Baltimore Council President Nick Mosby’s financial woes highlighted during testimony in ex-wife’s mortgage fraud trial

In 2014 and 2015, Nick Mosby, who was a member of the Baltimore City Council at the time, 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 tax years 2014 and 2015, 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 over what he would be allowed to say 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.

The defense last week called Nick Mosby to testify 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.

Nick Mosby 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.

Nick Mosby said he didn’t tell his wife about the debt originally and that when she found out about it, he said he was taking care of it. But he didn’t.

“I lied to her throughout the whole time,” he testified.

Marilyn Mosby closed on the house near Orlando in September 2020 and the condo in Longboat Key in February 2021.

Prosecutors said her lies on mortgages for both applications didn’t end with the unpaid taxes.

Nick Mosby plays a role in at least one more of his ex-wife’s alleged false statements.

Short of about $5,000 on closing costs for the condo, but with her mortgage application already in front of the lender, Marilyn Mosby needed to figure out a way to come up with cash quickly — or at least make it look like she would have enough by the time the transaction took place.

By that time, the mortgage lender had already 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.

Mosby’s Florida mortgage broker, who facilitated her purchase of both properties, suggested she submit a letter to the lender saying someone would give her money at closing. 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, a forensic accountant with the FBI, 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.

Nick Mosby said he believed he put the money into his savings account so that an automatic payment linked to his checking account wouldn’t draw from those funds, but that he didn’t “really remember” the transaction.

Mosby’s attorneys said Thursday that they have several witnesses coming from out of state to testify as defense witnesses. Through their questions of prosecution witnesses, Mosby’s lawyers signaled that her mortgage broker, Gilbert Bennett, will play a key role in their defense.

This article will be updated.

©2024 Baltimore Sun. Visit baltimoresun.com. Distributed by Tribune Content Agency, LLC.