A Baltimore City Circuit Court judge upheld two out of three findings in a city administrative ruling that City Council President Nick Mosby violated Baltimore’s ethics code for elected officials, throwing out the most notable finding that the Democrat himself took money from controlled donors.
At a virtual hearing Monday afternoon, Judge Lawrence Fletcher-Hill agreed with the Baltimore City Board of Ethics that the Democrat solicited donations from controlled donors — that is, people who are seeking to do business with the city — to a legal defense fund established for him and his wife, former city State’s Attorney Marilyn Mosby.
While neither Mosby created the trust fund or served as its officer, the City Council president erred by not explicitly disavowing himself from the trust, the judge found.
The politician could have publicly disclaimed that he did not want to receive any donations from the trust, but failed to do so, the judge said. “In the absence of having done that, I find that he had an ownership in the trust.”
But Fletcher-Hill struck down the finding that Mosby took money from controlled donors, calling the evidence presented by the board’s legal team extremely weak — “even the evidence of money given to the trust by controlled persons.”
He based his ruling on the argument that there is no firm evidence that Mosby is in control of the trust — only that he has an interest in it.
“I can’t conclude that is a completed gift to him,” Judge Fletcher-Hill said.
He supported the board’s final finding that Mosby violated the city’s ethics code by not including the trust in his annual financial disclosure report filed in January 2022 for the calendar year 2021.
He declined to order Mosby to cooperate with the board’s original mandates that Mosby return donations from the fund or face a fine of up to $1,000 a day, saying that either party may decide to appeal further and that the board should reconsider what enforcement actions are appropriate in light of his decision.
“It’s better for the board to have the first opportunity to go forward on any enforcement of its decision now that it’s gone through at least the first stage of judicial review,” he said.
Mosby told The Banner that he was glad the court struck down the notion that he benefited from the trust.
“That was always the spin of it: that I had set up this trust, I benefited from it and I received gifts from contractors. That couldn’t be further from the truth,” he said.
The City Council president said he will amend his 2021 financial disclosure form by adding the trust fund and is not planning on appealing the finding.
The ethics board director also likened the ruling to a victory, saying the judge affirmed that the city’s restrictions on solicitation of gifts are very broad.
“That means an official cannot get around those restrictions by allowing third parties to fundraise on their behalf,” Stephan Fogleman, director of the board of ethics, said. “It’s also a win, because the judge has affirmed the board’s interpretation of the breadth of our financial disclosure laws, which we believe will lead to greater transparency.”
He said the board will discuss whether they will seek compliance with their original mandate at a later date. The group is due to meet Wednesday.
The legal dispute began last May, when the Baltimore City ethics board ruled that Mosby had violated the city’s ethics code by accepting money from at least two contractors seeking to do business with the city, via their donations to a legal defense fund established for him and his wife, former Baltimore State’s Attorney Marilyn Mosby. Such donations from “controlled donors,” as the ethics code defines them, are prohibited.
The five-member panel is housed in the independent Office of The Inspector General that interprets and oversees the city’s ethics code.
According to a report by the board, the Mosby 2021 Trust was established to assist the couple with legal fees as they made headlines that year over a federal probe into their finances. The city’s former top prosecutor was later charged with mortgage application fraud and perjury. She has vehemently maintained her innocence and will likely go to trial in the fall; her husband has not been charged with any crimes.
Robyn Murphy, a local consultant, served as the fund’s trustee at the time of its creation, according to IRS documents. The Mosby 2021 trust raised more than $14,000, about $5,000 of which came from controlled donors.
In January of last year, the board told Mosby that he violated ethics law. James J. Temple Jr., Mosby’s lawyer at the time, argued that his client was not involved in creating the trust and did not directly solicit donations to it. The board disagreed in their final May report, noting that the council president’s name and photo appeared on the fund’s now-shuttered website and that he and Murphy were photographed together at the Preakness Stakes.
Mosby’s attorney, Robert Fulton Dashiell, maintained his client’s argument that he served no role in the fund’s operations.
“My client had no control whatsoever of what happened to the money when it got there,” Dashiell said in his opening arguments. “He had nothing to do with the formation of the entity, he did not appoint the trustees for the entity, he had control over what actions our trustees took, how much money, if any, they ever distributed, or who they distributed it to.”
In the judge’s eyes, the ethics board was unable to prove that the money ended up in Mosby’s hands.
Sarah Hall of the D.C. law firm Epstein, Becker and Green argued that according case records, most of which are confidential, a “subset” of the $14,000 raised was put into a Donorbox account, and another portion of that sum — again unspecified — was transferred into a bank account set up by the trust. The board did not provide evidence to suggest that this sum made its way to either Mosby.
Hall did win over the judge with her argument that the council president could have told the public that the trust was operating without his consent.
“He never asserted that this trust was being run by a rogue actor or someone without his permission,” she said.
Both attorneys debated what exactly the word “gift” means in the ethics code and whether trust funds — often used in estate planning to designate a third-party beneficiary — should be included in city financial disclosure forms, which ask that public officials list any business entities they own or operate.
Dashiell argued that trust funds are not specifically listed as business entities under the ethics law definition. But the judge ultimately agreed with Hall’s argument that the law’s definition is broad enough to encompass the Mosby 2021 Trust: “The trust was clearly engaged in business and raised money,” Hall argued. “It set up a bank account and it did all sorts of other actions that are inherently business-oriented.”
In May, the board ordered Mosby to shutter the trust and return the donations or potentially face a fine of up to $1,000 a day. He appealed the finding, automatically sending it before a Baltimore City Circuit Court judge — a rare process that has not occurred in recent memory.
He was slated to appear in court in August, but a series of postponements, including after the judge gave more time to Mosby to find a lawyer and after his current attorney filed new documents that the ethics board’s attorneys did not have time to review.