Md. court: No evidence Club Harem owner knew of alleged prostitution

The owner of a Baltimore bar and strip club can keep his liquor license because no evidence had been presented that he knew an employee had allegedly offered sex for money to a police officer, a Maryland appeals court has ruled.

In its 3-0 decision, the Court of Special Appeals reversed the city liquor board’s move to suspend Steven Kougl’s license for one month based on evidence that an employee at Club Harem invited an undercover Baltimore detective to touch her breasts and moments later agreed to have sex with him for $100 plus the cost of the room. The Baltimore City Circuit Court had upheld the board’s suspension, saying Kougl had violated board rules prohibiting the solicitation of prostitution, the violation of public morals and indecent exposure in a drinking establishment.

But the Court of Special Appeals said those rules enable the board to suspend licenses only if the licensees had actual knowledge of the illicit activity or that they should have known about it through the exercise of reasonable care and diligence.

Evidence that Kougl had such knowledge was not presented to the board, the appellate court said in its reported decision filed Thursday.

The court concluded that such actual or “constructive” knowledge is necessary based on the rules’ requirement that a licensee not “permit or suffer” any employee soliciting anyone for prostitution or immoral purposes.

The words “permit” and “suffer” imply “knowledge, a willingness of the mind and responsible control or ability to prevent,” Judge Patrick L. Woodward wrote for the intermediate appellate court.

The court was sympathetic to but rejected the board’s public policy argument that the rules impose “strict liability” on licensees, which would have enabled licenses to be suspended regardless of whether the licensees knew or should have known of the illicit behavior.

“Unlawful or immoral activities may be associated with places where alcoholic beverages are sold,” Woodward wrote. “However, one of the primary purposes of the Liquor Board Rules is to clearly inform licensees of their responsibilities regarding prohibited activities so that they can conform their conduct and the conduct of their businesses to be in compliance with the rules. Interpreting the words used in the Liquor Board Rules at variance with their plain meaning does not advance the public purpose of achieving compliance with the rules.”

Kougl’s attorney, Peter A. Prevas, said Monday the court’s “very thorough” decision came down to statutory construction.

“The court rightly had to give the plain meaning to those words” in the rules, said Prevas, of Prevas & Prevas in Baltimore. “Even though the word ‘suffer’ is a bit antiquated, it’s still there.”

Thomas R. Akras, a spokesman for ‎Board of Liquor License Commissioners, declined to comment Monday on the court’s decision.

‘Do whatever’

The controversy arose April 25, 2013, when plainclothes detective Fletcher Jackson entered the club on East Baltimore Street as part of a prostitution investigation. Employee Jamaica Brickhouse allegedly asked Jackson to join her and he bought her a drink, according to the Court of Special Appeals’ opinion.

After some small talk, she allegedly exposed her breasts to Jackson, suggested a lap dance and a trip to a place where they could “do whatever.” Jackson asked how much it would cost for sex and she allegedly replied that it would be $170 for the room plus a tip for services. Jackson said he would tip her $100 and she allegedly agreed, the opinion stated.

Brickhouse was issued a criminal summons eight months later but the state declined to prosecute.

The liquor board charged Kougl with the rules violations on July 2, 2014, nearly 15 months after the incident at the club.

A few weeks later, the board voted 2-1 to suspend Kougl’s license.

After losing his appeal in circuit court, Kougl sought review by the Court of Special Appeals.

Judges Kathryn Grill Graeff and Kevin F. Arthur joined Woodward’s opinion in Steven Kougl et al. v. The Board of Liquor License Commissioners for Baltimore City, No. 935, September Term 2015.