Nick Mosby, while serving as a member of the Baltimore City Council in 2014 and 2015, falsely claimed thousands of dollars of charitable deductions on his taxes, federal prosecutors told a judge Monday.
Mosby claimed he gave a total of $36,000 to charity in those tax years, but federal prosecutors said an expert reviewed his and his former wife Marilyn Mosby’s financial records and found they didn’t have enough money between the two of them to give that much away.
“There just weren’t enough funds to make those charitable donations,” Assistant U.S. Attorney Aaron Zelinsky told the federal judge, urging her to allow him to ask Nick Mosby about the taxes.
Details of Baltimore City Council President Nick Mosby’s past financial woes came to light both during his testimony at Marilyn Mosby’s federal mortgage fraud trial and in attorneys’ arguments about what they could question him about in front of the jury.
The lawyer for the former Baltimore City State’s Attorney argued that raising the then-couple’s joint tax “impropriety” was unfair because they were never charged or penalized by the IRS.
“If the government had a tax case against Mr. Mosby, you would expect there to be some sort of penalty or finding,” Federal Public Defender James Wyda said.
Zelinsky said he wanted to question Nick Mosby about his taxes to show “that he committed perjury,” undercutting his credibility to the jury tasked with deciding his ex-wife’s case.
Nick Mosby finished testifying Monday afternoon after about a day and a half of answering questions from the defense and prosecution. On his way out of court, he declined to comment, saying he believed it was inappropriate to speak while the case was ongoing.
Another witness important to the defense’s case, the mortgage broker who facilitated Mosby’s purchase of both Florida properties, took the witness stand after Nick Mosby.
Defense lawyers called both witnesses to bolster their theory of the case: That Marilyn Mosby did not knowingly lie on mortgage applications for two vacation properties in Florida.
Mosby was charged with failing to disclose a federal tax debt on loan applications for an eight-bedroom house near Disney World and a condo on the Gulf Coast. But Nick Mosby testified that he was solely in charge of the former power couple’s taxes, that he caused the tax debt that grew to $69,000 and that he withheld their tax trouble from Marilyn Mosby.
U.S. District Judge Lydia Kay Griggsby prohibited Zelinsky from questioning Nick Mosby about the improprieties on the taxes, which he filed jointly with his ex-wife, finding that allowing the testimony would prejudice the jury against Marilyn Mosby. The judge, however, allowed prosecutors to ask about the council president’s financial troubles.
In 2014, the year Nick Mosby claimed to have given $21,000 to charity, he was $18,640 behind on the mortgage for his house in Baltimore’s Reservoir Hill neighborhood. A bank also repossessed his car because he was $3,000 in arrears on his payment. Additionally, Zelinsky said, from 2014 to 2018, his wages were garnished to pay off student loans.
In 2015, a year Zelinsky told the judge Nick Mosby claimed $15,000 in charitable donations, he was $9,600 in arrears on his mortgage and “tens of thousands of dollars” behind on taxes.
Nick Mosby was appointed to the Maryland House of Delegates in 2017. At the same time, he launched a campaign for mayor.
Without his income as a city councilman, Mosby testified, “I get significantly behind on my bills. Ashamed of it — didn’t tell my wife about it.”
He said the financial hole led him to start a consulting business, Monumental Squared LLC, to operate when the legislature wasn’t in session.
Under questioning by Zelinsky, Mosby acknowledged funneling “over a thousand dollars” of personal expenses through his business. The expenses included clothing purchases from Michael Kors, Gap, Ugg boots, Under Armor, J.Crew and Brooks Brothers.
On Thursday, Nick Mosby gave an emotional account of the couple’s story, from the time they fell in love as college students in Alabama to their relationship unraveling as each achieved political prominence.
He also took the blame for the couple’s once sizable federal tax delinquency, saying he alone handled their taxes and that he wasn’t transparent with his wife as the debt accumulated.
Prosecutors must convince the jury that Mosby’s false statements were intentional and intended to influence mortgage lenders. Though her indictment lists seven false statements, prosecutors must only prove one false statement per mortgage to secure a conviction.
Underwriters for the mortgage lenders testified that they relied on Mosby’s truthfulness on the applications in determining whether to issue the loans. Had she disclosed the liability, they said in court, they may not have lent her money.
Marilyn Mosby closed on the house in Kissimmee, Florida, near Disney World, in September 2020 and the condo in Longboat Key in February 2021.
Mortgage broker Gilbert Bennett facilitated both transactions and testified Monday afternoon about how he guided Mosby through the process, from applying for a loan preliminarily to closing.
Mosby’s defense lawyers asked Bennett about the portion of the mortgage applications that prompted the applicant to list their liabilities. She is charged with failing to disclose her tax debt.
Bennett said that part of the application “auto populates” from a credit report his company had Mosby undergo.
“That gets input directly from the credit report,” he said.
Prosecutors have said Mosby’s lies on mortgages for both applications didn’t end with the unpaid taxes.
About a week before Mosby closed on the Kissimmee house, she ratified an agreement with a company to run it as a rental, according to her indictment. The contract gave the business control of the property even though Mosby signed a document in her mortgage certifying she would “maintain exclusive control” over the property.
Bennett testified that he walked Mosby through the different classifications for homes. A primary residence, meant the owner must stay there for six months and a day every year, he said he told her, while a second home meant the owner would sleep there at least one day per year.
To convince the lender she intended to use the Longboat Key condo as a secondary residence, Bennett suggested Mosby write a letter outlining her vision for the property.
“You love your house in Kissimmee have spent over 40 days there since purchasing it, got your kids Disney passes blah blah,” Bennett said in a text to Mosby. “Your sister bought a house you absolutely adore and now another one just popped on the market and you want to buy it. Its across the street from [the] beach and literally next door to your sister.”
Bennett’s text continued to say the lender would put it in front of an “underwriting manager” promptly.
In the letter Mosby submitted, she said she’d been in Florida for the past 70 days. She had only been there 37 days, an FBI accountant who reviewed her financial and travel records testified.
Mosby also did not adopt all of Bennett’s suggestions for the letter after he emailed her edits.
In addition to the taxes, Nick Mosby played a role in at least one more of his ex-wife’s alleged false statements.
When Marilyn Mosby was short about $5,000 on closing costs for the condo, but with her mortgage application already in front of the lender, Bennett proposed she submit a “gift letter” saying somebody not named on the mortgage would give her money at closing. Bennett testified he downloaded the letter template he sent Mosby from the lending company that ultimately issued Mosby’s mortgage.
By that time, the mortgage lender already had locked in an interest rate for Mosby’s mortgage, an underwriter for the lending company testified. If Mosby didn’t close on the property then, the underwriter said, she risked losing the interest rate.
In the so-called “gift letter,” Mosby wrote that her husband was going to transfer $5,000 to finalize the deal. But Nick Mosby had only about half of that amount in his bank account.
Jenna Bender, the FBI’s forensic accountant, reviewed the former power couple’s bank records.
When Marilyn Mosby received her biweekly state’s attorney salary after writing the gift letter, she transferred $5,000 to Nick Mosby’s account, Bender testified. Nick Mosby transferred the money from his checking account to his savings account and back again. Then, Bender said, he sent the money back to his wife.
