Baltimore State’s Attorney Marilyn Mosby indicted on federal charges she lied on financial transactions to buy homes in Florida

A federal grand jury has indicted Baltimore’s top prosecutor Marilyn Mosby on charges of perjury and making false statements with a series of financial transactions that helped her buy a condo on Florida’s Gulf Coast and another property near Orlando, Florida.

Mosby, 41, is charged with falsely claiming to suffer financial hardship from the coronavirus to obtain an early withdrawal from her retirement savings to purchase the homes. In addition, federal prosecutors allege she lied on a mortgage loan application by hiding an outstanding federal tax debt. And they accuse her of entering into an agreement to rent out a home she bought in Kissimmee, near Disney World, while at the same time promising not to rent the property — all to obtain a lower interest rate.

In a break from routine, the U.S. Attorney’s Office in Baltimore issued no public statement with the indictment.

The cloud of indictment has loomed over Mosby for nearly a year, since federal prosecutors issued subpoenas in March for a wide range of financial records from her and her husband, City Council President Nick Mosby. Marilyn Mosby is now charged with four felonies that could bring prison time, even as her election for a third term looms in June.

Federal prosecutors have not accused Nick Mosby of wrongdoing.

The indictment alleges Marilyn Mosby sought a $40,000 withdrawal from her city retirement account in May 2020, citing financial hardship she had experienced due to the pandemic. In fact, her salary that year had increased by $10,000 to $248,000, according to the charges.

“Mosby had not experienced adverse financial consequences stemming from the coronavirus as a result of ‘being quarantined, furloughed or laid off’ or ‘having reduced work hours’ or ‘due to lack of childcare’ or ‘the closing or reduction of hours of a business I own or operate’” — all prerequisites for obtaining the loan, which Mosby attested to under penalty of perjury, federal prosecutors wrote in the indictment.

Her attorney, A. Scott Bolden, pledged Thursday to fight the federal charges, again accusing prosecutors of harboring a personal grudge against her.

“We will fight these charges vigorously, and I remain confident that once all the evidence is presented, that she will prevail against these bogus charges — charges that are rooted in personal, political and racial animus five months from her election,” he said in a statement.

The case against Mosby has been a matter of much public debate and speculation. Federal authorities kept silent about the case for months, even as her lawyer publicly demanded answers from them.

The criminal charges are narrowly focused on withdrawals from her retirement savings and her purchase of the Florida homes. The indictment, however, provides no clues as to what prosecutors were after by issuing subpoenas to a city dance studio where the Mosbys sent their children, to Black churches where the Mosbys gave money, and to their private companies and election campaigns.

“The indictment is more telling for what is not in the indictment, rather than what is in there,” Bolden said.

He called the charges “a far cry from criminal tax evasion and tax related charges that were at the heart of this federal investigation. More importantly, Ms. Mosby has never lied or made a false statement in connection the allegations contained in the charging document.”

The indictment says Mosby received $36,000 from her request to withdraw $40,000 from her retirement account. She then put the money toward a down payment on a rental property near Orlando, Florida. But prosecutors say in purchasing that property, she lied about whether she had any federal tax debts when the IRS had issued a lien on her Baltimore property.

Prosecutors also allege that she falsely said the property was a second home, which lowered the interest rate.

She already had lined up a management company to operate it as a short-term rental, the indictment says.

Mosby purchased the eight-bedroom, 4,000-square-foot Kissimmee property in September 2020 for $545,000 and was using it as a rental property. She sold it in November for a $150,000 profit, to a buyer from Baltimore County.

Mosby was elected to become the city’s top prosecutor in 2014, and rocketed to national prominence by bringing charges in the police custody-related death of Freddie Gray and pushing progressive policies. She was reelected in 2018 and is up for reelection this year.

Supporters have said she is being targeted for her progressive policies and Black leaders are often unfairly targeted for investigations. In October, a group including civil rights attorney Ben Crump called for an end to the investigation.

Joining them, Bolden said federal prosecutors were pursuing perjury charges against his client, but would not give him details. He said he was only told that it related to her signature on a document.

“I say, what document?” Bolden said. “You can’t prosecute me for perjury, or that I lied about a document, without telling me what the document is. Without telling me what the lie is. That’s denial of due process. Every one of them, there were eight in the room, refused to tell us what the lie was, what document they saw.”

Bolden repeated that line of attack Thursday, saying federal tax authorities “went completely dark” and refused to say whether they were considering the evidence he submitted to support Mosby’s innocence.

“You would only conduct a criminal investigation in that manner, if you were not interested in the truth or exculpatory evidence or justice, but rather only concerned with obtaining an indictment and bringing false charges against my client — at all or any costs,” he said.

Federal prosecutors accuse Mosby of making a second withdrawal from her retirement savings, this one in December 2020 for $45,000, and again falsely claiming financial hardship related to the coronavirus. She used that money as a down payment for a $476,000 condominium on a barrier island in Longboat Key, Florida, according to the indictment. She bought the condo last February.

Retirement account holders such as Mosby are allowed to withdraw funds before a certain age and avoid the typical 10% tax penalty under the federal coronavirus relief passed in 2020. Those taxpayers, who must meet hardship conditions, can either repay their accounts or report the extra income over the next three years on tax returns.

Ed Jacobson, president and CEO of Glass Jacobson, said many of the Owings Mills tax, accounting and financial services firm’s clients benefited from that provision, making withdrawals from 401(k) or IRA accounts after losing income in the pandemic.

”It provides somebody who needs cash a way to pull from a retirement account and do it with relatively minor tax consequences,” Jacobson said. “It was a wonderful provision of the CARES act … Clearly you have to have a negative, adverse effect to avail yourself of some of the relief.”

But he said, until news of Thursday’s indictment, he hadn’t heard of the IRS challenging any withdrawals.

“It’s a brand new law,” he said. And, “the IRS is so far behind in processing returns and processing refunds … I have not seen it challenged before.”

He called allegations of false statements on mortgage applications “pretty serious charges.” Mortgage applicants typically can get lower mortgage rates on a second home than on an investment property. And “having a lien would make a borrower a higher risk, if a borrower could even get the loan.”

Typically, a lender would turn up a tax lien before approving a loan.

If convicted, Mosby faces a maximum of five years in prison for each of the two counts of perjury and a maximum of 30 years for each of the two counts of making a false statement. Actual sentences take into account a defendant’s history and are typically far less.

A fundraising website has been established to accept donations for Mosby’s legal defense, but it remains unclear who is in charge of the money. Mosby and her attorney have said they have nothing to do with the fund. The fund manager has not responded to questions from The Baltimore Sun.

NAACP leaders in Maryland have said they intend to donate money from the organization.

The Sun reported in late 2020 that a $45,000 federal tax lien had been placed against the Mosbys. Court records show the couple repaid the debt in July.

Marilyn Mosby also has faced questions about a travel company she formed in 2019 and did not initially disclose on state ethics forms. She requested an investigation by Inspector General Isabel Cumming; ultimately, Mosby criticized Cumming for not clearing her.

Mosby can remain in office with the charges pending. State law generally requires a conviction to remove her from office.

A spokeswoman for the Baltimore State’s Attorney’s Office issued a statement saying city prosecutors will remain focused on their work.

“Our leadership and our frontline prosecutors are some of the best in the world and we will not be distracted or sidetracked from our mission to make Baltimore a safer community,” spokeswoman Zy Richardson said.