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Defense attorneys turn tough in Bales trial

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SOUTH BEND — The legal team representing real estate broker John M. Bales and partner William E. Spencer haven't called their first witness and already they're putting up a spirited fight as federal prosecutors seek to prove charges including bank, mail and wire fraud.

During the trial in U.S. District Court for the Northern District of Indiana, defense attorneys have attacked state officials who oversaw the state's contract with Bales' firm Venture Real Estate Services, attacked IBJ's coverage of an unusual state lease deal in Elkhart that led to the charges, and attacked a former co-defendant who bought the Elkhart building using a down payment provided by Bales.

But Larry Mackey, a former federal prosecutor who gave the government's closing argument against Oklahoma City bomber Timothy McVeigh, on Thursday delivered the most dramatic courtroom moments in the Bales trial during his cross examination of Jeff Lozer, general counsel for Indiana's Department of Child Services.

A government witness, Lozer recalled a conversation he had with Spencer before the Elkhart deal closed. Spencer told Lozer that Venture may consider "financial assistance" to help the landlord and expedite the move for DCS, Lozer testified under direct examination.

"My response was one of gratitude — their approach was to be creative on our behalf," said Lozer, who is friends with Spencer. "I was grateful for the offer."

Lozer said he couldn't remember whether he told Spencer that Venture should seek approval of such an arrangement from the Indiana Department of Administration, which oversaw the company's contract with the state.

Prosecutors say the secret arrangement between Bales and Page was a violation of a leasing agreement between Venture and the state that barred the company from direct or indirect ownership of properties where state agencies leased space. The defense argues the arrangement was a loan and not ownership.

During cross examination, Mackey showed Lozer notes from an FBI interview and the transcript of his grand jury testimony in January 2011 and asked him why he did not appear to mention the Spencer conversation in the interview but did mention it under oath. He also pushed Lozer about his failure to disclose the conversation to anyone else at the state after IBJ began reporting on the Elkhart deal.

Lozer acknowledged he didn't follow up with Venture to ask whether they had offered the Elkhart landlord financial assistance, but said he wasn't sure whether he told anyone else at the state including Harless.

"Is not sure 'yes', 'no', or 'I don't know'," Mackey snapped.

"I don't know," Lozer answered.

"You kept that fact a secret from everyone in December 2009, even though it was in the newspaper, right?" Mackey asked.

"Right," Lozer answered.

A few minutes later, Lozer again answered a Mackey question with, "I'm not sure."

"You know this is a criminal case, Mr. Lozer, it's very serious," Mackey responded, his voice forceful. "You did not seize the opportunity to set the record straight?"

Mackey pressed Lozer on why he didn't mention the conversation with Spencer during an interview with IBJ reporter Cory Schouten, whom Mackey pointed out in the courtroom.

"Was there an ounce of regret when you hung up with Mr. Schouten ... and didn't tell him what you know?" Mackey asked, referring to the reporter.

The government objected to the question, and the judge sustained.

Mackey, his voice rising, told Lozer the stakes were different in January 2011, that Lozer could lie to a reporter, but not to a grand jury.

Eyes widened in the jury box. A trial that has featured a blizzard of contracts and email records suddenly felt like an episode of "Law & Order."

"Does it occur to you you could be prosecuted for lying to the FBI?" Mackey continued. "Either it's a conversation that you remember and never forget or one that goes out of your memory."

The government again objected to the question, and the judge sustained.

Mackey walked toward Lozer, in a softer voice, asking how sure he was on a scale of one to 10 that he told Spencer to disclose the Elkhart arrangement to IDOA.

"Five out of 10," Lozer answered.

"So at best we're 50-50," Mackey said, his voice rising again.

"Did your phone work in 2008?" Mackey asked, sarcastically.

"Yes, I believe so," Lozer answered.

"Can we just say thank you to a generous man who put up his own money ... so kids wouldn't have to be in a bullet-ridden building?" Mackey asked.

"I should've picked up the phone but I probably didn't," Lozer finished.

Thursday's courtroom action also included sharp questions from the defense for Steve Harless, who manages office leasing for the state on behalf of the Department of Administration.

Mackey said Harless treated Venture unfairly, favoring its competitor Resource Commercial Real Estate. He also asked him pointed questions about his response to an IBJ records request, which he forwarded to Venture, and his reaction when IBJ reporter Cory Schouten stopped by his office unannounced to check on the status of a records request.

"Didn't you get to know that day he didn't always get it right?" Mackay said, referring to the reporter.

Assistant U.S. Attorney Jesse Barrett objected to the question, and the judge sustained the objection. Harless didn't answer, but Mackey had sent his message to the jury.

The prosecution also took testimony from Mike Sibbing, a closing agent who worked on the Elkhart deal, to discuss several documents critical to its case. Among them: internal title company documents that show Bales wired the entire down payment for the building even though he was not listed as a buyer or lender on closing statements.

On cross examination, Barclay asked whether anyone at Venture asked Sibbing to conceal or destroy the documents showing the source of funds. Sibbing said no.

The prosecution is on track to finish its case by Monday, and the defense expects its case could take about three days. The trial began Jan. 28 and was scheduled to last up to two weeks.

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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