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Shadow Players

Drilling Down Into Baltimore's Billion-Dollar "Informal Economy"

Milton Tillman Jr. in a 2006 booking photo
Tony Hill
Frank Klein
Sebastian Sassi
Frank Klein
Glenn Ross


By Edward Ericson Jr. | Posted 1/28/2009

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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.

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Tags: shadow economy, milton tillman jr.

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