ILNews

Defense attorneys turn tough in Bales trial

Back to TopCommentsE-mailPrintBookmark and Share

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.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. Where may I find an attorney working Pro Bono? Many issues with divorce, my Disability, distribution of IRA's, property, money's and pressured into agreement by my attorney. Leaving me far less than 5% of all after 15 years of marriage. No money to appeal, disabled living on disability income. Attorney's decision brought forward to judge, no evidence ever to finalize divorce. Just 2 weeks ago. Please help.

  2. For the record no one could answer the equal protection / substantive due process challenge I issued in the first post below. The lawless and accountable only to power bureaucrats never did either. All who interface with the Indiana law examiners or JLAP be warned.

  3. Hi there I really need help with getting my old divorce case back into court - I am still paying support on a 24 year old who has not been in school since age 16 - now living independent. My visitation with my 14 year old has never been modified; however, when convenient for her I can have him... I am paying past balance from over due support, yet earn several thousand dollars less. I would contact my original attorney but he basically molest me multiple times in Indy when I would visit.. Todd Woodmansee - I had just came out and had know idea what to do... I have heard he no longer practices. Please help1

  4. Yes diversity is so very important. With justice Rucker off ... the court is too white. Still too male. No Hispanic justice. No LGBT justice. And there are other checkboxes missing as well. This will not do. I say hold the seat until a physically handicapped Black Lesbian of Hispanic heritage and eastern religious creed with bipolar issues can be located. Perhaps an international search, with a preference for third world candidates, is indicated. A non English speaker would surely increase our diversity quotient!!!

  5. First, I want to thank Justice Rucker for his many years of public service, not just at the appellate court level for over 25 years, but also when he served the people of Lake County as a Deputy Prosecutor, City Attorney for Gary, IN, and in private practice in a smaller, highly diverse community with a history of serious economic challenges, ethnic tensions, and recently publicized but apparently long-standing environmental health risks to some of its poorest residents. Congratulations for having the dedication & courage to practice law in areas many in our state might have considered too dangerous or too poor at different points in time. It was also courageous to step into a prominent and highly visible position of public service & respect in the early 1990's, remaining in a position that left you open to state-wide public scrutiny (without any glitches) for over 25 years. Yes, Hoosiers of all backgrounds can take pride in your many years of public service. But people of color who watched your ascent to the highest levels of state government no doubt felt even more as you transcended some real & perhaps some perceived social, economic, academic and professional barriers. You were living proof that, with hard work, dedication & a spirit of public service, a person who shared their same skin tone or came from the same county they grew up in could achieve great success. At the same time, perhaps unknowingly, you helped fellow members of the judiciary, court staff, litigants and the public better understand that differences that are only skin-deep neither define nor limit a person's character, abilities or prospects in life. You also helped others appreciate that people of different races & backgrounds can live and work together peacefully & productively for the greater good of all. Those are truths that didn't have to be written down in court opinions. Anyone paying attention could see that truth lived out every day you devoted to public service. I believe you have been a "trailblazer" in Indiana's legal community and its judiciary. I also embrace your belief that society's needs can be better served when people in positions of governmental power reflect the many complexions of the population that they serve. Whether through greater understanding across the existing racial spectrum or through the removal of some real and some perceived color-based, hope-crushing barriers to life opportunities & success, movement toward a more reflective representation of the population being governed will lead to greater and uninterrupted respect for laws designed to protect all peoples' rights to life, liberty & the pursuit of happiness. Thanks again for a job well-done & for the inevitable positive impact your service has had - and will continue to have - on countless Hoosiers of all backgrounds & colors.

ADVERTISEMENT