. “But how? Who are you?”
“We’re . . . ” Mike called out an unusual name, partly drowned out by distance and traffic, and then added, almost as an afterthought, “but we’re doing business here as MD Liberty Homes. Have a good one!”
It turns out that around the date of this encounter a man matching Mike’s description and calling himself “Mike from Houston” showed up unannounced at a ramshackle Westport rowhouse owned by an entity called Maryland Liberty Homes LLC and told the current tenant he had come to take photographs of her home.
About a week afterward, the tenant of another MD Liberty Homes property, this one on a blighted block in Reservoir Hill, tremblingly tells a reporter that her property manager threatened her with immediate eviction if she went through with a planned photo shoot of her home.
That same property manager, who agrees to speak on the record on condition of anonymity, claims he doesn’t know Mike’s last name, but thinks it might be Remington or Rembrandt. It doesn’t really matter, he says, since Heineken Mike is just a minion.
The guy who does matter, he says, is Mike’s boss, a Houston real-estate speculator regularly referred to in the Buffalo Newsas that city’s “biggest slumlord,” and who was successfully prosecuted in 2003 by both New York Attorney General Eliot Spitzer and the city of Buffalo for hundreds of counts of housing code violations, predatory lending, deceit, fraud, and illegal leases.
Is that why Heineken Mike was here? Having been run out of Buffalo, is the most-prosecuted landlord in that city’s history moving to Baltimore? Not exactly. He’s been here for years.
There’s no phone listing or Web site for MD Liberty Homes in Maryland, but the URL Mdlibertyhomes.com was registered in 2001 with an Internet domain-name registrar by a man named David Moore-Jones, whose e-mail address is listed on the Register.com site as email@example.com.
Wizig is the unusual name Heineken Mike called out across the street.
Type Wizig.com into the address field of an Internet browser and you’re immediately linked to the Web site of Scott Wizig Enterprises, a real-estate company based in Houston, touting hundreds of residential properties. Its motto: “homes for sale/ we finance/ no credit check!!!”
A Lexis-Nexis search turns up dozens of stories in the Buffalo News chronicling the unhappy relationship between the city and Wizig.
In October 2000, Wizig purchased at tax auction a block of 281 blighted Buffalo properties at an average price of $2,200 each. Before being thwarted by a judicial restraining order two years later, Wizig had already sold 10 of these properties at nearly 1000 percent profits, and had contracts in place worth $1.1 million for the sale of 34 others—mostly to low-income renters lured by the dream of homeownership.
Wizig’s Buffalo strategy, according to James Morrissey, the New York state’s attorney who prosecuted him, was to dupe consumers into renting properties and paying a hefty up-front fee to purchase them 18 months later at exorbitant prices. He was also charged with renting inhabitable properties, of failing to make repairs, and of using leases that illegally held tenants responsible for all repairs.
Morrissey says that Wizig was the worst landlord he’s ever encountered. “I’d never before seen a landlord renting apartments with no electricity, heat, or water,” he says in a recent phone interview. “In some cases, the waste system [in the properties] wasn’t hooked up to the sewer system.”
Wizig ended up settling with both city and state prosecutors. He agreed to have his company plead guilty to about 200 housing violations and to contribute hundreds of thousands of dollars to repairs and restitution funds. The municipal charges carried a maximum penalty of 41 years in jail, but Buffalo preferred to settle rather than endure prolonged litigation. “We just wanted him out of the city,” city prosecutor Lenora Foote says.
Headquartered in the Houston suburb of Bellaire, Scott Wizig Enterprises has been selling single-family homes, apartments, land, and commercial properties since 1987. And according to a lengthy investigative report published Sept. 2 in the Houston Press, Wizig may be currently operating a similar rent-to-own scheme in his home city. Craig Malisow’s article describes how Wizig lures aspiring homeowners with lease-option contracts that trick credit-challenged consumers into paying hefty “option fees” and locking into two-year rental agreements—all before their monthly payments (at 12 percent interest) start counting toward the actual purchase of the property. In Malisow’s main example, a Wizig customer would end up paying $116,336 for a house appraised at $69,700—an agreement a Houston attorney describes in the article as “one of the most egregious contracts he’s seen in 14 years of practice” as a tenant-landlord specialist.
And now, it appears, Wizig has brought his business to Baltimore. In Buffalo, Wizig did business under the name NY Liberty Homes LLC; both NY Liberty Homes and MD Liberty Homes list the same Houston mailing address on real property transaction records. In real-estate documents obtained by City Paper that detail the March 2004 sale of an Edmondson Village home by MD Liberty Homes to a person named Tarzan Peterson, Scott Wizig is listed as both the managing member and president of MD Liberty Homes LLC.
According to research prepared by the Community Law Center, a public-interest law firm located in Charles Village, MD Liberty Homes LLC currently owns 29 properties in Baltimore and has sold five others. All of the properties were purchased between 2001 and 2003 and are located in poor areas of East, West, and Southwest Baltimore. Fifteen of the 29 have been cited by the city for housing code violations.
In addition to MD Liberty Homes, Wizig is known to have chartered at least two other Maryland limited liability corporations, Wiz Homes and MD Specialty Homes. Of the 15 Baltimore properties currently owned by these two entities, eight have open housing code violations on file with the city’s Housing Authority.
Although City Paper has learned of no instances where any of Wizig’s companies have financed the sale of their Baltimore properties to consumers through rent-to-own contracts, a sales document obtained by CP—faxed on May 14, 2004, from Scott Wizig Enterprises Inc. to a Baltimore property management company—advertises the sale of these residences using language suggestive of such financing arrangements. For example, 2237 Ramsey St., a vacant house (with an open housing code violation) in Carrollton Ridge, is advertised: “3 bedroom 1 bath, lease option 12 months $1,500 dn = $495.00 month or $34,999 w/$2000 dn or $32,500 w/$3,000 for 20 yrs.”
Because Wizig uses LLCs to purchase properties, and because Maryland law doesn’t require LLCs to disclose the identities of their members, there may be no way to know for sure how many properties the Texan owns in Baltimore.
Neither Scott Wizig nor any of his companies are now or have ever been under any type of criminal investigation in Maryland—nor had any local government official contacted by City Paper ever heard of him.
"He said if I went through with this he was going to send me out. I’m not sure what to do, because I don’t have nowhere to go.”
The phone message is left by Antonetta Queen, who rents an MD Liberty Homes-owned rowhouse on the 2800 block of Parkwood Avenue, near Druid Hill Park Lake. Three days earlier she had been eager to have her property photographed in connection with this article. When reached by phone, Queen says that her property manager had subsequently threatened her with eviction if she agreed to go through with it.
In an earlier phone interview, Queen had described the three-bedroom unit as barely habitable. In addition to a rat infestation, she said there was a buckling ceiling in one of the bedrooms and a hole in the kitchen wall behind the freezer that “goes all the way down to the basement.”
“I’ve been trying to get him to fix the roof and the ceiling in the back bedroom,” she said, adding, “I pay $552 [a month] for this condemned property. When I moved in, he said he would be out in three months for lead [inspection]. He ain’t never come.” She’s been living there with her three daughters and a granddaughter for more than a year. Before that, she and her family had been homeless for seven months, sleeping in a cousin’s basement.
Queen is lying, says Jeremy (who asked to be identified by a pseudonym), the property’s manager, both about the condition of the property and the eviction threat. “I told her if she does an interview against [Wizig] that he has a right to cancel her lease,” Jeremy explains. “And I told her that I don’t want to lose her. But me threatening eviction is not what happened.”
As for the neglected repairs, Jeremy says, “I don’t know about that. I know when she moved in, we’d done our renovation on it.”
Jeremy, who manages more than 300 properties in Baltimore for around 50 accounts, doesn’t want his identity revealed for fear of alienating Wizig (one of his larger clients) and other property owners. But he’s eager to disprove any lingering impression that he may have threatened a tenant with eviction for speaking to the press. He offers to let a reporter listen in on a follow-up phone conversation between himself and the tenant.
“Hey, babe, [Jeremy] again,” he says to Queen when he calls her a few minutes later. “Did you get a hold of the newspaper people?”
“Yeah, I did,” she says. “Everything’s OK. I told him I wasn’t gonna to go through with it.”
“You don’t feel like you’re threatened in any way, do you?” Jeremy says.
“I know you’re not one of our drug users, hon. Your house is clean, right? I just don’t want them to see a dirty house. You keep it clean, right?”
Queen wearily affirms Jeremy’s confidence in her housekeeping skills, and then reminds him of the rats in the basement and the hole in the bedroom ceiling. Jeremy assures her he’ll be happy to send over a maintenance man the following day or even place her in another of his units, if she prefers. She seems to like the last idea.
“Now, did that sound coerced?” Jeremy asks, after Queen has hung up.
As for Queen’s complaints about his neglecting to repair her property, “She was just having a bad day and wanted to take it out on somebody,” Jeremy says. “She’s been known to get nasty,” he adds with a good-natured chuckle, “but we straighten her out.”
Compared to most of Wizig’s Baltimore tenants, he says, Queen is a solid citizen. “Most of [Wizig’s] tenants are horrible,” he says. “They’re not capable of holding jobs. Otherwise they wouldn’t live in these places. These are lower-income people. Most of them are young drug users.
“I put people in beautiful houses,” Jeremy sighs, “houses that even you and I could live in. And they destroy them in two months.”
Perhaps that’s why he didn’t object to a City Paper photographer visiting another Wizig tenant, Doretha Watkins, who lives in an end-of-row rowhouse in Westport, a hardscrabble neighborhood nestled among the decaying industrial waterfront south of Locust Point.
A thin, 43-year-old woman, Watkins keeps a clean house. The beds are tidy, the modest collection of CDs and videos neatly arranged on the living room bookshelf. Apart from the roaches scurrying about on the floor, the kitchen is spotless. If it had windows, the dank cellar where Watkins’ niece and nephew sleep would be almost homey. The three upstairs bedrooms are reserved for Watkins, her husband, and two elderly uncles.
The rent on the 600-square-foot home is $525, payable by hand to the maintenance man, Dave, who comes by every month to collect a money order. One of Jeremy’s employees, Dave is not as punctual with repairs as he is with collections, Watkins says.
“Ever since we moved in here,” she says, “they have not fixed a thing.”
Heineken Mike came by recently to take photographs of the property. “He said he was here to see about the things that haven’t been done,” Watkins says, but she isn’t holding out much hope for improved service. Anyway, Mike didn’t stay long. “Said he had to catch a 5:20 back to Houston.
“He had on jeans and a nice pair of comfortable walking shoes,” Watkins recalls, her thin lips pursed into a tight oval. “He was well-groomed.”
Despite her obvious efforts at neatness, the physical condition of Watkins’ home makes Antonetta Queen’s complaints appear quaint by comparison. The living room floor tilts rather sharply downward, toward the front door. There’s a hole in the kitchen wall left over from an electrical fire that started earlier in the summer. The floor around the upstairs toilet is soft and squishy.
“When you sit on the toilet, the whole thing moves,” says Morris Akes, 35, Watkins’ nephew. “And my uncle is like 300 pounds,” he adds ominously.
Far more disturbing evidence can be found outside. The cement foundation wall on the south side is literally coming apart from the rest of the house, leaving visible gaps into the basement. The brick wall above is perceptibly bowed out, as if weighed down by the roof. The building looks like it actually might crumble.
Neither the Parkwood Avenue nor Sidney Avenue properties are among the 23 known Wizig-owned properties currently cited for housing code violations, which begins to explain why the Texan’s investments in Baltimore have gone more or less entirely unnoticed by the bureaucrats charged with protecting tenants like Doretha Watkins from unscrupulous landlords.
Housing code enforcement is a complaint-driven process, explains Kenneth Strong, who heads the homeownership program in the city’s Department of Housing and Community Development. If tenants don’t come forward, neglected properties tend to also get neglected by law enforcement.
Still, “to have 50 percent of your properties with code violations is a pretty damning indictment of [Wizig] as an owner,” Strong says. He suggests checking with Michael Braverman, chief of the Housing Department’s code-enforcement division, to see if Wizig is already under any official scrutiny.
“The Housing Inspection Services Division has not forwarded any properties by any of [companies known to be associated with Wizig] to my shop for litigation,” Braverman says. The reason for that, he speculates, is that Wizig’s known holdings in the city don’t fit into the prosecutorial strategy guided by directives from the Mayor’s Council on City Living Report, a February 2003 document that recommended “stepped up code-enforcement” in certain “stabilization” and “reinvestment” areas.
According to the report’s typology, neighborhoods in the “stabilization” category, such as Greater Lauraville and Ashburton, are areas with relatively high homeownership and low vacancy rates. “Reinvestment” areas are identified as having “moderate real estate values . . . and average homeownership rates,” like Rosemont and Govans.
The location of Wizig’s properties mostly fall into the council’s “redevelopment area” category—neighborhoods so deteriorated and dense with abandoned buildings that the city has little hope of a market-driven recovery, and are consequently not a priority for code enforcement. That means little scrutiny for those who invest in the city’s most decrepit neighborhoods, even if they don’t improve their properties, or even if they allow them to deteriorate further.
“Frankly, if I had the dough to hire another prosecutor just to [target] landlords, I’d [do it],” Braverman says.
Another reason for Wizig’s heretofore anonymity in Baltimore may be attributed to his method of property acquisition here. Where in Buffalo he made a public splash with a one-time purchase of nearly 300 homes at a city auction, in Baltimore Wizig’s purchases have been made singly—usually through bank foreclosure sales, but also through an unusual and possibly unanticipated use of the city’s tax-sale process.
Every May, the city must, by state fiat, put up for auction thousands of property liens generated by delinquent property taxes or long-overdue municipal charges, such as water bills. In effect, the city is auctioning off to the highest bidder the right to take and hold—or sell—the property, if the owner fails to pay his or her bills. If the delinquent owner doesn’t redeem the lien within six months, the new lien-holder can start foreclosure proceedings.
In the vast majority of the cases, say tax-sale experts, the tax-sale investor isn’t interested in the property itself, but in the 18 percent interest he or she gets to charge the delinquent owner in exchange for acting as a freelance debt collector on behalf of the city.
If, however, you’re in the business of acquiring generally undesirable properties for very cheap prices—like Scott Wizig—you might well purchase tax certificates for properties whose owners you believe are unlikely to redeem, because you can then take them to court and end up acquiring a property for the price of an unpaid water bill.
This is exactly what Wizig appears to be doing in Baltimore—and what Heineken Mike must have meant by “taking properties off the tax rolls.” For example, during the 2002 tax sale, Wiz Homes LLC successfully bid $1,382 for a tax lien on 3029 Windsor Ave., a HUD-owned vacant house in West Baltimore. When the federal Department of Housing and Urban Development failed to redeem the lien, Wizig obtained a judgment of foreclosure in January of this year.
While clearly a tedious method of property acquisition, it can yield a tidy profit. Just seven months after obtaining title, Wiz Homes sold the Windsor Avenue property to an individual investor, Un J. Lee, of Rockville, for $26,000—a 2,000 percent profit, minus attorney fees.
And because tax-sale investors aren’t expected to end up owning the properties whose liens they buy, there is no vetting of bidders to ensure they have no criminal history as landlords.
“This is a legal method of acquiring property, and state law governs what the city has to do,” says Michael Bainum, director of the city’s Project 5000, which is similarly using the tax-sale process to acquire thousands of derelict properties. “As long as [Wizig] meets the minimum legal requirements for a tax-sale purchase, the city is obligated under state law to sell them to him.”
Though Wizig has been implicated in predatory lending and property flipping in Buffalo and Houston, he hasn’t caught the attention of Baltimore authorities and community activists. Despite advertising “suspiciously high” sale prices for mostly vacant properties in undesirable neighborhoods, “Wizig would not have shown up on our radar screen, as someone who is engaged in property-flipping fraud,” says Diane Cipollone of the Community Law Center.
Illegal flipping is commonly defined as the quick purchase and resale of property at falsely inflated prices. The difference between the purchase and sale prices of the properties Wizig has sold so far aren’t so egregiously inflated (the assessed value of the Windsor Avenue home, which Wizig bought for $1,382 and sold for $26,000, was last assessed by city as being worth $69,820), and so they don’t automatically suggest the use of fraudulent appraisals, which is typically how illegal flippers convince naive buyers to overspend. And so far the Community Law Center’s “Project to End Predatory Real Estate Practices,” which Cipollone heads, hasn’t heard from any Baltimore residents complaining about Wizig’s companies in the sort of lease-to-own schemes he operated in Buffalo.
For this, Jeremy says, local tenants have him to thank. Wizig’s Baltimore property manager contends that Wizig routinely pressures him to put tenants into such contracts, but that he refuses to comply, out of consideration for the tenants.
Actually, it’s Jeremy who’s to blame for the whole mess, Scott Wizig says, when finally reached by phone in Houston.
“You’ll probably have a hard time believing this,” he says in a slow drawl, “but we really want to know that these properties are being maintained and that these tenants are being taken care of.”
To that end, Wizig says he flew Heineken Mike—his name really is Mike, though Wizig declined to reveal his last name—out to Baltimore to take photographs of the tenant-occupied properties.
“I can tell you that we’re not happy with the current management situation in Baltimore, and we’re going to look at all the properties we have rented, and if there are any problems we’ll certainly address those,” he continues. “We’re going to most likely be changing management companies.”
Wizig tells City Paper that his companies own a total of 39 properties in Baltimore, all purchased since 2001, and have sold about 10. He says he has sales pending for 12 other properties—to investors, not homeowners. He acknowledges that he operates in Maryland under the names MD Liberty Homes, MD Specialty Homes, and Wiz Homes. These claims are consistent with the information City Paper was able to independently verify.
Wizig concedes that “we clearly made some mistakes in Buffalo,” but says that his unhappy experience there—and his first three years in Baltimore—have caused him to rethink his strategy.
“It’s always difficult to manage rental properties from another state, where you don’t have much hands-on, day-to-day dealings,” he says, adding that “we don’t anticipate doing any more rentals with new customers [in Baltimore], but we are certainly going to look into and make sure the existing customers are being taken care of.”
As for the lease-to-own schemes for which he was prosecuted in New York—and is infamous for in Houston—Wizig says those are not his focus here.
“We’re not doing any lease options in the city of Baltimore,” Wizig says. “At one point we contemplated doing that, but we just felt like it just was going to be a challenge to manage. We’re not opposed to selling properties to an owner-occupant, but lot of these properties need so much work and repairs they really seemed to be better suited for investors.”
Wizig also emphatically denies that he’s a flipper. “We’re not involved in flipping, nor would be involved in anything of that nature at all,” he says.
For his part, Jeremy responds to Wizig’s finger-pointing with incredulity. “This is a situation where the owner is trying to hide behind the management company,” he says. “But I can’t make repairs without his permission, and he hasn’t paid me for the last two months of work. I don’t work for free. If a tenant calls me right now with a big problem, they’re gonna have to sit on it.”
Which doesn’t bode well for Doretha Watkins, whose Westport rowhouse was still standing at press time but continues to languish in disrepair.
Neither does it bode well for Baltimore. “I think [the city] should be very worried,” says Buffalo’s city prosecutor, Lenora Foote. “I’m not sure what type of system [Baltimore] has in place with respect to housing-code enforcement, but they should really stay on top of any of the properties that Mr. Wizig purchases.”
Wizig gives no indication of leaving Baltimore any time soon: “I believe in Baltimore. The city is starting to turn around, and there are a lot of positive things happening.” He says his busy schedule doesn’t permit him to visit as often as he’d like, but he particularly enjoys hanging out in Canton and “Fell’s Park.”
“I think that at this point, we’re really just experimenting with a small number of properties and seeing how it works,” he says. “We’re taking a wait-and-see attitude.”
As for Heineken Mike’s pains to smuggle beer into his hotel room, Wizig is not a drinking man and doesn’t want to speculate. “It does seem odd, though,” he says. “The last time I checked, buying a 12-pack of Heineken was legal.”
And so is bringing it into your hotel room at the Peabody Court. “Guests can and do bring whatever possessions into the hotel guest room and are permitted to bring their own alcoholic beverages into the room. State law, to our knowledge, does not prohibit the consumption of alcoholic beverages provided that the persons possessing and/or consuming the alcoholic beverages are of legal age,” hotel manager Jason Curtis noted in a written statement provided to City Paper.
In short, Mike didn’t need that bag at all.