Marilyn Mosby case: Legal debate may influence whether former state’s attorney testifies at mortgage fraud trial

Attorneys in the case of Marilyn Mosby are set to argue Friday over several legal questions that could shape the former Baltimore state’s attorney’s upcoming trial on mortgage fraud charges.

The hearing follows months of back-and-forth court filings and is the last date U.S. District Judge Lydia Kay Griggsby set to have substantial debate about the law before Mosby’s trial, which is scheduled to begin Jan. 18. At Friday’s hearing, the lawyers largely will be offering their views about what evidence is appropriate for the jury to consider and why.

Key among the looming questions is whether Mosby’s attorneys will be allowed to use several out-of-court communications with bankers and mortgage brokers that seem to support their defense theory: That Mosby, who was state’s attorney at the time, didn’t knowingly make false statements on mortgage applications for a pair of properties in Florida.

Mosby faces two counts of mortgage fraud. Prosecutors say she misled lenders by failing to disclose a $69,000 federal tax debt and claiming one property, an eight-bedroom house near Orlando, as a second home when she’d already arranged a company to run it as a rental — a financial maneuver that secured a lower interest rate, according to her January 2022 indictment.

When she found out about the tax lien, she called her mortgage broker in Florida “livid because it was news to her,” the broker told investigators, according to papers filed by her lawyers. “She thought her husband took care of it because it was his deal to clear up.”

The broker was referring to Mosby’s ex-husband, Baltimore City Council President Nick Mosby. While the Baltimore power couple’s divorce was finalized in November, Nick Mosby appears set to play a prominent part in his ex-wife’s defense, with her lawyers long foreshadowing their intent to call him as a witness.

Investigators interviewed a commercial banker who spoke to Nick Mosby at some point in 2020, while the city council president was looking to take out a loan to pay off the couple’s tax lien, according to court documents.

The banker told investigators that he asked Nick Mosby why his wife wasn’t included on the loan, and that Mosby responded, “It’s my obligation. I want to take care of it,”

In either case, Mosby’s attorneys say they’re not seeking to introduce the comments to prove they were true, but to show what Mosby believed at the time. The defense lawyers argued that’s an exception to the so-called “hearsay” rule, which typically precludes witnesses from testifying about what someone else said.

Federal prosecutors railed against the idea in response to the request from Mosby’s attorneys.

They argued the legal exception to hearsay that the defense cited doesn’t apply because Mosby had reason to lie. They also said the comments were irrelevant, in part because many of them appeared to have happened long after the crimes that Mosby is charged with occurred.

“At the time all these statements were made, the defendant and her associates had ample motive to fabricate due to the multiple then-ongoing publicly reported investigations by various bodies into the defendant,” prosecutors wrote.

In the same filing, they later added, “The issue at trial is what the defendant thought when she filled out the forms in 2020 and early 2021, not what she may have thought months or even a year later.”

Prosecutors also described the request from defense lawyers as an attempt to get Mosby’s side of the story across while avoiding her testifying.

The mortgage fraud trial comes after a jury in November found Mosby guilty of two counts of perjury, with jurors determining she lied about suffering financial hardship during the coronavirus to take money from her retirement savings to buy the Florida properties, worth a combined $1 million.

It was a stunning fall from grace for a woman once heralded as a pioneering progressive prosecutor, and Mosby faces continued consequences from the convictions.

Maryland’s Bar Counsel, who investigates wrongdoing by attorneys, asked the state Supreme Court last month to suspend Mosby’s law license while her case plays out, citing the convictions as a violation of attorney rules of professional conduct. On Tuesday, the Supreme Court ordered Mosby to explain why her license shouldn’t be suspended, online court records show. Typically, attorneys have 15 days to fulfill such a request.

At her upcoming trial, Mosby’s lawyers have asked Griggsby to prohibit prosecutors from questioning Mosby about her convictions, among other topics, if she takes the stand. They also want Griggsby to prevent the government from introducing the evidence they used to convict Mosby of perjury at her mortgage fraud trial.

Mosby’s lawyers say it’s a “damning fact” that, if raised at trial, would prevent her from receiving a fair shake.

“No doubt, the government would hammer the jury’s guilty verdicts repeatedly in closing, urging jurors not to trust the word of someone who has been found guilty, beyond a reasonable doubt, of telling lies,” the defense attorneys wrote.

Evidence of other crimes or bad behavior from a defendant is typically out of bounds at a trial because jurors are only supposed to consider the evidence underlying the charges in question.

But prosecutors say the perjury convictions speak to Mosby’s credibility. In past cases, prosecutors wrote, appellate courts found that questions about guilty findings that required proving someone was dishonest are “the most readily admissible of all prior convictions, presumably because such evidence is highly relevant for the jury in assessing credibility.”

Mosby’s attorneys successfully argued to have her case moved from the federal courthouse in Baltimore to the one in Prince George’s County, citing more extensive media coverage in the region surrounding the city where she held office for eight years. They also won the right to have two trials: one for perjury, the other for mortgage fraud.

At the perjury trial, prosecutors offered a preview of the types of topics they wanted to question Mosby about, including the apparent tax impropriety an FBI accountant identified in court and Mosby being held in contempt of court for comments she made publicly about a high profile murder case. After asking for an extension to consider taking the witness stand, Mosby elected not to.

The legal questions at issue Friday could influence whether she testifies this time around.