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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. It appears the police and prosecutors are allowed to change the rules halfway through the game to suit themselves. I am surprised that the congress has not yet eliminated the right to a trial in cases involving any type of forensic evidence. That would suit their foolish law and order police state views. I say we eliminate the statute of limitations for crimes committed by members of congress and other government employees. Of course they would never do that. They are all corrupt cowards!!!

  2. Poor Judge Brown probably thought that by slavishly serving the godz of the age her violations of 18th century concepts like due process and the rule of law would be overlooked. Mayhaps she was merely a Judge ahead of her time?

  3. in a lawyer discipline case Judge Brown, now removed, was presiding over a hearing about a lawyer accused of the supposedly heinous ethical violation of saying the words "Illegal immigrant." (IN re Barker) http://www.in.gov/judiciary/files/order-discipline-2013-55S00-1008-DI-429.pdf .... I wonder if when we compare the egregious violations of due process by Judge Brown, to her chiding of another lawyer for politically incorrectness, if there are any conclusions to be drawn about what kind of person, what kind of judge, what kind of apparatchik, is busy implementing the agenda of political correctness and making off-limits legit advocacy about an adverse party in a suit whose illegal alien status is relevant? I am just asking the question, the reader can make own conclsuion. Oh wait-- did I use the wrong adjective-- let me rephrase that, um undocumented alien?

  4. of course the bigger questions of whether or not the people want to pay for ANY bussing is off limits, due to the Supreme Court protecting the people from DEMOCRACY. Several decades hence from desegregation and bussing plans and we STILL need to be taking all this taxpayer money to combat mostly-imagined "discrimination" in the most obviously failed social program of the postwar period.

  5. You can put your photos anywhere you like... When someone steals it they know it doesn't belong to them. And, a man getting a divorce is automatically not a nice guy...? That's ridiculous. Since when is need of money a conflict of interest? That would mean that no one should have a job unless they are already financially solvent without a job... A photographer is also under no obligation to use a watermark (again, people know when a photo doesn't belong to them) or provide contact information. Hey, he didn't make it easy for me to pay him so I'll just take it! Well heck, might as well walk out of the grocery store with a cart full of food because the lines are too long and you don't find that convenient. "Only in Indiana." Oh, now you're passing judgement on an entire state... What state do you live in? I need to characterize everyone in your state as ignorant and opinionated. And the final bit of ignorance; assuming a photo anyone would want is lucky and then how much does your camera have to cost to make it a good photo, in your obviously relevant opinion?

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