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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. If real money was spent on this study, what a shame. And if some air-head professor tries to use this to advance a career, pity the poor student. I am approaching a time that i (and others around me) should be vigilant. I don't think I'm anywhere near there yet, but seeing the subject I was looking forward to something I might use to look for some benchmarks. When finally finding my way to the hidden questionnaire all I could say to myself was...what a joke. Those are open and obvious signs of any impaired lawyer (or non-lawyer, for that matter), And if one needs a checklist to discern those tell-tale signs of impairment at any age, one shouldn't be practicing law. Another reason I don't regret dropping my ABA membership some number of years ago.

  2. The case should have been spiked. Give the kid a break. He can serve and maybe die for Uncle Sam and can't have a drink? Wow. And they won't even let him defend himself. What a gross lack of prosecutorial oversight and judgment. WOW

  3. I work with some older lawyers in the 70s, 80s, and they are sharp as tacks compared to the foggy minded, undisciplined, inexperienced, listless & aimless "youths" being churned out by the diploma mill law schools by the tens of thousands. A client is generally lucky to land a lawyer who has decided to stay in practice a long time. Young people shouldn't kid themselves. Experience is golden especially in something like law. When you start out as a new lawyer you are about as powerful as a babe in the cradle. Whereas the silver halo of age usually crowns someone who can strike like thunder.

  4. YES I WENT THROUGH THIS BEFORE IN A DIFFERENT SITUATION WITH MY YOUNGEST SON PEOPLE NEED TO LEAVE US ALONE WITH DCS IF WE ARE NOT HURTING OR NEGLECT OUR CHILDREN WHY ARE THEY EVEN CALLED OUT AND THE PEOPLE MAKING FALSE REPORTS NEED TO GO TO JAIL AND HAVE A CLASS D FELONY ON THERE RECORD TO SEE HOW IT FEELS. I WENT THREW ALOT WHEN HE WAS TAKEN WHAT ELSE DOES THESE SCHOOL WANT ME TO SERVE 25 YEARS TO LIFE ON LIES THERE TELLING OR EVEN LE SAME THING LIED TO THE COUNTY PROSECUTOR JUST SO I WOULD GET ARRESTED AND GET TIME HE THOUGHT AND IT TURNED OUT I DID WHAT I HAD TO DO NOT PROUD OF WHAT HAPPEN AND SHOULD KNOW ABOUT SEEKING MEDICAL ATTENTION FOR MY CHILD I AM DISABLED AND SICK OF GETTING TREATED BADLY HOW WOULD THEY LIKE IT IF I CALLED APS ON THEM FOR A CHANGE THEN THEY CAN COME AND ARREST THEM RIGHT OUT OF THE SCHOOL. NOW WE ARE HOMELESS AND THE CHILDREN ARE STAYING WITH A RELATIVE AND GUARDIAN AND THE SCHOOL WON'T LET THEM GO TO SCHOOL THERE BUT WANT THEM TO GO TO SCHOOL WHERE BULLYING IS ALLOWED REAL SMART THINKING ON A SCHOOL STAFF.

  5. Family court judges never fail to surprise me with their irrational thinking. First of all any man who abuses his wife is not fit to be a parent. A man who can't control his anger should not be allowed around his child unsupervised period. Just because he's never been convicted of abusing his child doesn't mean he won't and maybe he hasn't but a man that has such poor judgement and control is not fit to parent without oversight - only a moron would think otherwise. Secondly, why should the mother have to pay? He's the one who made the poor decisions to abuse and he should be the one to pay the price - monetarily and otherwise. Yes it's sad that the little girl may be deprived of her father, but really what kind of father is he - the one that abuses her mother the one that can't even step up and do what's necessary on his own instead the abused mother is to pay for him???? What is this Judge thinking? Another example of how this world rewards bad behavior and punishes those who do right. Way to go Judge - NOT.

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