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Grand jury indicts local real estate broker Bales

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A grand jury in South Bend has returned a 14-count criminal indictment against Indianapolis real estate broker John M. Bales and two associates over a state lease deal in Elkhart first revealed as part of an IBJ investigation.

The complaint alleges Bales, his partner and general counsel William E. Spencer, and Indianapolis developer and attorney Paul J. Page defrauded the state and an unnamed bank.

The charges, brought by the U.S. Attorney for the Northern District of Indiana, include eight counts of wire fraud, three counts of mail fraud, one count of bank fraud, and one count of conspiracy to defraud. Page was also charged with one count of making false statements to influence the actions of a bank.

The state hired Bales' firm, Venture Cos., in 2006 to handle leasing for state agencies in a contract that explicitly banned Venture and its partners and employees from “any ownership interest” or any “attempt to acquire” properties to be leased by the state.

But as IBJ reported last year, the politically connected real estate broker over the years has acted as a developer for several public-sector tenants he represents—putting government agencies into buildings he owns or those owned by his friends and associates.

The indictment points to one transaction in particular that prosecutors allege ran afoul of Bales' agreement with the state: A lease deal in Elkhart for the state's Department of Child Services in a building jointly owned by Page and former Marion County Prosecutor Carl Brizzi. The government has not charged Brizzi.

According to the indictment, Page bought the office building without putting up any cash through a company called L&BAB LLC, then leased it to the state's Department of Child Services. Page put up $361,000 in cash for the property, which had been wired from Bales' account under an entity called BAB Equity.

"Page promised to repay BAB Equity and to give it 25 percent of the profits when the Elkhart building was resold, even though Bales and Spencer could not have any sort of ownership interest in the building and even though Venture told the state that it would only be compensated through commissions," U.S. Attorney David Capp said in a statement.

The indictment alleges that Page also borrowed $531,000 from a bank without disclosing he wasn't investing his own money in the deal.

Venture was paid an $88,400 commission on the lease deal, then took more than a year to rebate $22,100 to the state as required under its deal. The firm also received a $28,875 broker's fee and a $22,700 development fee, the indictment alleges, "even though it told the state it would only be compensated through lease commissions."

Barnes & Thornburg Partner Larry Mackey, who is representing Bales, said in a statement late Wednesday that he's confident Bales will be exonerated.

"We caution against a rush to judgment," Mackey wrote. "John Bales is a good, ethical businessman and we welcome the opportunity to demonstrate throughout these proceedings."

The charges follow an FBI investigation that lasted more than a year.

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  • Airline Captain
    John Bales found INNOCENT by a jury last night! Caldwell I guess owes Page, Bales and Brizzy an apology. Perhaps Caldwell should live in a world as he describes and not in a Country that mandates a persons innocents until proven guilty. We live in a world where media feeds reacts much like the Jerry Springer show and disregards all the hype while so willing to destroy a an innocent person. But far be it if you have the political clout to control the media as Hillary Clinton proved while lying to the Country about Benghazi that cost this Country an Ambassador's life and three other American lives who defended the compound for 7 hours. What about her lies? Bales is innocent and Page was to. He caved to the pressure in one count. Pressure that people like Caldwell should one day be subject to. Then you realize how valuable your freedoms are and how valuable the standards set by this Country that mandate a personas innocents till proven otherwise.
  • Guilty by Association ?
    CADWELL- Comparing this to the Nazi Extermination of the Jews and the killing and rape of innocent women and children in Germany is not only a far stretch and extreme, but offensive. You and many people like you, feed on other peoples bad fortune and dive head first into the frenzy that resembles the Jerry Springer mentality. Hows that for a comparison? Unless I'm wrong here, our Country and our system of Justice was built around "Innocent Until Proven Guilty by a Court of Law", not by your standards of "guilty by association". Get real! No one here would ever want to live in a world derived by your presumptions and standards... if so, we may as well move to Iran or some other Country that has NO rights.
  • Innocent or Guilty by association
    You may be innocent until proven guilty, then there is always the fact for anyone who has been alive long enough to know. At some point in time, when you have a conscience, that you figure out who Carl Brizzi and Paul Page actually are. If you do not want the heat of being associated with them, DO NOT GET INTO BUSINESS WITH THEM. If you want to try to make money like they do, and then be called a "good guy" well...good luck with that venture. Don't be naive just because he did some good or gave some jobs. The nazi's gave jobs to millions of people...and by standards of a skin head or racist they did "some good" for their cause. The truth is be real about what is going on. You would not be charged if there was not some dirt. If you own something that you told the government (your client) you were not allowed to own, you LIED and choose to not follow what came out of your mouth. A person who defends men like this because they got a job from them disgust me...be honest with yourself and who these men are. And since you have a law degree...maybe he will give you another job in defending him (or is this a case you don't see being able to win)?
    • Winning tour revamped
      I'd like to invite the hood from Indy to join me on my new tour aptly entitled, " LOSING! "

      It's over, guys, and it all started with Tim posting nonsense on Yahoo and stalking the whistleblower. It continued with a certain male prosecutor and BFF of Tims calling and having a bus belonging to a nemesis of Tims towed in Oregon. And then we recently had a certain male prosecutor slandering someone on his radio show, angry that this purported whistleblower caused his downfall and subsequent public humiliation.

      Guys, it aint the whistleblower that made you corrupt. Greg amd Cory didn't cause your downfalls. Greg amd Cory went to work each day, as did the investigators, and did their jobs. Notice they aren't plagiarizing or stealing from expense reports or trading on news, and they manage to live super great lives and be well known and respected in theor fields of work. Ain't hard to do.

      Just think: was it worth the glory to end up in prison.
    • Love Connection?
      Tim and Carl, wanted to be the most important and loved guys around.

      Me thinks they ain't liked at all, and Bales etc probably wished they had never said hello!

      Would someome please finally indict Brizzi! Tim needs some company in prison!
    • GREED, BABY, GREED
      Their greed overcomes rationale. The L in Page should be for all the LLC's he created to defraud people. They're a bunch of white collar common criminals who line their own pockets at the expense of others.
    • Just saying
      I agree that the man is due his day in court before he's strung up but grand juries don't just indict without compelling evidence. Some investigator has been getting up every morning and sifting through bits of evidence. I'll never understand how a rational person can gamble with his freedom and reputation for some cash - which now will go to his attorney.
      • Re
        Well, Bales could produce his tax returns and checking account statements which would show whether or not he 1) timely bought a large position in Cellstar right before Indianapolis-based Brightpoint bought them--his friends Tim Durham and Carl Brizzi having bought the stock--2)IF he bought the Cellstar was that the dividend money he used to allegedly funnel over to the Elkhart building which would explain why Brizzi was given ownership for free, and if not where the cash came frmo that was used to buy the Elkhart building; 3) Perhaps he could give a public explanation of WHY he would funnel his own money to a building timely purchased by his friends just in time to ink a 10 year triple net lease contract instead of simply telling the existing owner of the property that the state of Indiana wanted to lease it; and while he is at it perhaps he can explain the Venture Value Fund he was involved in with Carl Brizzi and Ben Pecar of Barnes and Thornburgh because you are right, he is innocent until proven guilty. By the way Ben's wife's name is Leslie. Begins with an L. She was until last year a broker who allegedly also traded in Cellstar. Notice I say allegedly because she may not have ever bought the stock. She may also not be the L in L &BAB. We all can figure out who the B and Bs are. Ironic there wasn't a P for Page but instead an L. Ya just never know.

        It's always been my experience those with nothing to hide, hide nothing.
      • Agree with innocent until proven guilty
        I agree with "innocent until proven guilty". I've had the pleasure of working with John and his family and know him to be a good man, who loves his family and wants to help others. I believe he will come out of this will a not guilty verdict. It's sounds to me like a big misunderstanding where the media is giving only 1 side.
      • Innocent Until Proven Guilty
        While Bales may be under indictment, he has done a lot of good for Indianapolis, including providing jobs to many. This includes myself. Because of him, I was able to put myself throught college and then when on to law school.
        • Page
          Page has been successful for years - at defrauding,that is.
        • Page
          Page has been successful for years - at defrauding,that is.
        • Disgusting
          It's disgusting to read all the comments. Whatever happened to innocent until proven guilty. Let Bales have his day in court before pointing fingers and bashing him.
        • Instant Karma
          Knew Bales from way back before he became a player. My only surprise in this is that it took so long. As for his connections to the others...birds of a feather. You'd think this was Cook County or someting.
        • No Presidential Run Because of this??? Hmmmm.
          Thought when he said he would not run that this could be a big part of the reason. When all is said and done if anyone ever gets to the bottom, it will be very interesting to see who is dragged in. What a waste for a well-known Weasel like Bales. Always a shister!!!
        • tip of the iceberg
          Too bad there's not the energy to follow all of Bales' state and city deals. Almost every one would stink like this if the covers come off. Maybe not blatantly illegal or violating the terms of his contract, but still tales of conflicts of interests, buddies with pockets lined, and politicians and other "public servants" being servants to their campaign donors.
        • I'd like to know
          Didn't Page file bankruptcy? Has anyone pulled his bk filing to see if he included BAB or L and BAB in his schedules?

          Next, who is L? Is L Larry Mackey? Or is L the wife of another B&T attorney who was involved with Bales and Brizzi in the Venture Value Fund?

          And why didn't Bales retain Brizzi to represent him? After all, he's practicing law these days....don't you think that is odd?

          Larry Mackey can issue whatever statements he likes. Perhaps he can tell is why it is that Bales allegedly bought a large position in Cellstar right before Indianapolis-based Brightpoint bought them--same company Brizzi, at the time broke, managed to timely scoop up and wallah, Brizzi gets 50% ownership in
          Elkhart for free....is that where Bales got that cash--there was a $2.10/share dividend and allegedly SOmerset prepared Bales tax return showing Cellstar...

        • Accomplice
          Wow,
          How does Carl semm to get out of all of this??? Co-owner of the building and his partner gets indicted and Carl does not??? Something smells. He likely "rolled over" on his "friends"!
          I like the earlier comment - "off with their heads and include Carl with them!!!
          Grred is Bad!
        • 40 under 40
          Yet another member of the IBJ "Forty Under Forty" to be indicted.
        • Conflict of Interest
          At B & T? GASP ??!!!!
        • Long Overdue
          Great job from South Bend grand jury. Go get 'em. I agree, they would not have been indicted had it happened in Indpls. Fitting that good ole B & T is representing one of them. Where's what's his name - the B & T legal eagle that was head of the IN Supreme Court Disciplinary Committee?
        • Question
          If the state wanted that location so badly, why did the old owner sell? HELLO?
        • Man oh man
          Maybe Larry needs to take ol John down to the Amazon and have "a talking to" on one of those boats manned by 9 and 10 year old pygmy girls--

          Oops, was I supposed to disclose this. Damn.

          In the interim how fitting that Larry is riding to the rescue. Only problem is, what if Bales decides to open his mouth on Brizzi and Durham? Isn't that a CONFLICT OF INTEREST, Larry?

          Priceless!
          • YIPES!! Mackey DEFENDING Bales!!!
            Larry Mackey representing Bales!! Wasn't Mackey the one who prosecuted Timothy McVeigh?!? I love lawyers with principles!!
          • Hmmm
            notice it took a South Bend grand jury to get the indictment. Doubt it would have happened in Indy.

            Wonder what else they have coming down the Hwy 31 pike from up north. Hopefully charges against the others unnamed.
          • re
            Page 5, under purpose of conspiracy "Bales, Spencer, Page AND OTHERS"

            Gee, that's hard to figure out who "others" would include.

            http://www.ibj.com/ext/resources/IBJ-Daily/00-2011/12-December/bales-indictment.pdf
          • Notice this in the indictment

            click on word in this article : " indictment: (links) and you can see the actual indictment, which states Bales, Spencer, Page "and others"

            Notice also the BAB Equity mortgage was not filed until 11/23/2009. How interesting given the FBI was raiding Brizzi best bud Tim Durham within days. And why is it that Bales gave up 75% of the $$$? After all, he was already allegedly committing a crime to take anything. WHY would Bales give Page 75% for nothing but putting his name on a document? And why was Carl's name missing from all the paperwork? '

            Maybe because if you go back and look at Carl's disclosures, didn't he list Venture as one of his investments? Sure makes sense to me, but hey, no one would want to libel or slander Brizzi....but you can read this article and decide for yourself...

            Advance Indiana: Brizzi's Tangled Web Of Conflictsadvanceindiana.blogspot.com/.../brizzis-tangled-web-of-conflicts.htm...Cached - Similar
            You +1'd this publicly. Undo
            Dec 11, 2009 – It looks like Marion County Prosecutor Carl Brizzi's financial ties to Tim ... not disclosed his role on Venture Value Fund's board of managers. ...


            http://www.ibj.com/ext/resources/IBJ-Daily/00-2011/12-December/bales-indictment.pdf
          • Omission
            I'm sure it was a coincidence that Brizzi's wife was working for DCS at the time and that Carl received half ownership in the property for no money down. Poor Carl, he just seems to keep getting caught up in misunderstandings--a total innocent surrounded by crooks and schemers.

            Right.
          • Hi Carl!
            Hi Carl, will you be commenting on this story this Saturday on your crime beat? We love your show.

            Baby
          • Comment from the Gov?
            Can't wait to see who at the State level gets dragged into this. I'm a huge Daniels' supporter, but I think the Gov has some 'splanin' to do here!!
            • Exclusive Non Comp
              Long Time Observer has a good point, the exclusive non compete was a shame and political contributions are likely following a pattern who authorized the agreement with his company. Who got buttered up in political election time from bales? Those people, serving our state, should be put in jail as well, they are the real criminals. I can say first hand, we did not get a real estate contract with the state because of this exclusive non bid agreement and they went with another one of his friends buildings, which was not the best choice, not because our building was better and cheaper but because of the kickbacks. What is one going to do or cry faul to when you know your getting screwed which in turn hurts the community. Kinda reminds me of the way Russia does business.
              • About Time!!
                About time they nailed this hot shot!! Whomever representing the state that signed the exclusive, non-bid agreement with him should also be indited (and hopefully will).
              • More Under The Hood
                There are likely more deals like this under the hood if you look harder. Its been a pretty well know pattern and the people that lost out were the owners providing the fair leases but they choose to push them into owner occupied buildings getting double the love.

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