Defense attorneys for former Baltimore State’s Attorney Marilyn Mosby telegraphed their trial strategy in the clearest terms yet, writing in new court filings that she will argue during her perjury trial that a side business that never launched while she was serving as top prosecutor caused her a financial hardship.

They also say, following a judge’s recent order to hold separate trials, that she plans to take the stand in the perjury trial, but will invoke her Fifth Amendment right not to testify in the mortgage fraud case.

Mosby is accused of improperly obtaining early access to her own retirement funds by saying in sworn documents that she had suffered adverse financial consequences as a result of the COVID-19 pandemic. Federal prosecutors say her financial statements show that she suffered no such loss, and that she therefore committed perjury.

In new filings Friday, Mosby’s attorneys ask that the government be prevented from showing her financial statements because they do not reflect “sunk costs” related with her company stalling.

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“That’s because Mrs. Mosby’s business was non-operational, and therefore was not yet producing any income, when the pandemic hit. Mrs. Mosby had invested money in start-up costs, legal and operational fees, and research expenditures, but she was still in the early stages of laying the groundwork to get the business up and running,” they wrote. “Then, when the pandemic made it impossible to proceed with opening the business, she experienced sunk costs, expenses, and expenditures, as well as reduced expected profits.”

When the creation of Mahogany Elite was first revealed in 2020, Mosby said through a spokeswoman that she had no intention to operate the business while in office. Her term did not expire until 2023, and she sought reelection for a third term. The company is now up and running, with a retreat to Jamaica planned for next month.

Instead of dropping, Mosby’s income increased during the pandemic to about $248,000. Her defense attorneys don’t want jurors to hear that because they say it confuses the issues.

“[J]urors will ask, how could someone who made more money than she did the year before be worse off financially? This instinct is a natural one, but it is inconsistent with how the CARES Act defines ‘adverse financial consequences,’” her attorneys wrote. “As explained above, the adverse financial consequences Mrs. Mosby suffered are unrelated to her income; her business was not producing any income even before the pandemic began, and so the closing of the business did not lead — and could not have led — to a reduction in income.”

To prosecutors, that’s precisely the point they plan to make to jurors. The CARES Act spells out four conditions that relate to a financial hardship, and prosecutors and defense attorneys have sparred repeatedly over how to define those terms. They include loss of income from being furloughed or having a salary cut, but also a “closing or reducing of hours of a business that you own or operate.”

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In a separate filing, the defense argues that the terms regarding adverse financial consequence were too vague and there was no defined minimum threshold. “Without advance notice of that requirement, Mrs. Mosby had no ability to choose to obey the law,” the write.

U.S. District Judge Lydia Griggsby agreed this month to a change of venue, moving Mosby’s case from Baltimore to Greenbelt, and to hold two separate trials on the perjury and mortgage fraud counts.

Defense attorneys now say Mosby plans to testify in the perjury counts.

“Specifically, she intends to testify about why she believed she suffered adverse financial consequences as she understood the term when she submitted the [retirement fund] withdrawal forms in May 2020 and December 2020,” they said.

They are asking the court to prevent prosecutors from asking her about the mortgage fraud case in the perjury trial, because “none of the allegations charged in the mortgage fraud counts — e.g. allegedly lying by not disclosing back taxes and a tax lien, signing a second home rider, submitting an allegedly fake gift letter — are relevant to Mrs. Mosby’s expected testimony on direct examination.”

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In the mortgage fraud case, Mosby is accused of making false statements on paperwork related to the purchase of two properties in Florida.

Having to invoke the Fifth Amendment in front of a jury would be unfairly prejudicial, the attorneys say.

Justin Fenton is an investigative reporter for the Baltimore Banner. He previously spent 17 years at the Baltimore Sun, covering the criminal justice system. His book, "We Own This City: A True Story of Crime, Cops and Corruption," was released by Random House in 2021 and became an HBO miniseries.

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