Friday, January 04, 2013

John Bales Investigation Timeline

I've put together this timeline of the investigation of John Bales' corrupt real estate dealings with the State of Indiana and the City of Indianapolis over the years, which should provide a useful tip sheet to readers to follow during this ongoing corruption case, connect the dots and wonder when a panoply of co-conspirators will be indicted along with him.

2001--John Bales, a Carmel High School graduate and Ball State University alum, is working as an up-and-coming real estate broker at CB Richard Ellis when Marion Co. Prosecutor Scott Newman retains Bales' services to assist his office in consolidating its office space at 251 E. Ohio Street. Newman also convinced Marion Co. Coroner John McGoff to retain Bales' services to lease office space for the coroner's office at 521 West McCarty Street. Unknown to Dr. McGoff, the building leased by the coroner's office is linked to Bales' business partner, Greg Rankin. The Indiana company that owns 521 West McCarty is financially linked to a business controlled by Fred Dorsey, the father-in-law of Bales' business partner, Greg Rankin.

2002--Carl Brizzi is elected as Marion Co. Prosecutor, succeeding Scott Newman, who becomes a partner with Barnes & Thornburg. Newman introduces Brizzi to Bales to work out details on the build-out of space for the prosecutor's office at 251 E. Ohio Street under the lease agreement signed off on by Newman. The Metropolitan Development Commission approves a $25 million condominium project proposed by Bales and his partner, Steven Pittman, to develop 148 condominiums at 6600 Westfield Blvd. on a 12-acre site over the objections of environmental activists.

2003--John Bales leaves CB Richard Elllis and forms his own company, Meridian Asset Development, a forerunner of later Bales' companies, including Venture Companies and Venture Real Estate Services. Brizzi develops a close friendship with Bales, who in turn includes Brizzi as a partner in some of his real estate deals, including Curtailing Investments. Bales suddenly emerges as a major political contributor to the campaigns of Carl Brizzi and Mitch Daniels and other Republican candidates and committees, with his contributions reaching well above $50,000 in a relatively short period of time. Bales later lands a lucrative lease for office space to be occupied by a community court operated by the Marion Co. Superior Court for a building he owned at 902 Virginia Avenue. Bales is part of a development team awarded the right to redevelop the former Buggs Temple building on the downtown canal.

2004--Brizzi borrows $325,000 to invest in a couple of condominiums at a Broad Ripple condo project known as The Reserve. That project was developed by Bales, Steve Pittman and Barnes & Thornburg's Benjamin Pecar. Pecar, incidentally, was involved in a proposed $30 million Florida real estate venture with Bales and Brizzi as well to invest in distressed properties. According to the IBJ's Cory Schouten,  Brizzi was able to flip both of those condos for a quick profit. He made $24,000 on one of the units he sold in 2006 according to Schouten. Brizzi owns a stake in two other companies, Vergina, LLC and CJB Management, LLC, according to Schouten.

2005--The Marion County Alliance of Neighborhood Associations releases a report distributed to Mayor Bart Petersion, the Marion Co. Commissioners and the City-County Council urging that three current members of the Metropolitan Development Commission, including John Bales, not be reappointed to the MDC, for failing to respect the Comprehensive Development Plan.

2006--Bales is reappointed as a member of the Metropolitan Development Commission on January 13, 2006 by the Marion Co. Board of Commissioners on the motion of then-Marion Co. Auditor Marty Womacks, which was approved "with caution to watch attendance at meetings." Bales' Venture Real Estate lands an exclusive real estate leasing agreement with the state of Indiana with the help of attorneys at Barnes & Thornburg, including Bob Grand and Joe Loftus. Venture earns more than $3 million in commissions on office space leases it brokered for the state over the next several years. Venture's contract with the state explicitly bans Venture and its partners and employees from “any ownership interest” or any “attempt to acquire” properties to be leased by the state.

2007--On January 18, 2007, Bales is replaced by the Marion Co. Commissioners as a member of the MDC. Brizzi invests in Harry & Izzy's, a restaurant chain launched by St. Elmos' Steve and Craig Huse, which also included as investors Thomas Brown and Christopher Clifford. Legal questions later arise over how Brizzi can have an ownership interest in an establishment that holds a liquor license under a state law that prohibits law enforcement officials from owning an interest in liquor licenses. An Attorney General's opinion is crafted by Brizzi's friend, Attorney General Greg Zoeller, that permits Brizzi to hold a financial stake in Harry & Izzy's as long as his interest is held indirectly through a separate business entity. Zoeller had also hired Tim Durham's step-son to work as an investigator in his office by this time.

November, 2007--Brizzi tells reporters he is troubled by the Department of Child Services' handling of Tajanay Bailey, a 3-year old girl who died after DCS officials removed her from the care of a foster parent and returned her to her mother's home where she had previously been abused. Bailey died after enduring a weekend of torture. "She was hung on a hook. She was punched in the chest several times, causing her to fall. She was kneed in the head by her mother all because she had defecated and urinated in her pants," said Brizzi. "We will not stop until we find out the answers," Brizzi said. The prosecutor's office confirms they're looking into the possibility there was a court order in TaJanay's file preventing her from going back to her mother according to WTHR.

December, 2007--Gov. Mitch Daniels, according to at least one eyewitness, angrily confronts Brizzi during an Indiana Society event at a Chicago hotel about comments Brizzi had made to reporters about investigating DCS' handling of the Tajanay Bailey case through a grand jury proceeding. No subsequent action is taken by the Marion Co. Prosecutor's Office against DCS in connection with the Tajanay Bailey case.

February 22, 2008--L&BAB, LLC, a company owned by Indianapolis attorney Paul Page is formed. Barnes & Thornburg's Benjamin Pecar is listed as the registered agent of the company, as well as several other companies linked to Bales.

April 18, 2008--John Bales wires $361,635.63 to a title insurance company for the purchase by L&BAB of a building located at 1659 Mishawaka Street, Elkhart, Indiana (the “Elkhart Building”) as part of a real estate fraud scheme to kick back money to Bales. L&BAB agreed to borrow the money necessary to purchase the Elkhart Building, which was valued at a little over $900,000. Using his position as real estate broker for the state, Bales negotiated a lease of the Elkhart Building for the Department of Child Services, which employs Carl Brizzi's ex-wife, Melanie, for an annual rental rate of $248,500. According to Page, the plan was to flip the building at which time Bales was to receive a share of the profit,. as well as be repaid the $361,635.63 he wired to L&BAB. Venture earned an $88,400 commission and a $28,875 broker fee when the deal to purchase the building closed. L&BAB later kicked back a more than $33,000 development fee it was to earn on the deal to Bales' Venture Real Estate.

May 18, 2008--Bales is appointed to the City-County Administrative Board through a resolution sponsored by Councilor Marilyn Pfisterer.

Mid-2008--Acting on Bales' behalf, Barnes & Thornburg's Bob Grand and Joe Loftus help Bales secure an exclusive real estate brokerage agreement with the City of Indianapolis to handle the disposal of city-owned property. Ironically, a key Ballard official, Mike Huber, had overseen Venture's contract with the state in 2007 while working at DOA before Joe Loftus landed him a top job in the Ballard administration. Bales continues to secure more lucrative leases with City-County government with the law firm's help, including a lease deal for the Marion Co. Probate Department in a building owned by Bales. Shortly after Greg Ballard's election and upon becoming Indianapolis mayor in January, 2008, Barnes & Thornburg's Bob Grand and Joe Loftus assume virtual control over the City, dictating to Mayor Greg Ballard who he could hire for key city positions and to whom he could award city contracts. The firm becomes the largest provider of legal services to the City of Indianapolis. The firm also hires a then up-and-coming member of the Indianapolis City-County Council and former deputy prosecutor in Brizzi's office, Ryan Vaughn, as an attorney-lobbyist for the firm. Vaughn, who is good friends with Bales, is registered with the state to lobby on behalf of Venture Real Estate, although he would later claim the lobbyist filing was made in error. Another former Barnes & Thornburg attorney, Chris Cotteril, his hired by Ballard to serve as the City's corporation counsel. He inks the deal with Bales' firm, describing it as "a creative way to save taxpayer money." 

December 24, 2008--Paul Page amends the operating agreement for L&BAB to make Carl Brizzi a 50-50 owner of the Elkhart building that is to be leased to DCS. E-mail exchanges between Venture's William Spencer and Brizzi discuss the possibility of granting Brizzi an ownership stake in a retail strip center owned by Venture at 49th & Pennsylvania in Indianapolis.

Summer, 2009--Venture's controller Matthew Dyer discovers that Page has withdrawn $50,000 from L&BAB and tells Bales and Spencer, who become very upset. Dyer interprets Venture's interest in the Elkhart Building as an equity interest because there was no documentation of any loan or repayment schedule. Bales insists that Venture's interest in the building is as a lender. He becomes angry and blames Spencer, who he relied upon to do the documentation, for "fucking him" according to Dyer.

October, 2009--More than a year after the Elkhart Building is purchased by L&BAB, Bales delivers a mortgage on the property to Page securing Venture's initial investment in the building, which Page says he executes and records but which is backdated to the date of the original purchase. Bales had become concerned after learning that Page had withdrawn $50,000 from L&BAB. Page reacts angrily to the recording of the mortgage by terminating Venture's agreement with L&BAB to manage the Elkhart Building.

The recording of the Elkhart Building mortgage coincides with an investigative series launched by the IBJ's Greg Andrews looking into Tim Durham's Fair Finance Co., which we now know was operated as a Ponzi scheme that defrauded investors out of more than $200 million. Andrews discloses that Brizzi has recently been appointed as a member of Fair Finance's board of directors, a position Brizzi stepped away from within two months after questions about the company's operations begin to swirl. Durham had established himself as the largest single contributor to the campaigns of both Brizzi and Gov. Mitch Daniels, contributing nearly $1 million to their campaign committees and other mostly-Republican campaign committees.

November, 2009--Ballard's Chief of Staff Paul Okeson steps down to become a high-paid executive with Ersal Ozdemir's Keystone Construction, which has been the beneficiary of city contracts totalling in the tens of millions of dollars, had numerous business dealings with Bales and would later receive $6.5 million to build a parking garage. Okeson is succeeded as Ballard's chief of staff by Chris Cotterill. By Thanksgiving, FBI agents had raided Durham's offices to determine what had happened to the investors' money. A civil forfeiture action filed by the U.S. Attorney's Office in Indianapolis against Durham's assets is withdrawn less than a week after its filing, forcing defrauded investors of Fair Finance to seek an involuntary bankruptcy dissolution of the company and the appointment of a receiver to try to recover more than $200 million in lost investments. Unconfirmed reports claim Barnes & Thornburg's Larry Mackey, a former federal prosecutor, intervened on Durham's behalf to get the U.S. Attorney's Office to drop the civil forfeiture action.

January, 2010--About 5 or 6 FBI agents quietly open an investigation of John Bales' dealings with the state of Indiana concerning the Elkhart Building. Someone tips off the Ballard administration of the opening of the investigation and Bales' real estate brokerage agreement with the City is quietly terminated.
May, 2010--FBI agents begin investigating records of the Marion Co. Prosecutor's Office pertaining to a lenient plea agreement Brizzi's office gave to indicted drug dealer Joseph Mobarecki, who was represented by Paul Page. Questions had been raised about the deal, including Brizzi agreeing to return $10,000 in cash seized by police during his arrest, which was apparently used by Mobarecki to pay his legal bills to Page.

June, 2010--House Minority Leader Pat Bauer (D-South Bend) calls for a federal investigation after the IBJ's Cory Schouten provides details of Bales' business dealings on behalf of the state of Indiana that raise serious conflict of interest concerns. Around the same time Bales was negotiating a controversial new office lease for the Hoosier Lottery, which ultimately led to the firing of Commissioner Kathryn Densborn when details of the controversial lease became public.

May, 2011--Mitch Daniels announces he will not seek the Republican nomination for president after months of speculation that he would run.

July, 2011--Tim Durham, James Cochran and Rick Snow are indicted by the U.S. Attorney in Indianapolis on multiples counts of wire fraud and securities fraud in connection with the loss of more than $200 million of investors money in Fair Finance.

November, 2011--Brizzi turns over $195,881 to the bankruptcy trustee for Fair Finance to settle a claim brought by the trustee to recover more than $220,000 Brizzi's campaign committee received from indicted Ponzi schemer Tim Durham. Mitch Daniels later returned only a few thousand dollars of the more than $200,000 he received from Durham, claiming all the money had been spent. Daniels personal net worth exceeds $50 million. No politicians return the tens of thousand of dollars they received in campaign contributions from Bales.

December, 2011--John Bales, Paul Page and William Spencer are indicted by the U.S. Attorney in South Bend on multiple counts of wire fraud, mail fraud and bank fraud in connection with the purchase and leasing of the Elkhart Building. Controversial Oklahoma City Bombing federal prosecutor and now Barnes & Thornburg partner Larry Mackey, who chaired Brizzi's campaign committee, emerges as the attorney defending Bales. "There was no hanky-panky. There were no secret straw buyers. This was all above board," said attorney Larry Mackey. "What John Bales is going to do is demonstrate to the trial jury that no crime was committed."

December, 2011--The IBJ's Cory Schouten details dozens of state e-mails that he uncovered showing a very cozy relationship between Bales and various members of the Daniels' administration. Daniels' deputy chief of staff, Betsy Burdick, intervened on behalf of Bales knowing that her brother, Brian, an attorney at Barnes & Thornburg, represented Bales. “I hope what I am hearing is wrong with respect to the way IDOA is doing business here,” Burdick wrote on Aug. 28, 2009. “If this is true it is unacceptable and further discussion needs to take place. If what I am hearing is correct—this is not how we do business.” Bales' firm threw its weight around with state employees as well. "The firm’s chief financial officer, Greg Rankin, responded with an email threatening to seek intervention by Barnes & Thornburg partners Brian Burdick and Joe Loftus or even J. Murray Clark, then the chairman of the Indiana Republican Party," Schouten reported. One of Bales' attorneys at Barnes & Thornburg, Jason Barclay, tells the IBJ's Schouten that the state had given its blessing to Bales owning an interest in the Elkhart Building despite the explicit ban on such ownership in his contract with the state.

January, 2012--The IBJ's Cory Schouten reports key details about how the Daniels administration had rigged the state bidding process to ensure that Bales company received the exclusive real estate brokerage agreement with the state of Indiana to handle state office leases based on the accounts of whistle blowers at the Department of Administration. The whistle blowers, who disliked their dealings with Bales, complained that Bales bragged about his close relationship with Daniels and how he had his personal cell phone number. It also became clear that attorneys at the law firm of Barnes & Thornburg were called upon to assist Bales, including Brian Burdick, whose sister worked as a deputy chief of staff in Daniels' office. One of the whistle blowers, Bea Tate, quit her job after she was demoted for tangling with Bales. Rob Wynkoop, the Department of Administration's deputy commissioner, emerged as Bales' key enabler within the agency. Wynkoop was recently named to head the agency in the Pence administration. Schouten also reported that Daniels' chief of staff, Earle Goode, who formerly ran DOA when the contract was awarded to Bales' firm, purchased a residential lot from Bales in an upscale Indianapolis subdivision on the city's far north side for $450,000. Schouten said his investigation of Bales had been hampered by months of stonewalling by the Daniels' administration, which threw up continuous roadblocks to his efforts to obtain public records pertaining to Bales' business dealings with the state.

May, 2012--Ryan Vaughn steps down from the City-County Council and becomes Ballard's new chief of staff, replacing Chris Cotterill

June, 2012--Tim Durham, James Cochrane and Rick Snow are convicted by a federal jury in Indianapolis. The three are later sentenced to lengthy terms in prison. Durham was sentenced to 50 years, Cochrane received a 25-year term and Snow received a 10-year sentence. Purdue names Gov. Mitch Daniels as its next president when he steps down as governor in January, 2013.

January, 2013--Paul Page pleads guilty to one wire fraud count and agrees to cooperate with the government's prosecution of John Bales and William Spencer, as well as a parallel investigation in Indianapolis that reportedly includes as a target Carl Brizzi. Bales and Spencer are scheduled to go on trial in a federal court in South Bend later this month.

2 comments:

Bob Cardwell said...

Thank you for all of the work you do on this important subject.

Bradley said...

Absolutely fantastic work, Gary. Let's hope someone who is in a powerful enough position to do something about it is paying attention (I'm not holding my breath, though).