Monday, December 21, 2009

Carl Brizzi's Real Estate Investments; Possible Tax Problems Ahead?

Usually the question asked of elected officials is "Where did the money go?" With regard to Marion County Prosecutor Carl Brizzi, the question is "Where did the money come from?"

While Brizzi's $125,000 salary as prosecutor is far better than most associates and some partners at law firms earn in Indianapolis, it is not the type of salary that allows one to become a major investor, especially considering that Brizzi is still paying back student loans and has four children for whom he is paying child support.

Nonetheless, the limited government salary has not deterered Prosecutor Brizzi from becoming a major investor. In addition, to his investments in stock which generally are linked directly or indirectly with embattled Indianapolis businessman Timothy Durham, Cory Schouten of the Indianapolis Business Journal reports that Brizzi is also a major real estate investor:

Since he took office in 2003, Marion County Prosecutor Carl Brizzi has participated in more real estate deals than some full-time developers.

Records show he partnered in 2005 to develop a new Key Bank branch in Broad Ripple, and in 2008 he took an ownership interest in an office building in Elkhart that has the state as a major tenant.

He bought a 10-percent stake in downtown’s Harry & Izzy’s restaurant in 2007, flipped two condos in Broad Ripple’s Reserve development between 2004 and 2009, and joined local real estate heavyweights in an attempt to launch a $30 million vulture real estate fund in 2007.

And this year, the Republican prosecutor considered buying a minority interest in a retail building anchored by the restaurant Café Patachou at 49th and Pennsylvania streets before ultimately passing on the deal.

Brizzi, 41, has come under fire in recent months for investing in public companies connected to his friend and largest donor, embattled businessman Tim Durham. But Brizzi’s next headache could involve questions about his real estate dabbling—much of it done in partnership with another friend, Venture Cos. President John Bales, who last year won a no-bid contract to handle the sale of surplus city property.

Neither Brizzi nor Bales returned phone messages from IBJ, but a review of dozens of public records show their business relationship runs deep.

Bales led the effort to find new office space for the Prosecutor’s Office in 2003, settling on 72,000 square feet at 251 E. Ohio St.

He also handles lease deals for state agencies and has a knack for buying buildings where the state (a reliable and lucrative tenant) eventually leases space.

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. 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. Other state agencies pay less for space in downtown Indianapolis.

Brizzi has a stake in the building’s owner, L & BAB LLC, that’s worth $50,000 to $100,000, according to a federal disclosure he filed in May in preparation for a possible run for the 5th District U.S. House seat now held by Dan Burton.

He also disclosed an interest in Curtailing Investments LLC, which developed the Key Bank branch at 6410 N. College Ave. Records show the developer took out a loan for $1.15 million, secured by a long-term land lease with Key Bank, when it bought the property. Bales led the effort.
People will recall that Bales' Venture Real Estate received a sweetheart deal from the Ballard administration to inventory city property and then obtain the commissions off of any sale of those properties.

While these investments may not, by themselves, constitute ethical violations, they raise major red flags about how Prosecutor Brizzi obtained the money to make major stock and real estate investments that would not ordinarily be possible for someone on a $125,000 government salary. One has to ask the question whether people like Durham and Bales, both wanting the support of a powerful local politician, gave the money to Brizzi for the investments.

While Durham and Bales giving Brizzi money could well create potential conflict of interest, there may be a more serious problem. If Brizzi did not report these investment gifts from his friends as income, he may have some questions coming from the Internal Revenue Service

6 comments:

Flipper said...

Makes you wonder how much time he really spends as prosecutor with his full time real estate and restaurant businesses.

Jon said...

It used to be that the IRS would investigate people whose lifestyle did not match their income, maybe someone should call the feds.

Paul K. Ogden said...

Jon,

I'm pretty sure the feds can read the newspaper.

Jon said...

Paul, sarcasm aside as to calling the feds, one does wonder why none of the current Marion County politics hasn't risen to the level of federal awareness.

Citizen Kane said...

The Feds don't care.

Hoosier in the Heartland said...

Ah, but the whole mess made the Wall Street Journal today.

http://eyeonindianapolis.blogspot.com/2009/12/ponzi-probe-ensnares-indiana.html