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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. I have been on this program while on parole from 2011-2013. No person should be forced mentally to share private details of their personal life with total strangers. Also giving permission for a mental therapist to report to your parole agent that your not participating in group therapy because you don't have the financial mean to be in the group therapy. I was personally singled out and sent back three times for not having money and also sent back within the six month when you aren't to be sent according to state law. I will work to het this INSOMM's removed from this state. I also had twelve or thirteen parole agents with a fifteen month period. Thanks for your time.

  2. Our nation produces very few jurists of the caliber of Justice DOUGLAS and his peers these days. Here is that great civil libertarian, who recognized government as both a blessing and, when corrupted by ideological interests, a curse: "Once the investigator has only the conscience of government as a guide, the conscience can become ‘ravenous,’ as Cromwell, bent on destroying Thomas More, said in Bolt, A Man For All Seasons (1960), p. 120. The First Amendment mirrors many episodes where men, harried and harassed by government, sought refuge in their conscience, as these lines of Thomas More show: ‘MORE: And when we stand before God, and you are sent to Paradise for doing according to your conscience, *575 and I am damned for not doing according to mine, will you come with me, for fellowship? ‘CRANMER: So those of us whose names are there are damned, Sir Thomas? ‘MORE: I don't know, Your Grace. I have no window to look into another man's conscience. I condemn no one. ‘CRANMER: Then the matter is capable of question? ‘MORE: Certainly. ‘CRANMER: But that you owe obedience to your King is not capable of question. So weigh a doubt against a certainty—and sign. ‘MORE: Some men think the Earth is round, others think it flat; it is a matter capable of question. But if it is flat, will the King's command make it round? And if it is round, will the King's command flatten it? No, I will not sign.’ Id., pp. 132—133. DOUGLAS THEN WROTE: Where government is the Big Brother,11 privacy gives way to surveillance. **909 But our commitment is otherwise. *576 By the First Amendment we have staked our security on freedom to promote a multiplicity of ideas, to associate at will with kindred spirits, and to defy governmental intrusion into these precincts" Gibson v. Florida Legislative Investigation Comm., 372 U.S. 539, 574-76, 83 S. Ct. 889, 908-09, 9 L. Ed. 2d 929 (1963) Mr. Justice DOUGLAS, concurring. I write: Happy Memorial Day to all -- God please bless our fallen who lived and died to preserve constitutional governance in our wonderful series of Republics. And God open the eyes of those government officials who denounce the constitutions of these Republics by arbitrary actions arising out capricious motives.

  3. From back in the day before secularism got a stranglehold on Hoosier jurists comes this great excerpt via Indiana federal court judge Allan Sharp, dedicated to those many Indiana government attorneys (with whom I have dealt) who count the law as a mere tool, an optional tool that is not to be used when political correctness compels a more acceptable result than merely following the path that the law directs: ALLEN SHARP, District Judge. I. In a scene following a visit by Henry VIII to the home of Sir Thomas More, playwriter Robert Bolt puts the following words into the mouths of his characters: Margaret: Father, that man's bad. MORE: There is no law against that. ROPER: There is! God's law! MORE: Then God can arrest him. ROPER: Sophistication upon sophistication! MORE: No, sheer simplicity. The law, Roper, the law. I know what's legal not what's right. And I'll stick to what's legal. ROPER: Then you set man's law above God's! MORE: No, far below; but let me draw your attention to a fact I'm not God. The currents and eddies of right and wrong, which you find such plain sailing, I can't navigate. I'm no voyager. But in the thickets of law, oh, there I'm a forester. I doubt if there's a man alive who could follow me there, thank God... ALICE: (Exasperated, pointing after Rich) While you talk, he's gone! MORE: And go he should, if he was the Devil himself, until he broke the law! ROPER: So now you'd give the Devil benefit of law! MORE: Yes. What would you do? Cut a great road through the law to get after the Devil? ROPER: I'd cut down every law in England to do that! MORE: (Roused and excited) Oh? (Advances on Roper) And when the last law was down, and the Devil turned round on you where would you hide, Roper, the laws being flat? (He leaves *1257 him) This country's planted thick with laws from coast to coast man's laws, not God's and if you cut them down and you're just the man to do it d'you really think you would stand upright in the winds that would blow then? (Quietly) Yes, I'd give the Devil benefit of law, for my own safety's sake. ROPER: I have long suspected this; this is the golden calf; the law's your god. MORE: (Wearily) Oh, Roper, you're a fool, God's my god... (Rather bitterly) But I find him rather too (Very bitterly) subtle... I don't know where he is nor what he wants. ROPER: My God wants service, to the end and unremitting; nothing else! MORE: (Dryly) Are you sure that's God! He sounds like Moloch. But indeed it may be God And whoever hunts for me, Roper, God or Devil, will find me hiding in the thickets of the law! And I'll hide my daughter with me! Not hoist her up the mainmast of your seagoing principles! They put about too nimbly! (Exit More. They all look after him). Pgs. 65-67, A MAN FOR ALL SEASONS A Play in Two Acts, Robert Bolt, Random House, New York, 1960. Linley E. Pearson, Atty. Gen. of Indiana, Indianapolis, for defendants. Childs v. Duckworth, 509 F. Supp. 1254, 1256 (N.D. Ind. 1981) aff'd, 705 F.2d 915 (7th Cir. 1983)

  4. "Meanwhile small- and mid-size firms are getting squeezed and likely will not survive unless they become a boutique firm." I've been a business attorney in small, and now mid-size firm for over 30 years, and for over 30 years legal consultants have been preaching this exact same mantra of impending doom for small and mid-sized firms -- verbatim. This claim apparently helps them gin up merger opportunities from smaller firms who become convinced that they need to become larger overnight. The claim that large corporations are interested in cost-saving and efficiency has likewise been preached for decades, and is likewise bunk. If large corporations had any real interest in saving money they wouldn't use large law firms whose rates are substantially higher than those of high-quality mid-sized firms.

  5. The family is the foundation of all human government. That is the Grand Design. Modern governments throw off this Design and make bureaucratic war against the family, as does Hollywood and cultural elitists such as third wave feminists. Since WWII we have been on a ship of fools that way, with both the elite and government and their social engineering hacks relentlessly attacking the very foundation of social order. And their success? See it in the streets of Fergusson, on the food stamp doles (mostly broken families)and in the above article. Reject the Grand Design for true social function, enter the Glorious State to manage social dysfunction. Our Brave New World will be a prison camp, and we will welcome it as the only way to manage given the anarchy without it.

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