CBS WJZ-TV | June 24, 2008

BALTIMORE (WJZ) - New information is released in the investigation into Mayor Sheila Dixon as she admits having a personal relationship with a prominent developer.

Mike Hellgren reports prosecutors are now investigating whether Dixon received thousands of dollars in gifts from developer Ronald Lipscomb when she voted on tax breaks and zoning for his projects.

In a new statement to the Eyewitness News, Mayor Dixon says, "In late 2003 and early 2004, I had a personal relationship with Ron Lipscomb. We were both separated from our respective spouses at the time, we traveled together and exchanged gifts on special occasions. Our brief relationship was personal, and it did not influence my decisions related to matters of city government."

Documents reveal investigators were after computer records of the relationship when they raided Doracon Contracting last year. Lipscomb is Doracon's president.

In one case, the document states Dixon voted on a $13 million tax break for Doracon--for the Spinnaker Bay building in Harbor East-- the same day she and Lipscomb went on a lavish trip to New York.

The document also reveals trips the two took to Colorado, Boston and Chicago, and that Lipscomb was at Dixon's birthday celebration in the Bahamas. It raises questions about whether Doracon and Lipscomb paid for travel and lodging expenses.  

The Baltimore Sun published a statement from Lipscomb's lawyer. 

"In Mr. Lipscomb's entire business career, he has never asked an elected official, including Ms. Dixon, to do anything for him or his businesses, but has devoted his time and effort on behalf of legacy wealth for minorities, often at great personal disadvantage." 

The state prosecutor's investigation into money, influence and the mayor is heating up as grand jurors meet.  That could be the critical step before an indictment.  

Documents confirm the prosecutor's office is investigating crimes of "bribery, perjury and misconduct in office."  They are also looking at whether the mayor voted on contracts that benefitted her sister's employer.

They are also looking to see if the city paid her former campaign manager's company thousands of dollars to work on the City Council's computers with no contract.

During proceedings at the Mitchell Courthouse, the prosecutor will question those subpoenaed.  The grand jurors are Baltimore citizens, prohibited by law from talking about what happens.

This week, Anthony McCarthy will appear before them.  He was Dixon's chief of staff when she was City Council president and served as her mayoral spokesman and director of communications until last year.

"We will cooperate fully with the prosecution.  Mr. McCarthy has no idea what they're looking for or what questions they might have," said Dwight Pettit, his attorney.

The mayor has strongly denied any wrongdoing.

"I'm trying to keep the city running and moving and stay focused," Dixon said. "In my heart, I did nothing intentionally in any of this. This has legs on it that's trying to destroy my character."

The prosecutor is also looking at whether Doracon paid for Dixon's fur coats.  The document his office filed reveals Dixon never disclosed any gifts from Lipscomb in statements she signed under oath and required by the city's ethics ordinances.  

"The grand jury is totally the show of the prosecution.  As one expert said the other day, a grand jury can indict a ham sandwich," Pettit said.

At least six of those subpoenaed worked with Dixon when she was City Council president.  Many are current city employees; some still work in the mayor's office.

"They can step out and ask for counsel and they also have the right to take the fifth amendment if they feel that anything is incriminating," Pettit said.

Pat Warren reports Governor O'Malley, who was mayor when Dixon was City Council president, offered his perspective from the Eastern Shore. 

"I hope that everything works out for the best for Mayor Dixon.  I know she was a very strong partner of mine during the years I served the city of Baltimore and I hope things work out.  It's probably not appropriate of me to make a comment other than that."

He also said that he had no knowledge of the relationship between Dixon and the developer.  

Current City Council President Stephanie Rawlings-Blake had nothing but praise for Dixon last week after Dixon's house was searched.  

"This is a woman who when she became leader of our great city, hit the ground running and never stopped," she said.

"No matter how prominent the person is, in America, you're innocent until proven guilty," said State Delegate Jill Carter.

The re-surfacing of the investigation catches many off-guard, leading some observers to believe prosecutors may be getting help from other connections to the mayor.

"One can only guess that it had something to do with the guilty pleas and sentencing of two people who were associated with Mayor Dixon," said political analyst Matthew Crenson.

Dixon has not been charged with any crime.

The mayor has been attending a conference in Florida.  Her spokesman says she will not be back in her office until Wednesday.