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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. Employers should not have racially discriminating mind set. It has huge impact on the society what the big players do or don't do in the industry. Background check is conducted just to verify whether information provided by the prospective employee is correct or not. It doesn't have any direct combination with the rejection of the employees. If there is rejection, there should be something effective and full-proof things on the table that may keep the company or the people associated with it in jeopardy.

  2. Unlike the federal judge who refused to protect me, the Virginia State Bar gave me a hearing. After the hearing, the Virginia State Bar refused to discipline me. VSB said that attacking me with the court ADA coordinator had, " all the grace and charm of a drive-by shooting." One does wonder why the VSB was able to have a hearing and come to that conclusion, but the federal judge in Indiana slammed the door of the courthouse in my face.

  3. I agree. My husband has almost the exact same situation. Age states and all.

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  5. Andrew, if what you report is true, then it certainly is newsworthy. If what you report is false, then it certainly is newsworthy. Any journalists reading along??? And that same Coordinator blew me up real good as well, even destroying evidence to get the ordered wetwork done. There is a story here, if any have the moxie to go for it. Search ADA here for just some of my experiences with the court's junk yard dog. https://www.scribd.com/document/299040062/Brown-ind-Bar-memo-Pet-cert Yep, drive by shootings. The lawyers of the Old Dominion got that right. Career executions lacking any real semblance of due process. It is the ISC way ... under the bad shepard's leadership ... and a compliant, silent, boot-licking fifth estate.

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