Board rules ethics code breached
Ruling says Baltimore City Council President Nick Mosby broke ordinance
Baltimore City Council President Nick Mosby violated the city’s ethics ordinance by indirectly soliciting for a legal-defense fund that took donations from at least two city contractors, the city’s Board of Ethics said in a ruling Thursday that ordered Mosby to stop accepting money from the fund.
The fund was established for the legal defense of him and his wife, Baltimore State’s Attorney Marilyn Mosby, as they faced a federal criminal investigation last year into their financial dealings. While Nick Mosby has not been charged with anything, Marilyn Mosby was charged this year with perjury and making false statements related to the purchase of two Florida houses.
According to the Board of Ethics, their legal defense fund received $5,000, its largest individual contribution, in August from the “resident agent” for a contractor that is a city-certified minority- or woman-owned business. The business was a subcontractor on a deal considered by the city’s spending board in 2020, the board reported.
It also received a $100 donation from the executive director of a nonprofit organization that was awarded a multi-thousand dollar grant by the city in March.
The ruling does not name the donors or further identify their connections to the city, but both are considered “controlled donors” under the city’s ethics
law, which bars elected officials from receiving contributions from such donors, solicited or otherwise.
The board also concluded that Nick Mosby violated a provision of the law barring him from soliciting donations, directly or indirectly, from controlled donors.
An order issued Thursday by the Board of Ethics calls on the council president to accept no payments from the fund, and to ask the fund to cease fundraising on his behalf. Nick Mosby also must request a list of all donors and donations to the fund to be provided to the ethics board.
Within 30 days, Mosby must instruct the legal defense fund to return any donations from controlled donors, the order states.
Nick Mosby issued a statement late Thursday denying he violated the city’s ethics code.
“I am completely perplexed by the board’s findings,” he wrote. “The board is fully aware that I have never asked, requested, or solicited any person to donate to the ‘legal defense fund.’ The board further knows that I never assisted in the creation of the legal defense fund or the entity that controlled the funds that were donated.”
Until now, there has been no public accounting of donations to the fund.
Prominent supporters and community leaders have encouraged contributions, posting on Facebook and appearing at news conferences, but Marilyn Mosby reported no gifts to the fund during her most recent ethics disclosure statement filed in April. Nick Mosby’s last ethics disclosure, filed in January, does not list the legal defense fund as a business affiliation or detail any gifts.
According to the ruling issued Thursday by the board, the fund received $14,352 in donations as of March 15 from 135 individual donors. The board subpoenaed both Donorbox, the trust’s fundraising platform, and Stripe Inc., a payment processing company. Donorbox did not comply with the subpoena, according to the board’s report.
In a letter sent Thursday to members of City Council and Mayor Brandon Scott, the ethics board issued a notice of the finding so both can take “appropriate action as required by the ethics law.”
The portion of the ethics law cited, however, does not specify what action can be taken.
Council Vice President
Sharon Green Middleton, the highest ranking member of City Council behind Nick Mosby, could not be reached Thursday.
Scott said the violations “reflect poorly on our city as a whole and are counterproductive.”
“This is another sad day for Baltimore and another unwanted distraction as we work to move our city forward,” he said. “I vow to continue to work to rebuild the public trust between our residents and the city government.”
According to the board’s 17-page ruling, the inquiry into the Mosby legal defense fund began with two complaints filed in August. The ruling does not name who filed the complaints.
That same month, the board warned Nick Mosby of “significant restraints” the ethics law imposes on his ability to solicit and accept donations. The board also requested the identities of the trustees controlling the legal defense fund and information about the process used to screen donations, according to its ruling.
According to the board, the fund was established as a trust controlled by two unidentified people who have a “social relationship” with Nick Mosby. The trust is represented by an attorney from Reed Smith, a Washington, D.C.-based law firm that also represents Marilyn Mosby in her criminal defense.
The federal investigation into the Mosbys’ finances resulted in January with Marilyn Mosby being indicted on two counts of perjury and two counts of making false statements on loan applications to buy two properties in Florida: an eight-bedroom house near Disney World and a condo on the state’s Gulf Coast.
Federal prosecutors say Marilyn Mosby perjured herself by falsely claiming financial hardship because of the coronavirus to make early, penalty-free withdrawals from her city retirement savings under the federal CARES Act. They also accused her of failing to disclose a federal tax lien on a mortgage application for one property and claiming the house near Orlando as a second home to secure lower interest rates when she already had lined up a company to operate it as a rental.
In October, an attorney for the legal defense fund declined to turn over fund records to the Board of Ethics, citing attorney-client privilege. In the same correspondence, the attorney said the defense fund is not a “fundraiser” and said he or she was unaware of “any fundraising activities.”
At the time, the fund already had received $7,718 in donations, according to the board’s report.
Twice, the director of the Board of Ethics, Jeffrey Hochstetler, made test donations to the legal defense fund to check whether the group was confirming the origin of donations, according to the board’s report. The donations, made in August and October, used an alias and a nonexistent physical address.
Baltimore’s ethics ordinance forbids public officials from receiving donations from controlled donors as well as soliciting them, whether directly or indirectly.
In the case of Nick Mosby, controlled donors are considered anyone who seeks to do business with City Council, the council president’s office, the Board of Estimates or any city governmental or quasi-governmental entity with which the council president is affiliated. Also included are subcontractors doing business with or seeking to do business with the above groups, and those who engage in activities regulated or controlled by those groups.
In its ruling, the Board of Ethics said Nick Mosby indirectly solicited donations by taking no action to distance himself from the fund or asking it to stop operating.
“The respondent need not have directly asked someone to establish the Mosby Trust or conduct unrestricted fundraising through the Mosby Trust’s Donorbox account in order to have ‘facilitated’ the Mosby Trust’s solicitation of controlled donors on his behalf,” the report states. “It is enough that he has knowledge of the unrestricted solicitation activity on his behalf and takes no steps to stop that activity or otherwise seeks to ensure that the individuals acting on his behalf comply with the ethics law’s obligations.”
The board also found Mosby indirectly accepted donations via the defense fund.
“Although the respondent may not have directly accepted a gift from a controlled donor, the Mosby Trust directly accepted such gifts on the respondent’s behalf,” the board wrote. “Under the circumstances here, that amounts to the respondent’s indirect acceptance of such gifts. Indeed, it is difficult to imagine a clearer instance of indirect acceptance.”
In his statement Thursday, Nick Mosby argued he “proactively disclaimed” any interest in the legal defense fund and never received any money from it.
In advance of the Board of Ethics’ findings, the council president said he “instructed the trust to return the limited amount of funds received on my behalf.”
Nick Mosby said he and his attorney were excluded from private conferences held by the ethics board.
“The Board was investigator, prosecutor, judge, and jury — that is not a fair or impartial process,” he said.
The board’s ruling cites a 1993 opinion of the state ethics commission that found state ethics law “very substantially restricts” contributions to legal defense funds. At the time the St. Mary’s County sheriff wanted to solicit donations to support a $1.5 million defamation lawsuit against a weekly newspaper in Southern Maryland.
The state ethics commission said controlled donors to the sheriff would include people with matters pending before the sheriff’s office, people who provide services or materials to the office, or attorneys, inmates or others in the criminal justice system.
State ethics law, which regulates Marilyn Mosby, includes similar provisions to Baltimore’s code of ethics. State Ethics Commission Executive Director Jennifer Allgair did not return requests for comment Thursday afternoon.