Mark Raymond Vogel, the developer and racetrack owner arrested last week on a cocaine charge, has used his interests in Maryland racetracks to prop up his troubled real estate empire, according to court records and racing sources.
Vogel, 42, whose monopoly on harness racing in the state has raised concern about the sport's future in Maryland, pledged track proceeds in August as collateral for a Riggs Bank loan on the $400 million Bowie New Town Center, court records show.
The arrangement came after what state legislators said was a promise from Vogel not to underwrite his other ventures with the assets of his state-regulated harness tracks.
Racing officials also have discovered that Vogel withdrew as much as $2 million from the tracks, apparently to support other ventures.
Vogel's attorney, Paul Mark Sandler, acknowledged the withdrawals, saying "he never believed that taking proceeds from the track was improper under the circumstances, because he had invested millions of his own funds into the track." Vogel is the sole owner of Rosecroft Raceway in Oxon Hill and Delmarva Downs, near Ocean City, Md.
Sandler said he had no knowledge of Vogel's most recent financing arrangements with Riggs.
One of Vogel's partners in the Bowie New Town project said that he and another partner had not received any of the proceeds from sales at the development. Joseph Kies estimated sales at the development at $20 million, but said neither he nor Jeffrey Weidig, who have a combined 10 percent in the development, had received any money from Vogel.
The pledge of track proceeds is evidence of mounting financial troubles for Vogel, whose property holdings stretch from central Virginia to the Maryland coast.
He now faces foreclosure on one of his projects, a $600,000 federal tax lien and mounting bank debt in addition to the cocaine possession charge. New Jersey racing officials say that his planned $17 million purchase of the Atlantic City Racetrack is in jeopardy because he has been unable to raise the money.
Vogel, of Potomac, was arrested Sept. 13 in Fairfax and charged with possession of four grams of cocaine, worth about $400. He was released on $10,000 bond and intends to plead not guilty to the charge, according to his lawyer, Plato Cacheris.
The arrest resulted from a probe by the U.S. Drug Enforcement Administration. Federal law enforcement sources say they are also investigating land transactions and zoning decisions among a prominent group of developers, lawyers and politicians.
After inquiries from state racing officials, Vogel agreed earlier this week to turn over the daily fiscal management of his two racetracks.
However, no agreement has been signed, and state authorities said they plan an extensive examination of Vogel's management and will conduct a hearing next week.
Commission members said they decided earlier this month to force Vogel's removal from day-to-day racing operations if he did not voluntarily step aside.
Members were concerned about complaints that Vogel was not promptly paying horse owners their winnings, was forcing employees to cash their paychecks at the track and had failed to make available money from an escrow account for former Delmarva Downs stockholders. The commission has the authority to revoke or suspend a track owner's racing license.
"We were concerned about the damage this might to do to horse racing. It looked like his financial responsibilites were so great that he couldn't crawl out of them," said Eric Frederick, a commission member.
Vogel entered the racing industry with his 1987 purchase of Rosecroft and subsequent acquisition of Delmarva Downs and the Freestate Racing Association -- holdings that gave him control of harness racing in Maryland.
Vogel has often appeared before the state legislature and racing commission in search of tax breaks, legislation to establish off-track betting parlors and a controversial transfer of racing dates to Rosecroft.
Senators who have questioned the developer say he consistently assured them that he would not use racing assets to underwrite other debt.
"I originally raised the question . . . could Rosecroft stand on its own and was it separate and distinct from all of his other holdings?" said state Sen. James C. Simpson (D-Charles). "They assured me that it stood on its own."
Horse racing is a strictly regulated industry that requires owners to account for the revenue they receive and how it is used. Because it is within the state's authority to allocate lucrative racing days, ownership of racetracks has been carefully watched.
Recently, concern has grown over the future of the state's harness racing industry if Vogel's real estate ventures collapsed.
Under the financing arrangement with Riggs, Vogel pledged as collateral $1.25 million, plus another unspecified amount owed to him by his racing subsidiaries, Montgomery County court documents said.
Staff writers Debbie M. Price, Veronica T. Jennings and Vinnie Perrone contributed to this report.