Former Venture employee turns on Bales in testimony

SOUTH BEND — An FBI investigation into Venture Real Estate Services and principals John Bales and Bill Spencer already had begun when Matthew Dyer signed on as the company’s controller in December 2009.

Bales told him about the federal investigation during the interview process and said the company had done nothing illegal, Dyer testified Jan. 30 in U.S. District Court for the Northern District of Indiana.

Dyer, who worked at Venture until February 2012, prepared the company’s financial statements, cut its checks and managed properties including an Elkhart office building leased by the state’s Department of Child Services and owned by Indianapolis attorney Paul Page through a company called L&BAB LLC. Bales provided Page with a down payment to buy the building via a company called BAB Equity LLC.

Bales

Prosecutors say the secret arrangement was a violation of a leasing agreement between Venture and the state of Indiana that barred the company from direct or indirect ownership of properties where state agencies leased space. The defense argues the arrangement was a loan and not ownership.

Dyer testified that he disagreed with Bales and Spencer about the arrangement’s being a loan. He recalled three occasions where he discussed the matter with Bales, who never disclosed to the state Venture’s involvement in the Elkhart deal outside of brokering the lease.

“Equity means ownership,” Dyer said. “If it was truly a loan, I would have called it BAB Loan or BAB Mortgage.”

Bales’ reaction during the conversations, Dyer said, was to blame Spencer, his general counsel and now co-defendant. As Dyer recalls, Bales profanely lamented that he had “trusted” Bill to protect him, and Bill “f–ked” him.

Dyer said he was responsible for managing the Elkhart property on behalf of owner Paul Page. Dyer said he noticed in the summer of 2009 that Page had withdrawn funds from the building’s checking account in violation of an understanding that rent revenue from the state would first go to pay back Bales. There apparently was no pre-arranged payment schedule, as would be typical with a loan.

Dyer said he alerted Bales, who moved to place a mortgage on the property to protect his investment. And Page responded by firing Venture as property manager.

In 2010, Dyer said he realized Venture hadn’t paid the state a portion of the Elkhart lease commission, about $22,000, required under the contract. The entire $88,400 commission had gone to Bales to repay part of his $362,000 down payment.

Dyer said he told Bales about the unpaid balance owed to the state. His boss’ response, as Dyer recalled it: “F–k them. They owe us money, so I can pay them whenever I want.”

A few weeks later, after Dyer completed a full audit and reminded Bales about the outstanding payment, Bales told him to cut the state a check. A portion of the money was routed right back to Venture to cover unpaid commissions on other lease deals.

Bales attorney Larry Mackey noted in his cross examination that Dyer shared more information, including the equity-versus-ownership conversations, in a follow-up interview with the FBI and federal prosecutors shortly before the trial, than he had during an interview months earlier.

Dyer said he simply was not asked to elaborate during the earlier interview, and he was acting on his attorney’s advice “not to volunteer information or go on a tangent.”

Mackey also sought to challenge Dyer’s credibility by bringing up an insurance claim Dyer filed that was later denied.

Dyer acknowledged during questioning that he had received a letter from Erie Insurance Co. shortly before his follow-up interview with federal authorities notifying him that his claim on a stolen vehicle had been denied. The insurance company determined he had made false statements.

Later, on redirect, Dyer said he had told the insurance company the truth.

“The cops caught the guy who stole my car,” he added.

Assistant U.S. Attorney Jesse Barrett has argued Bales and Spencer were well aware their arrangement in Elkhart would not pass the state’s smell test.

Testimony in the case was continuing at IBJ deadline. The defense is expected to present its case the week of Feb. 4.•