A state agency had an option to buy a piece of Eastern Shore property that Maryland House Speaker R. Clayton Mitchell Jr. later helped sell to developer Mark R. Vogel.
The state's plans to buy the tract provide new details of a transaction that has become the focus of state and federal investigations of Vogel, the millionaire developer and racetrack owner recently convicted of cocaine possession, and Mitchell, the powerful leader of the state House of Delegates.
The sale, for which Mitchell received a $100,000 commission, was consummated shortly after the end of a legislative session in which lawmakers debated several bills of importance to Vogel's harness racing tracks in Oxon Hill and Ocean City.
Department of Natural Resources Secretary Torrey C. Brown said last week that he was unaware of Mitchell's involvement during the summer of 1988 as his agency unsuccessfully renewed its efforts to buy the 80-acre parcel near the town of Crisfield. He said the negotiations were dropped when the owners, a partnership of Somerset County businessmen, decided to market the property to a private developer.
Mitchell (D-Kent) knew of the state's interest when he was hired as the broker for the property, about two weeks after Brown renewed a $600,000 offer for the land, according to Daniel M. Long (D-Somerset), former chairman of the House Judiciary Committee.
Long served as Mitchell's attorney, drawing up the listing agreement between Mitchell and the owners.
Long, now a Somerset County Circuit Court judge, said Mitchell made it clear to the property owners that if the state bought the land he would not accept a commission.
Long said there was nothing inappropriate or illegal about Mitchell's involvement in the transaction.
Mitchell, a part-time real estate agent who has served as the House leader since 1987, eventually received a $100,000 commission for selling the land, plus an additional 30 acres, to Vogel for $1.7 million.
Mitchell, who incorporated a real estate business soon after he was retained by the Crisfield owners, has defended the transaction as a straightforward real estate deal in which he received a standard broker's commission. Last week, Mitchell, speaking through his attorney, declined to comment further on the state's interest in the property.
Mitchell's involvement in the transaction has come under scrutiny by State Prosecutor Stephen Montanarelli as part of a broad nine-month investigation into his personal finances and legislative dealings. Federal prosecutors involved in a probe of Vogel's business dealings also are examining the transaction involving Mitchell.
The federal investigators are focusing on Mitchell's involvement in the April 1989 sale to Vogel at a time when several major racing bills were pending before the General Assembly. Mitchell and other legislative leaders killed a proposal for off-track betting.
Mitchell helped save one bill of special interest to Vogel -- a special tax break for Vogel's Delmarva Downs race track in Ocean City -- within weeks of the closing on the property sale. Legislative ethics records do not include any disclosure by Mitchell of his dealings with Vogel.
Vogel said last week that he was unaware that the state had been interested in buying the land when he was approached by Mitchell and his son, a licensed real estate agent, shortly after they listed the property. Vogel said the state has not approached him about buying the property.
The Department of Natural Resources first expressed an interest in the land in 1986, when Crisfield City Manager Julian Tyler wrote to Brown to urge state purchase of the property "as a site for a public beach and park."
The state already owned the nearby Somers Cove Marina, an important county attraction in which the state has invested about $10 million in improvements during the last decade.
DNR secured a six-month option to buy 80 acres of unimproved property for $599,500. The purchase option included the most valuable part of the land owned by the Hammock Point Associates partnership, a 30-acre parcel that had been subdivided for residential development, said Michael Nelson, assistant secretary for capital programs.
But the state's plan hit a snag in September 1987 when the proposed purchase came up for review by the three-member Board of Public Works, which must approve state land purchases. Comptroller Louis L. Goldstein expressed concerns about the price being too high for the Crisfield area, Nelson said.
Members also worried that an adjacent former city landfill, which had been found to be contaminated with PCBs and other hazardous wastes, might contaminate the property, leaving the state liable for cleanup costs, according to Nelson.
Those problems caused the agency to drop the purchase plan until the next summer. At that time, Brown wrote the owners on July 5, 1988, that DNR had a "continuing interest" in the property and believed it could overcome funding problems to complete the purchase during the fiscal year.
Brown suggested in the letter that he and the owners meet to discuss the possible sale, offering to contact them during his visit to the annual J. Millard Tawes Crab and Clam Bake on July 20, 1988. In an interview, Brown said the meeting never took place, and he later learned the owners had decided to market the property privately.
Mitchell has said that he was asked to broker the land during a meeting with the owners at the same Crisfield event. He was introduced to the owners by former delegate Long.
Long said he and Mitchell were aware of the state's interest in the parcel at the time Mitchell was retained. But Long said Mitchell made it clear to the property owners that he "would not collect a commission on any sale to the state."
Long said he could not recall if such language was included in Mitchell's listing contract, but said, "I believe that it was."