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Defense attorneys in Bales case trash former co-defendant

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SOUTH BEND — Indianapolis attorney and developer Paul J. Page is no longer a co-defendant in the fraud trial of real estate broker John M. Bales and a partner after agreeing to a plea deal, but you wouldn't know it from the action Tuesday in the U.S. District Court for the Northern District of Indiana.

Only now, rather than federal prosecutors, it's defense attorneys for Bales and co-defendant Bill Spencer who are targeting Page.

The defense hopes to convince the jury that it was Page who committed "financial fraud" as the official owner of an Elkhart office building leased to a state agency. The government alleges Bales secretly put up the equity for Page to buy the building and get a loan in exchange for a cut of profits, in violation of his firm's real estate contract with the state of Indiana. Spencer helped arrange the transaction.

In his opening statement, Spencer attorney Bernard Pylitt called Page a "pig" for withdrawing $50,000 out of an account tied to the Elkhart building, a "pig" for turning down reasonable offers to sell the building, and a "thief" for collecting more than $150,000 in income from a building he got for free.

Pylitt suggested Bales and Spencer had no choice but to deal with Page's demands so they could meet a deadline to secure safe office space for the Department of Child Services. Other developers had turned down the deal, and Page only wanted in if he didn't have to put up any money.

Bales attorney Larry Mackey noted that his client is the only individual to lose money on the deal. Bales invested about $362,000, while Page borrowed the rest — about $931,000, including funds for preparing the space for occupancy — from Huntington Bank. He told the bank he would be the 100-percent owner with no other debt.

"Paul Page lied to Huntington Bank," Mackey said. "We're not going to disagree with that. Bales and Spencer had nothing to do with that lie."

Neither side has mentioned in court that Page also was charged with a crime, which is likely a strategic decision since there's no rule preventing disclosure. Page agreed in early January to plead guilty to one count of wire fraud in exchange for his cooperation with federal prosecutors. Assistant U.S. Attorney Jesse Barrett has indicated in court that he does not expect to call Page.

Indianapolis attorney Robert W. Hammerle, who represents Page, said the name-calling reflects more on Bales and Spencer than his client.

"These types of childish accusations remind me of Lance Armstrong's personal dismissal of former teammates who, like Paul Page, came forward and told the truth," Hammerle wrote in an email. "Once he was forced to come out from hiding, Mr. Armstrong now looks like a colossal cheating fool, and who can trust him?"

The description of his client as a "pig", he said, is actually an improvement over the original label Bales chose when he named the limited liability company that owned the Elkhart building L&BAB LLC, which allegedly stands for "lazy and broke-ass bitch."

"Like it or not, the evidence is clear that Mr. Bales and Mr. Spencer orchestrated this matter from the beginning," he said. "Whether they committed a crime is up to the jury to decide, but any attempt to personally diminish Mr. Page says more about their character than anyone else."

The government opened its case Tuesday with testimony from Carrie Henderson, who led the Indiana Department of Administration and oversaw Venture's work from May 2006 to January 2009.

She said she viewed Venture as a partner and overall was satisfied with the company's work for state government on a demanding contract.

But she also recalled a conversation between her and Bales that may prove critical for the government's case. She testified that, early in her tenure, Bales suggested that Venture could provide financing for state-leased buildings to help close deals.

"I told him that was creative, but we absolutely couldn't do that kind of deal with the state of Indiana, even if fully disclosed," Henderson said. "I made a very strong statement to say we can't do that kind of deal here. You have to be transparent. You can't work both sides of a transaction."

Barrett, the prosecutor, asked Henderson whether IBJ's coverage of Bales after her tenure at IDOA gave her concern. She responded that she couldn't be certain all of the information in the stories was accurate.

On cross examination, Mackey sought to broaden the jury's focus away from the Elkhart deal, asking Henderson about Venture's work on the disposition of surplus state property and other lease deals around the state.

He also drew attention to the fact she didn't move to edit Venture's contract, upon annual renewals, even after the conversation with Bales in which she expressed her disapproval of the firm working both sides of a deal.

Later, Pylitt asked Henderson why she ignored calls from Barnes & Thornburg attorneys and a defense-hired private investigator to sit down for an interview, after meeting with prosecutors repeatedly. Her response: She couldn't say no to a subpoena.

The trial resumed Wednesday morning with testimony from former IDOA Commissioner Mark W. Everson, who served after Henderson. He began his testimony late Tuesday.

Another government witness likely to testify Wednesday is Matthew Dyer, who served as Venture's controller and is expected to address the nature of the deal between L&BAB LLC, which owned the Elkhart building, and the Bales-controlled BAB Equity LLC, which provided the down payment.

The defense has described BAB Equity's cash infusion as a loan, but has not addressed why a lender would use the word "equity" in its name since equity, by definition, means ownership.

The defense is concerned enough about Dyer's potential testimony that it dug into his background and is asking U.S. District Judge Robert L. Miller Jr. for permission to introduce evidence to challenge his credibility. Specifically, the defense alleges Dyer submitted a false insurance claim on a stolen vehicle at the same time he was giving false testimony to the FBI.
 

The IBJ is a sister publication of Indiana Lawyer.

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  1. A traditional parade of attorneys? Really Evansville? Y'all need to get out more. When is the traditional parade of notaries? Nurses? Sanitation workers? Pole dancers? I gotta wonder, do throngs of admiring citizens gather to laud these marching servants of the constitution? "Show us your billing records!!!" Hoping some video gets posted. Ours is not a narcissistic profession by any chance, is it? Nah .....

  2. My previous comment not an aside at court. I agree with smith. Good call. Just thought posting here a bit on the if it bleeds it leads side. Most attorneys need to think of last lines of story above.

  3. Hello everyone I'm Gina and I'm here for the exact same thing you are. I have the wonderful joy of waking up every morning to my heart being pulled out and sheer terror of what DCS is going to Throw at me and my family today.Let me start from the !bebeginning.My daughter lost all rights to her 3beautiful children due to Severe mental issues she no longer lives in our state and has cut all ties.DCS led her to belive that once she done signed over her right the babies would be with their family. We have faught screamed begged and anything else we could possibly due I hired a lawyer five grand down the drain.You know all I want is my babies home.I've done everything they have even asked me to do.Now their saying I can't see my grandchildren cause I'M on a prescription for paipain.I have a very rare blood disease it causes cellulitis a form of blood poisoning to stay dormant in my tissues and nervous system it also causes a ,blood clotting disorder.even with the two blood thinners I'm on I still Continue to develop them them also.DCS knows about my illness and still they refuse to let me see my grandchildren. I Love and miss them so much Please can anyone help Us my grandchildren and I they should be worrying about what toy there going to play with but instead there worrying about if there ever coming home again.THANK YOU DCS FOR ALL YOU'VE DONE. ( And if anyone at all has any ideals or knows who can help. Please contact (765)960~5096.only serious callers

  4. He must be a Rethuglican, for if from the other side of the aisle such acts would be merely personal and thus not something that attaches to his professional life. AND ... gotta love this ... oh, and on top of talking dirty on the phone, he also, as an aside, guess we should mention, might be important, not sure, but .... "In addition to these allegations, Keaton was accused of failing to file an appeal after he collected advance payment from a client seeking to challenge a ruling that the client repay benefits because of unreported income." rimshot

  5. I am not a fan of some of the 8.4 discipline we have seen for private conduct-- but this was so egregious and abusive and had so many points of bad conduct relates to the law and the lawyer's status as a lawyer that it is clearly a proper and just disbarment. A truly despicable account of bad acts showing unfit character to practice law. I applaud the outcome.

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