Side businesses owned by Marilyn J. Mosby are emerging as central to her upcoming trial on federal perjury charges, as Mosby’s lawyers and federal prosecutors skirmished over what evidence will be allowed in court.

Defense attorney Kelley C. Miller said in court Wednesday that a planned expert witness for the defense would testify that Mosby’s “business income and business activity were negatively impacted by the COVID-19 pandemic,” and that her net worth at the time of the withdrawal was less than it had been before. The defense had previously not disclosed what the expert would say, and U.S. District Judge Lydia Kay Griggsby pressed them to reveal more.

Mosby’s lead attorney A. Scott Bolden had previously raised the possibility, outside of court, that she expected to receive income from three businesses she formed on the side in 2019.

But federal prosecutors say her prior statements about not intending to run the business while in office were the truth, and that she is changing her tune as a defense against federal charges that she lied about a financial hardship to access retirement funds.

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Assistant U.S. Attorney Leo Wise said jurors “will determine if the Marilyn Mosby who said it then is credible, or the Marilyn Mosby who’s saying it now.”

Wise called the disclosure “really interesting.”

The disclosure came as Griggsby dealt an apparent blow to the prosecution on the same topic, ruling that four statements made by Mosby’s representatives in the past about the business could not be presented to the jury by prosecutors because the statements came during the course of unrelated investigations.

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Mosby created three companies in 2019 under the banner of Mahogany Elite Enterprises, which came to light a year later when the Baltimore Brew reported she had failed to disclose the companies on ethics forms.

Zy Richardson, the chief spokesperson for the state’s attorney’s office, said in July 2020 that Mahogany was a “long-term venture,” that she “had not received a single cent in revenue,” and that “there are no plans to operate the company while she is state’s attorney.”

The businesses became, in part, subject of investigations by the inspector general and the state Attorney Grievance Commission and Office of Bar Counsel. During those investigations, Mosby’s then-personal attorneys and the State’s Attorney’s Office’s chief counsel asserted that the businesses were nonoperational and “not yet conducting business,” which prosecutors intended to introduce as evidence.

Defense attorney Lucius Outlaw said prosecutors would be hard-pressed to get the statements into evidence without calling the attorneys as witnesses, which he said they couldn’t do because she had not waived attorney-client privilege. But Assistant U.S. Attorney Aaron Zelinsky responded that prosecutors had already received Justice Department approval and issued subpoenas to Mosby’s attorneys, saying statements they made to third parties are not protected.

Griggsby agreed with the defense that the jury hearing about the investigations would “touch on issues that have nothing to do with this case.” The defense had argued that jurors would be led to the impression that Mosby “has always been under investigation” and would be a back door to investigations that did not lead to charges or discipline.

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Griggsby said she could revisit the issue, and prosecutors said they hoped to be able to tailor the evidence in a way that wouldn’t touch on the investigations.

The outgoing two-term state’s attorney is charged with four counts of perjury and making false statements, with prosecutors saying she lied about a financial hardship in order to access retirement funds under a federal coronavirus relief plan, the CARES Act, and then lied on paperwork related to the purchase of two Florida properties.

Mosby lost the Democratic primary election to defense attorney Ivan Bates, finishing third of three candidates in the race. The federal charges could put her law license in jeopardy.

She entered the downtown federal courthouse accompanied by her husband, City Council President Nick Mosby.

Asked by a reporter if a plea deal was in discussions, lead attorney A. Scott Bolden replied: “No plea deals. We’re going to trial.”

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The defense lost other motions to preclude government witnesses who analyzed financial records, as well as to prevent prosecutors from telling jurors that Mosby used the withdrawn retirement funds to buy the Florida properties.

Attorney Rizwan Qureshi said the objective of the federal coronavirus relief was to put money in the community in light of the unprecedented issues presented by pandemic, and that the government was “trying to equate how she spent the funds, with how she obtained the funds and whether she qualified.” He said connecting the Florida properties to the withdrawal will paint her in a bad light to jury.

Assistant U.S. Attorney Sean Delaney said there were clear requirements for making the withdrawals, such as being laid off, furloughed, or suffering business loss, and the fact that the defendant did not use her COVID funds to mitigate any adverse consequence is evidence there were no adverse consequences in the first place. He called it a “link in causal chain.”

Griggsby denied the defense’s motion, saying whether Mosby suffered adverse financial consequences was a “central issue” for the trial.

In court filings and public comments, Mosby and her lawyers have accused prosecutors of conducting a witch hunt by combing through every aspect of her life looking for violations. So far, they’ve offered various legal defenses to the charges, claiming she suffered businesses losses, that retirement plan regulators failed to notify her of the requirements for withdrawals, and that she was kept in the dark and later lied to by her husband about a federal tax lien placed on their property.

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Mosby withdrew $90,000 from a retirement fund that participating city employees typically would not be able to access until their retirement. Unlike a 401(k), such funds couldn’t be withdrawn early, even by incurring a penalty. The CARES Act changed that, but those withdrawing funds had to demonstrate a financial hardship related to the pandemic, including being quarantined, furloughed or laid off, having reduced work hours, being unable to work due to lack of child care, or the closing or reduction of hours of a business.

Starting in May 2020, prosecutors say Mosby tapped the retirement funds to purchase two homes in Florida worth more than $1 million while she and her husband owed $45,000 in back taxes.

Meanwhile, Mosby’s net salary increased during that time from $141,450 to $151,270 and a “miscellaneous” category of income increased from $13,500 to $24,275. Prosecutors say Mosby spent more than $100,000 in credit card purchases, $80,000 in loans and almost $65,000 in other miscellaneous expenditures.

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