The FBI is collecting records on an Elkhart real estate deal and an Indianapolis drug case, both involving Marion County Prosecutor Carl Brizzi and defense attorney Paul Page.
Page in 2008 arranged for Brizzi to own 50 percent of an office building leased by the Department of Child Services without Brizzi putting up cash or credit. A year later, Brizzi offered a lenient plea deal and returned $10,000 in seized cash to accused drug dealer Joseph Mobareki, a Page client.
The FBI has picked up files on the Mobareki case and Elkhart real estate deal and has begun asking questions of those with knowledge of the deals, multiple sources said. An FBI spokesman would neither confirm nor deny the agency is investigating.
The moves follow an Indianapolis Business Journal investigation that has raised questions about Brizzi’s business dealings while in office and whether those deals influenced his actions as prosecutor. Law enforcement officials found his intervention in the Mobareki case troubling considering his no-cost real estate deal with Page in Elkhart.
A review of dozens of pages of records connected to the Elkhart deal has revealed new details:
• The property has two mortgages: A $1.2 million first mortgage with Huntington Bank and a second mortgage for an unspecified amount with a company called BAB Equity LLC, which lists a post office box real estate broker John Bales has used for his companies and political contributions.
Bales and his firm, Venture Cos., orchestrated the $2.5 million, 10-year deal that put the state’s Department of Child Services into the building a few months after L & BAB LLC acquired the one-story building at 1659 Mishawaka St. in February 2008.
A spokesman for the Indiana Department of Administration said the second mortgage does not appear to violate Bales’ state leasing contract, which bans him from any direct or indirect ownership interest in properties the state leases.
Bales said in an e-mail that he does not control BAB Equity but refused to say who does. He did not respond to follow-up questions including why the company uses his post office box.
• The Elkhart building had a market value of about $700,000 before the state lease and $1.2 million after the lease, according to an April 2008 appraisal prepared for Huntington Bank. The appraisal says the building would be difficult to market to traditional office users because it is surrounded by industrial properties and has no street frontage.
The 1986 building had been vacant for several months and badly in need of repairs when L & BAB put the property under contract. The appraisal noted the 15,200-square-foot building had interior mold, three broken AC units, and deferred maintenance on windows, exterior bricks and parking-lot pavement.
L & BAB had planned to spend $422,500 to renovate the building and prepare most of it, about 13,000 square feet, for the arrival of DCS. The company eventually paid $825,000 for the property, and got a $15,000 allowance from the seller to remedy an animal infestation.
• Venture arranged to list the building for sale with an asking price of $1.8 million in late 2008, immediately after the DCS executed its lease deal. The property did not sell.
Financial documents included in the offering show the building owner, building seller, DCS and an insurance company split more than $577,000 of expenses to renovate and outfit the building. The owner’s portion was about $315,000, while DCS paid about $200,000 for upgrades including new restrooms.
The records show Page invested $321,835 in the building and financed $993,750. That includes a commission of $88,400, and a development fee of $45,600, both going to Venture.
• Records suggest Brizzi was added as a co-owner of the building late in the process. Financial documents provided to potential buyers in 2008 list Bruce Zeller of Carmel-based Zeller Construction Co. as co-investing with Page. Zeller did not return a phone message.
Page, an attorney with locally based Baker Pittman & Page and principal in condo developer Page Development, told IBJ in March that Brizzi – whom he called an “equal partner” in the deal – did not contribute cash and isn’t named on the loan the pair used to buy the building.
He said Brizzi earned his stake in the Elkhart building by bringing him an attractive investment opportunity. He said Brizzi and Bales, a Brizzi partner on previous deals, approached him about the Elkhart building.
Brizzi has said in disclosure documents that his equity interest in the property is worth $50,000 to $100,000.
The records offered no suggestion of how the building owners arrived at the name L & BAB.
Putting the Elkhart deal together was a challenge since banks weren’t lending and few property investors showed interest in fixing up an office building in financially depressed Elkhart, said Jeff Lozer, the general counsel for DCS.
Lozer said he didn't know Brizzi was involved with the deal until he read about his investment in IBJ. The IBJ is a sister publication to Indiana Lawyer.
“We were really pressing Venture to get the deal done, to bring it home,” Lozer said. “We had the building picked out but needed someone to finance the build out. The issue for us was finding a suitable place to put our folks. We don’t care who the landlord is.”
Brizzi has declined repeated interview requests but said in a statement Thursday that he could not comment on the FBI's inquiries because he is "unaware of this alleged action."
Brizzi, a Republican whose second term ends in December, is not seeking re-election.