Brizzi's Christmas Eve Gift

Testimony this week by an FBI agent who headed up the investigation of John Bales revealed a Christmas Eve gift in 2008 for former Marion Co. Prosecutor Carl Brizzi. The IBJ's Cory Schouten described documents offered by the defense during the testimony of FBI agent Brian Percival that showed an amendment to the operating agreement for L&BAB, LLC on December 24, 2008, which made Brizzi a co-equal owner of the Elkhart Building that Indianapolis attorney Paul Page had purchased earlier in the year after John Bales' Venture Real Estate fronted L&BAB more than $360,000 for the down payment to close on the purchase of the building. The government contends the money Venture invested in the deal represented an equity interest, while the defense claims it merely represented a loan to L&BAB of which state employees had tacitly, if not expressly approved.

Under Venture's exclusive real estate brokerage agreement with the state of Indiana, Bales and his partner, William Spencer, were barred from having a financial interest in any real estate it assisted the state in leasing from other property owners. Brizzi invested none of his own money or had to borrow money for his 50% ownership stake in the building according to what Page told the IBJ during an interview in 2010. The Elkhart Building was purchased for about $900,000 with the knowledge it would be immediately leased to the Department of Child Services for approximately $250,000 a year. Brizzi's ex-wife was employed by DCS. The Marion Co. Prosecutor's office had handled a number of criminal cases where defendants were represented by Page. News reports have suggested that Brizzi's office sometimes gave lenient treatment to Page's clients because of his business relationship with him. Government evidence also showed that Brizzi had exchanged more than 750 cell phone calls and text messages with Page between January, 2008 and March, 2010. News reports have suggested that Brizzi is the subject of an ongoing investigation by the U.S. Attorney's Office in Indianapolis.

Prosecutors attempted but were blocked by defense objections from offering e-mail exchanges between Brizzi and Spencer dated around the time Brizzi acquired his ownership stake in the Elkhart Building discussing a possibility of Venture granting Brizzi an ownership interest in a retail strip center it owned at 49th & Pennsylvania in Indianapolis. According to other IBJ reports, Brizzi had also participated in other real estate investment undertaken by Bales' Venture Real Estate. In one of the those e-mails, Spencer told Brizzi: "Don't worry. I will not let Bales pick the name of the entity." That was an apparent reference to the acronym Bales provided for L&BAB, which supposedly stood for "lazy and broke-ass bitch." I'm not sure on what basis the judge denied the admission of those e-mail exchanges. If the defense opened the door to Page's business relationship with Brizzi, it would seem logical that the government should be allowed to show Brizzi's business relationship with Bales and Spencer.

Under cross-examination, Schouten reports that Mackey was critical of the FBI investigation for failing to subpoena L&BAB's bank records. Agent Percival told jurors that information was not needed because the information it needed for its investigation was obtained independently by looking at the individual financial records. Percival also agreed with Bales' attorney Larry Mackey that the government could not quantify any losses incurred by the government or the bank as a result of the defendants' fraudulent conduct. Mackey also challenged the government's estimate that the Elkhart Building was worth $2 million after the state invested money in improvements to the building and entered into its long-term lease agreement for DCS. Percival told jurors that it never wiretapped Bales or any of the other parties during its investigation.

The government wrapped up its case this morning. The defense began its case by offering favorable testimony from former DCS Director James Payne, who was fired last year by former Gov. Mitch Daniels after the Indianapolis Star disclosed Payne's intervention in child welfare case involving his grandchild that sometimes put him at odds with his own agency's child welfare case workers. Schouten says the case could go to jurors as soon as tomorrow.