Brizzi Wants To Be Donald Trump Too

He's supposed to be the full-time prosecutor of our state's largest county. In recent weeks, we've learned about Marion Co. Prosecutor Carl Brizzi's penchant for following the stock investments of alleged Ponzi scheme perpetrator, Tim Durham, his largest campaign contributor, ala Martha Stewart. Now it emerges that Brizzi has been busy trying to become the next Donald Trump in the world of real estate investment with another political insider, John Bales.

Advance Indiana first made a financial connection between Brizzi and real estate developer John Bales more than a year ago when I disclosed Brizzi's participation in a proposed $30 million real estate venture headed by Bales that intended to buy up distressed properties in Florida's one booming real estate market. At that time, controversy erupted over the Ballard administration's decision to award a no-bid contract to Bales to help dispose of "surplus" park lands. Last week, Advance Indiana exclusively reported on Brizzi's investment in another Bales real estate venture, Curtailing Investments, LLC. Borrowing heavily on my original reporting (without attribution, of course), the IBJ's Cory Schouten uncovers more real estate investments by Brizzi since he became prosecutor seven years ago, mostly involving deals with Bales. One of Bales' companies initiated a deal that landed a lease for the office building where the prosecutor's office leases 72,000 square feet.

Brizzi first made news with his investments while in office two years ago when he emerged as one of five investors in Harry & Izzy's, a new restaurant chain launched by the owners of St. Elmos steakhouse, along with the Colts' superstar quarterback, Peyton Manning. Although Brizzi is barred under Indiana law from holding an interest in a liquor license because he is a law enforcement officer, he got around the bar on his 10% ownership stake in Harry & Izzy's that was raised by the state's ATC by getting an opinion letter from his friends in the state's Attorney General's office that carved out an exception for him.

While the Harry & Izzy's story garnered public attention, Brizzi's other real estate investments have largely gone unnoticed until now. According to Schouten's story today in the IBJ, Brizzi invested in the development of a Key Bank branch in Broad Ripple in 2005 as part of his investment in Curtaiing Investments, and he took an ownership interest in an office building in Elkhart, Indiana, which recently received a lucrative state contract to lease most of the space in that building for the state's Department of Children Services. Brizzi also considered buying an interest in property that is home to the Cafe Patachou restaurant at 49th Street and Penn earlier this year. Neither Brizzi nor Bales would return calls from the IBJ seeking comment from them on their real estate investments.

Schouten's story raises questions about whether Bales and Brizzi received a sweetheart deal from the state on the lease of the Elkhart property. Brizzi disclosed on his federal disclosure statement he filed earlier this year when he briefly considered a bid for U.S. Rep. Dan Burton's fifth district seat an interest in L & BAB LLC, owner of the Elkhart real estate, that’s worth $50,000 to $100,000. "One such building is at 1659 Mishawaka St. in Elkhart, where the Department of Child Services agreed in July 2008 to lease 13,000 square feet for $19.12 per square foot, or $248,500, per year," Schouten writes. "It’s one of the highest per-square-foot rates for a state agency, and well above the $6-$10 range for available Elkhart office space listed on LoopNet," he continues. "Other state agencies pay less for space in downtown Indianapolis." Unbelievable. We're paying more to rent real estate space in economically-depressed Elkhart than we are in downtown Indianapolis?

Brizzi also borrowed $325,000 in 2004 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 Ben Pecar. Pecar, incidentally, was involved in that Florida real estate venture with Bales and Brizzi as well. It looks like 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, although I believe they may be one and the same, the latter being the name to which he changed the former, which appears to carry a sexual connotation.

So the question becomes: How can Carl Brizzi afford all of these investments on his $125,000 a year salary as a prosecutor, not to mention his stock portfolio? According to his divorce documents, he and his ex-wife owned three homes together, each with first and second mortgages. Brizzi is paying $1,000 a month in child support to his ex-wife for the couple's four children. Ironically, an ethics expert tells Schouten that it does not appear that any of Brizzi's investments violated the City of Indianapolis' ethics ordinances. Actually, Brizzi is considered a state officer. That is why he files a financial disclosure statement with the State of Indiana and not the City of Indianapolis. A tough federal prosecutor would likely find plenty of legal wrong with what has been publicly disclosed to date about Brizzi's investments. If this were Chicago instead of Indianapolis, U.S. Attorney Patrick Fitzgerald would have already convened a grand jury and began issuing subpoenas to investigate Brizzi. But we have interim U.S. Attorney Tim Morrison, the guy who inexplicably unfroze Durham's assets days after filing a forfeiture action in the U.S. district court in Indianapolis.

I'd rather not sit around and wait so see what happens to Brizzi. I will once again renew my call as an elected Republican precinct committeeman for Brizzi to resign his office immediately so we can appoint someone to clean up his tarnished office, and to run for election to his office next year.

Even More Trouble For Brizzi

The IBJ and Indianapolis Star both have new reports this weekend on another Durham company in which Marion Co. Prosecutor Carl Brizzi owned stock. The company in question is Red Rock Pictures Holdings, a production company in which Durham and other associates acquired an interest in recent years and which later loaned millions to National Lampoon, Inc., another Durham-controlled company. The stock ownership was revealed on a federal financial disclosure form Brizzi filed earlier this year when he formed a campaign committee for a potential bid for the congressional seat currently held by U.S. Rep. Dan Burton (R). Brizzi did not respond to questions from the Star's Ted Evanoff and John Russell:

It is not known whether Brizzi currently holds shares in Red Rock. If he does, the disclosure would contradict a statement he made earlier this week, when he said he had no further financial ties to Durham, beyond those already reported in news stories.

Brizzi, who did not respond to several requests for comment Friday, has acknowledged he was appointed to the board of a Durham company recently raided by the FBI and bought stock in another Durham-related business whose records have been subpoenaed by the Securities and Exchange Commission.

Brizzi disclosed the Red Rock investment in a campaign filing when he was considering running for Congress in the district represented by Rep. Dan Burton. Brizzi pulled out of the race after Burton said he planned to run for a 15th term.

On the disclosure form, Brizzi listed the value of his stock in Red Rock at $1 to $1,000. Shares in Red Rock are nearly worthless, trading for less than a penny each. It was not clear when Brizzi bought the stock, how much he paid or how many shares he still holds.

Also unclear is how Brizzi came to buy stock in the little-known company. No analysts follow the stock or offer recommendations on it. The company has been struggling to make ends meet.

In the quarter that ended in May, the company lost $4.2 million and disclosed it has experienced losses from operations since its inception in 2004 that raise substantial doubt about its ability to continue as a going concern.

The stock ownership in Red Rock becomes more troubling when you discover that Dan Laikin of National Lampoon, who recently pleaded guilty to federal charges that he manipulated National Lampoon's stock while serving as its CEO, is in the mix. Durham took the helm of National Lampoon after Laikin stepped down. The Star notes that Red Rock loaned at least $1 million to Laikin. National Lampoon bought a 14% stake in Red Rock and shared a chief financial officer, Lorraine Evanoff, for awhile. Evanoff stepped down after Laikin was charged with stock manipulation. Red Rock is currently run by television marketer Reno Rolle.

In previous interviews, Brizzi has claimed to reporters that Fair Finance and his stock ownership in CLST Holdings, another Durham-controlled company under investigation by the SEC, are the only business ties he had to Durham. Brizzi later hedged his answer in an interview with WTHR's Chris Proffitt when asked if Durham had personally loaned money to him. The new discovery of his stock in Red Rock further complicates his Durham problem. A pattern of Brizzi investments following Durham's is emerging. There have been Internet-posted rumors in the past that Red Rock was a "pump and dump" target by some investors. That's a form of stock fraud where stock investors buy a company's stock artificially cheap, generate excitement to pump its price and then dump it for a quick profit. Gee, didn't that happen with Brightpoint's stock a few years back?

The IBJ's Greg Andrews notes the growing problem Brizzi's ties to Durham are causing him. Andrews first broke the news that Brizzi had agreed to serve on Fair Finance's board of directors but thought better of that decision after Andrews began his news reporting of the company. Brizzi declined an interview for Andrews' story, but he did respond to questions by e-mail. In that correspondence, Brizzi told Andrews he thought he had sold the Red Rock stock that he had listed on his federal financial disclosure statement:

Brizzi declined IBJ’s requests for an interview about his investments. In an e-mail exchange, he initially said he did not think he owned stock in Red Rock. When presented with the disclosure, he said he thought he had sold it since the filing.

It’s not clear what led Brizzi to either Red Rock or CLST. In a letter to supporters he posted on his Facebook page Dec. 7, Brizzi said he began buying CLST in 2005 “after discussing the investment, as well as other companies, with friends and financial advisers as part of my overall investment planning.”

In that letter, Brizzi said, “To the best of my knowledge, there are no other businesses, stocks, or investments in which Durham and I both have an interest.” He stood by that statement after being presented with the Red Rock disclosure but didn’t respond to further inquiries.

The number of shares Brizzi owned in Red Rock wasn’t clear. Stock in the struggling business trades for less than a penny, leaving even large holdings nearly worthless. The filing listed the value of his stake at between zero and $1,000.

Andrews also picks up on the pattern of Brizzi buying stock in companies that Durham has become a major investor:

Details of Brizzi’s CLST investment also are sketchy. His purchases began the same year a Durham-led investment group began scarfing up shares of the firm. SEC filings don’t list Brizzi as part of that group.

In his letter to supporters, Brizzi said his current CLST stake is worth about $7,500, based on the stock price of about 10 cents a share. That indicates he owns about 75,000 shares. Purchasing that quantity in 2005 would have cost $24,000 at the stock’s low for the year and $340,500 at the stock’s high. Yet in his WXNT interview, Brizzi said he spent less than $10,000 to buy the shares.

When Brizzi acquired his stake, the company was known as CellStar Corp. and was in the cell-phone distribution business. It later sold off those operations to locally based Brightpoint Inc. and other firms and distributed $2.10 per share in cash dividends to stockholders.

CLST was in wind-down mode until about a year ago, when it suddenly began purchasing customer-finance receivables, including some from Fair Finance. Fair filings with Ohio securities regulators show that, at the time, Fair was strained for cash and was seeking money to repay purchasers of its investment certificates.

Brizzi’s disclosure statements dating to 2001 never have listed ownership of more than five individual stocks in a single year, though the federal filing from this year shows him owning more than a half dozen mutual funds, each with between $1,000 and $15,000 in assets.

Brizzi earns $125,000 a year as prosecutor and doesn’t have extensive assets. The federal filing shows he owes between $100,000 and $250,000 on a loan he took out to buy ownership interests in the local restaurant Harry & Izzy’s. The filing shows he still is paying off student loans.

Papers filed in connection with his divorce, which was finalized in February, showed he and his wife had three residences, but with first and second mortgages on all of them.•

The more reporters dig for information, the more troubling the questions about Brizzi's financial relationship with Durham become.

Brizzi's Tangled Web Of Conflicts

It looks like Marion County Prosecutor Carl Brizzi's financial ties to Tim Durham aren't his only problem. Investigators might want to look at his financial relationship with real estate developer John Bales. According to Brizzi's financial disclosure statements, he owns an interest in Curtailing Investments, LLC valued between $50,000 and $100,000. According to the Articles of Organization for the Curtailing Investments filed with the Secretary of State on August 29, 2003, the organizer and registered agent of the company was John Bales. If Bales' name sounds familiar, it's because he was at the center of a controversial no-bid real estate contract Mayor Ballard's administration signed with another one of his companies, Venture Real Estate Services, LLC, to sell off the City's "surplus" park lands. More importantly, though, Brizzi engaged Bales to handle the leasing of office space for the prosecutor's office.

The county several years ago retained another Bales company, Meridian Asset Development, to find building space for county agencies to lease. Instead, the company wound up buying buildings and becoming the developer. That included about 72,000 square feet of space Brizzi's office leased at 251 E. Ohio Street. Meridian Asset Development later became a part of Bales' Venture Companies. I previously reported that one of that companies' divisions, Venture Value Fund I, identifies Brizzi as being a member of its Board of Managers. According to the company's website, Venture Value Fund I was "formed for the purpose of investing in distressed and undervalued real estate projects and properties due to the recent downturn in the housing market as well as the related tightening of credit for residential and commercial real estate projects." Brizzi's financial disclosure statements have not disclosed his role on Venture Value Fund's board of managers. Brizzi was one of six board of managers described in the private placement offering for the company, which indicated that the six board members represented Series A ownership units in the business and had invested an aggregate of $60,000 between them and were committed to investing an additional $90,000 in the Series B units. The offering proposed up to $30 million in Series B units sold in increments of $10,000 per unit. This is how a private placement referendum for Venture Value Fund I describes Brizzi:

Carl has served as the Marion County Prosecutor since November 2002. Using his comprehensive plan titled the “Brizzi Brief,” Carl focused the efforts of the Prosecutor’s office on prosecuting without apology the worst offenders and creating innovative crime prevention programs. Carl was a leader in changing Indiana law to allow law enforcement officers to use sting operations to catch those soliciting children over the Internet. Carl has aggressively prosecuted those who make, sell and use Methamphetamine. In 2005, Carl’s office achieved a 95% conviction rate in Meth cases. As former Chief Gang Prosecutor, Carl understands the danger associated with increased gang activity. For this reason, he fought to pass legislation that doubles the prison sentence for certain gang-related crimes.

In addition to tough prosecution, Carl also makes it a priority to engage in efforts that will help prevent crime. In October 2003, he kicked off the Mentor Network with Colts Coach Tony Dungy. Carl also created MY-KID (Mentoring Youth-Kids improving Directions), a mentoring program that pairs one volunteer with three middle school students and developed the EKG (Educating Kids about Gun Violence) program aimed at reducing youth gun violence.

Carl was a deputy prosecutor and the Chief Gang Prosecutor under former Marion County Prosecutor Scott Newman. He also served as Chief Investigative Council with the United States House of Representatives and was a founding partner in the law firm of Brizzi, Collignon & Dietrick.

Carl was raised in Indianapolis and attended Christ the King Elementary School, Bishop Chatard High School, and is a graduate of North Central High School. He received his B.A. in Political Science from Indiana University and earned his law degree from Valparaiso School of Law.

I raised the issue before and I'll raise it again. Should Carl Brizzi have a business relationship with the same guy who procured and developed government office space for the Prosecutor's Office? While Brizzi struggles to explain his tangled and conflicted relationship with Tim Durham, reporters might want to begin asking him questions about his financial relationship with John Bales.