Victor Frenkil, the politically influential Maryland developer, has failed to pay back a $20 million loan -- the first default in his 50-year career, he says -- and foreclosure proceedings have begun against several of his properties.
United States Fidelity & Guaranty Co., a major insurance company here that made the loan to Frenkil in April 1980, filed claims against nine properties in Baltimore and three counties in Maryland that Frenkil had put up as security.
USF&G says the unpaid balance of the loan, including interest, now exceeds $30 million. To get it back, the company has scheduled an auction of the properties Nov. 17 to 19.
Frenkil, a prominent figure in construction and political circles for a generation, blamed his problems today on "two bad contracts" involving the loss of millions of dollars in Washington on the Rayburn House Office Building 14 years ago and, more recently, the new Hart Senate Office Building.
In both cases, improper construction by other contractors caused him costly delays in building garages for the two buildings, he said.
He said that he filed a $13.5 million claim against the architect of the Capitol in the case of the Hart building and a claim of "several more million dollars" in the Rayburn building case, but has recovered none of it. He said he borrowed the $20 million from USF&G in 1980 "because of these substantial losses." Because he has not succeeded in any of his claims, however, he said he does not think he will be able to pay off the loan by Nov. 17 to save his properties from the auction block.
"It's the first failure in our whole history," Frenkil said in a telephone interview. "I've been in this business for 50 years . . . I started out pushing doorbells."
Frenkil, who owns several firms, including Baltimore Contractors Inc. and Empire Construction Co., has erected a number of major buildings, leaving his mark on the Baltimore landscape.
In recent years, he built the $16.3 million, 400-inmate reception center at the Maryland Penitentiary and purchased and restored the old Belvidere Hotel.
He also has been tied closely with political interests in the state and was a friend of former governor Marvin Mandel and a former business partner of state Comptroller Louis Goldstein.
Frenkil was accused in 1977 by the state transportation secretary, Harry Hughes, of improperly pressuring the State Board of Public Works to include one of Frenkil's firms as a subcontractor in the management contract for construction of Baltimore's subway system.
Mandel and Goldstein were two of the three members of the public works board. It initially rejected Hughes' recommendation that Ralph M. Parsons Co. get the prime contract -- triggering Hughes' resignation as transportation secretary -- but later reversed itself after the issue was aired publicly. Frenkil did not get the subway contract.
The properties put up by Frenkil for the $20 million loan include a construction office and an old public transit car barn in Baltimore City, several large tracts in Baltimore and Anne Arundel counties and an island in Dorchester County.