Bales And Spencer Found Not Guilty: Federal Prosecutors Have Egg On Their Face

The U.S. Attorney's Office in the Northern District of Indiana has egg on its face after a jury found real estate developer John Bales and his business partner, William Spencer, not guilty on multiple counts of fraud arising out of their roles as the state of Indiana's exclusive real estate leasing agent for state office space. Defense attorneys pummeled the faceless and voiceless co-conspirator, Indianapolis attorney Paul Page, whose conspicuous absence from the government's roster of witnesses leaves many unanswered questions about the government's handling of this case it claimed was of great importance.

Last month, Page, a criminal defense attorney by trade, pleaded guilty to a wire fraud charge for his role as a straw buyer of an Elkhart office building that Bales and Spencer intended to lease for the state's Department of Child Services. Bales fronted the money Page needed to secure a loan from a bank and Bales and Spencer made everything else happen, as long as Page agreed to kick back Bales' original investment, plus a share of the profits from a quick flip of the property after the office space was built out for DCS and a quarter of a million dollar a year long-term lease was in hand according to Page's plea agreement. Yet the jurors in the federal court room in South Bend never learned that Page had pleaded guilty to his role in the scheme last month, nor were they allowed to hear one word from Page about the scheme because federal prosecutors chose not to call him as a witness. Instead, the jurors were treated to endless personal attacks by defense attorneys on the absent Page, who referred to him as a "lazy and broke-ass bitch", a "pig", a "thief" and a "crook."

The jurors also never learned that the man who was given a 50% stake in the company Bales set up for Page to act as a straw buyer without investing a single dime of his own money was the state's most powerful prosecutor at the time, Marion Co. Prosecutor Carl Brizzi, whose campaign committee Bales' criminal defense attorney chaired. Jurors didn't hear that prior to Brizzi obtaining his interest in the Elkhart real estate that he had publicly told reporters for the Indianapolis Star he was opening a criminal investigation of DCS' handling of an abused child in Indianapolis, Tajanay Bailey, who died a brutal death at the hands of her abusive mother shortly after DCS employees returned the young girl to her care despite ample evidence in the case file that their actions were not in the young girl's best interests. A source witnessed Gov. Daniels angrily confront Brizzi about his investigation of DCS at a cocktail reception during an Indiana Society gathering at a Chicago hotel shortly after Brizzi opened his investigation. Brizzi's office later quietly dropped the case before Page acquired the Elkhart Building with Bales' money and obtained a long-term lease with DCS. Months later, Brizzi would receive his 50% stake in the company without investing a dime. The federal judge hearing the case refused to let jurors see e-mails that showed Spencer and Brizzi discussing a potential ownership stake for Brizzi in another Bales real estate project in Indianapolis.

The jurors also didn't hear that the law firm defending Bales had helped him land the sweetheart deal leasing all of the state agency properties for state agencies from the Daniels administration, or their continued role in assisting Bales' dealings with the state, which included help directly from a deputy chief of staff in the Governor's office whose brother was a partner at the same law firm defending Bales. The jurors heard nothing about the tens of thousands of dollars Bales showered on Daniels' campaign committee in consideration for his sweetheart deal or the campaign committee of Brizzi chaired by Bales' criminal defense attorney.

The jurors never heard that the law firm defending Bales is the same law firm that has been paid tens of millions of dollars by the Daniels administration to defend the state's losing lawsuit over the welfare privatization debacle against IBM, which lost the contract to another client of the law firm, ACS, IBM's former partner in the privatization deal. And what about that call center lease in Marion that was awarded to a powerful state lawmaker and his son, who just coincidentally purchased the building before being awarded a lease that would make them millions of dollars?

Jurors never saw the e-mails Bales and his underlings sent to state employees who tried to keep his shady dealings in check, boasting to them that he was close to Governor Daniels whose phone number he had on his speed dial, or the threats he made to sick his powerful attorney-lobbyists on them if they didn't give him what he demanded. More importantly, the jurors heard nothing about the other real estate leased to state agencies in which Bales' company also held a financial stake, which the IBJ's Cory Schouten had previously reported in his detailed investigative reporting that led to the indictments of Bales, Page and Spencer.  Instead, we have one guilty plea from one straw buyer and bit player who could not have committed the crime to which he confessed if the decision reached by the jurors in South Bend was a legally correct verdict. All in all, it was a pretty sad day for justice in Indiana. The federal prosecutors in South Bend should be holding their heads in shame tonight.

The IBJ's Cory Schouten, the only reporter to provide daily coverage of the trial had Bales' reaction to the verdict:

"Few things have brought more pride than the small part I played in helping the children in need," Bales wrote, referring to his role in finding office space for Indiana's Department of Child Services. "I won't let this legal ambush change that. I did not deserve this nightmare and pray that no other citizen suffers what I experienced."

This is utter crap from a greedy and an overly ambititous real estate broker who could give a damn less about the children DCS is charged with protecting in this state. The losing federal prosecutor, Jesse Barrett, had no comment on the verdicts. No surprise there. Anyone want to take a guess where Mr. Barrett worked before he became a federal prosecutor. You knew it. The dutiful public servant worked in Barnes & Thornsburg's South Bend office, the same law firm defending Bales!

Please see the timeline I developed for the John Bales saga here. It provides the road map of the trail of deceit, fraud and self-dealing that exemplifies how the public's business is conducted in this state. The bottom line is that only the people who lie, cheat and steal get ahead. There's no reward for honesty, integrity and trust.