December 6, 2022

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The Legal System

Baltimore Council President Nick Mosby violated ethics law by accepting money from city contractors via legal defense fund, board rules

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BALTIMORE — Baltimore City Council President Nick Mosby violated the city’s ethics ordinance by indirectly soliciting for a legal defense fund that took donations from at least two city contractors, the city’s Board of Ethics said in a ruling Thursday that ordered Mosby to stop accepting money from the fund.

The fund, established for the legal defense of him and his wife, State’s Attorney Marilyn Mosby, received a $100 donation from the executive director of a nonprofit organization that was awarded a multi-thousand-dollar grant in March.

A $5,000 donation, the largest individual contribution to the fund, was received in August from the “resident agent” for a contractor that is a city-certified minority- or woman-owned business. The business was a subcontractor on a deal considered by the city’s spending board in 2020, according to the Board of Ethics.

The ruling does not name the donors or further identify their connections to the city, but both are considered “controlled donors” under the city’s ethics law, which bars elected officials from receiving contributions from such donors, solicited or otherwise.

The board also concluded that Nick Mosby violated a provision of the law barring him from soliciting donations, directly or indirectly, from controlled donors.

An order issued by the Board of Ethics on Thursday calls on the council president to immediately stop receiving donations from the fund, and to request the fund cease all fundraising on his behalf. Nick Mosby must also request a list to be provided to the ethics board of all donors and donations to the fund.

Until now, there has been no public accounting of donations to the fund, which was opened for donations in mid-2021 to help the power couple defend themselves against a federal criminal tax investigation.

Prominent supporters and community leaders have encouraged contributions, posting on Facebook and appearing at news conferences, but Marilyn Mosby reported no gifts to the fund during her most recent ethics disclosure statement filed in April. Nick Mosby’s next ethics disclosure statement is not due until January.

According to a ruling issued by the board Thursday, the fund received $14,352 in donations as of March 15 from 135 individual donors. The board subpoenaed both Donorbox, the trust’s fundraising platform, and Stripe Inc., the payment processing company. Donorbox did not comply with the subpoena, according to the board’s report.

In a letter sent Thursday to members of City Council and Mayor Brandon Scott, the ethics board issued a notice of the finding so both can take “appropriate action as required by the ethics law.” The portion of the ethics law cited does not specify what action can be taken.

According to the board’s 17-page ruling, the inquiry into the Mosby legal defense fund began with two complaints filed in August. The ruling does not name who filed the complaints. That same month, the board warned Nick Mosby of “significant restraints” the ethics law imposes on his ability to solicit and accept donations. The board also requested the identities of the trustees controlling the legal defense fund and information about the process used to screen donations, according to its decision.

According to the board, the fund was established as a trust controlled by two unidentified people who have a “social relationship” with Nick Mosby. The trust is represented by an attorney from Reed Smith, a Washington, D.C.-based law firm that also represents Marilyn Mosby in her criminal defense.

The Mosbys have been at the center of a federal investigation into their finances that resulted in Marilyn Mosby being indicted in January on two counts of perjury and two counts of making false statements on loan applications to buy two properties in Florida: an eight-bedroom house near Disney World and a condo on the state’s Gulf Coast. Nick Mosby has not been charged with anything.

Federal prosecutors say Mosby perjured herself by falsely claiming financial hardship because of the coronavirus to make early, penalty-free withdrawals from her city retirement savings under the federal CARES Act. They also accused her of failing to disclose a federal tax lien on a mortgage application for one property and claiming the house near Orlando as a second home to secure lower interest rates when she had lined up a company to operate it as a rental.

In October, an attorney for the legal defense fund declined to turn over records of the fund to the Board of Ethics, citing attorney-client privilege. In the same correspondence, the attorney said the defense fund is not a “fundraiser” and said he or she was unaware of “any fundraising activities.”

At the time, the fund had already received $7,718 in donations, according to the board’s report.

Twice, the director of the Board of Ethics, Jeffrey Hochstetler, made test donations to the legal defense fund to confirm whether the group was checking the origin of donations, according to the board’s report. The donations, made in August and October, used an alias and a non-existent physical address.

Baltimore’s ethics ordinance forbids public officials from receiving donations from controlled donors as well as soliciting them, whether directly or indirectly.

In the case of Nick Mosby, controlled donors are considered anyone who seeks to do business with City Council, the council president’s office, the Board of Estimates or any city governmental or quasi-governmental entity with which the Council president is affiliated.

Also included are subcontractors doing business with or seeking to do business with the above groups, and those who engage in activities regulated or controlled by those groups.

Donations from people who are not controlled donors still require disclosure under the city’s ethics ordinance if they are received from several key types of people.

Specifically, elected officials must disclose on their annual ethics forms gifts from people or entities who do business with the city, those regulated by the city and registered lobbyists. City ethics law requires listing gifts worth more than $20. Two or more gifts with a cumulative value of $100 from one person or entity also must be disclosed.

State ethics law, which regulates Marilyn Mosby, includes the same provisions. State Ethics Commission Executive Director Jennifer Allgair did not return requests for comment Thursday afternoon.

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(Baltimore Sun reporter Lee O. Sanderlin contributed to this report.)

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