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Bales partner pleads guilty in deal with prosecutors

January 4, 2013

SOUTH BEND — Indianapolis attorney and developer Paul J. Page has agreed to cooperate with federal prosecutors in an investigation that targets former Marion County Prosecutor Carl Brizzi.

Page on Friday pleaded guilty to a felony wire fraud charge in U.S. District Court in South Bend, agreeing to testify if called against co-defendants John M. Bales, a real estate broker, and Bales partner William E. Spencer in the Northern District case.

Page separately agreed to cooperate with a Southern District investigation in a move that could forestall additional charges against him, Assistant U.S. Attorney Jesse M. Barrett noted during the morning hearing.

Page, 47, could face up to 20 years in prison and a $250,000 fine for the wire fraud charge, but he opted to take his chances on leniency in exchange for cooperation as authorities investigate Brizzi's side dealings during his two-term tenure as prosecutor.

A 14-count indictment in South Bend alleges Page, Bales and Spencer defrauded the state and a bank over their purchase of a building in Elkhart and a subsequent lease deal with the state's Department of Child Services. The deal was first revealed as part of an IBJ investigation.

A trial in that case is scheduled to begin Jan. 28 and last up to two weeks.

The government agreed to drop the 13 other charges Page faced, assuming he cooperates as promised. Page also agreed to forfeit the office building in Elkhart he has said he co-owned with Brizzi. Page's sentencing is scheduled for April 12.

Page declined to comment as he left the courtroom Friday to meet with a probation officer.

His attorney, Robert W. Hammerle, said Page was a victim of a scheme orchestrated by Bales. He pointed to the fact that Bales named the company that wound up owning the Elkhart building L&BAB LLC, an acronym for "lazy and broke-ass bitch", an apparent reference to Page and Brizzi. 

The government has not filed charges against Brizzi.

Asked whether the investigation in the Southern District has Brizzi as its target, Hammerle said: "Use your own judgement. Beyond that, I'd refer you to the U.S. Attorney's Office."

Tim Horty, a spokesman for the U.S. Attorney's Office in Indianapolis, said he could not "confirm or deny any ongoing investigation."

Barrett declined to comment or provide a copy of the cooperation agreement involving Page, which was was not filed in court.

During the hearing, Barrett described the probe as a "parallel investigation in the Southern District into conduct in which Mr. Page was involved."

Brizzi has drawn attention from the FBI and federal prosecutors because of a series of questionable business deals with Page and for his friendship and business ties to financier Tim Durham, who was sentenced in December to a 50-year prison term for orchestrating a $250 million Ponzi scheme.

The FBI also was looking into deals involving Brizzi, including the state lease deal in Elkhart and an Indianapolis drug case.

Page arranged for Brizzi to own 50 percent of the office building in Elkhart without Brizzi’s putting up cash or credit, as a finder's fee of sorts. 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.

Page has not been accused of wrongdoing in the Mobareki matter.

At the hearing Friday, U.S. District Judge Robert L. Miller Jr. asked Page several questions about the plea agreement to ensure the terms were clear. Page acknowledged he could be called to testify in the case against Bales and Spencer, and agreed to stipulations that could extend his potential prison sentence including the fact the crime required "sophisticated means" and "special skills."

Page admitted in court and in the plea agreement (read it here) he concealed from the bank that he received funds from Bales to buy the Elkhart building in 2008.

The two had agreed to split the proceeds of the investment, despite the fact Bales' firm, Venture Cos., represented the state in lease deals for state agencies. The firm's contract with the state explicitly banned Venture and its partners and employees from “any ownership interest” or any “attempt to acquire” properties to be leased by the state.

"I'm guilty of these charges," Page told the judge.

Hammerle said the lender has not lost money on the deal since Page continued making payments.

"As long as I've done this, the toughest cases, right or wrong, are when you like your clients," Hammerle said. "I like Mr. Page."

Jason Barclay, an attorney for Bales, said his client has not entertained or accepted a deal with federal prosecutors.

"We're looking forward to proving his innocence on January 28," he said.

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