Prosecutors: Marilyn Mosby’s net worth tripled when she claimed COVID-19 hardship

Marilyn Mosby’s financial circumstances improved over the same time period she claimed under penalty of perjury to have suffered losses due to the coronavirus pandemic, said a forensic accountant hired by federal prosecutors.

The government expert’s opinion, made public during a flurry of Monday night filings in the federal criminal case against the former Baltimore state’s attorney, responds to the question underlying Mosby’s perjury charges: whether she qualified for early withdrawals from her retirement savings because of financial consequences caused by the COVID-19 crisis.

Claims Mosby, a Democrat, made to that effect, namely that she had suffered financial losses, allowed her to take out approximately $80,000 from her city-managed retirement account in 2020 that she used on down payments for a pair of Florida vacation homes.

By the government’s accounting, Mosby’s net worth tripled from the end of 2019 to the end of 2020.

Mosby, 42, is charged with two counts of perjury and two counts of mortgage fraud, related to the withdrawals and home purchases. Her trial is scheduled for mid-March but has been postponed twice before.

Her lawyers — and experts they’ve hired to testify in her defense — claim the legal language Congress adopted for its first coronavirus relief package, the CARES Act, was vague, and that her claims of “adverse financial consequences” had no determination on whether she qualified for an early withdrawal. Mosby’s defense team said in court filings that her retirement savings portfolio, net worth and potential business income decreased during the pandemic.

Prosecutors hired Joshua A. Johnston, a certified public accountant with expertise in financial forensics and accredited business valuation, to review Mosby’s financial records and the opinion of one of the experts retained by her defense, Jerome Schmitt.

“There is no indication that Ms. Mosby suffered the specific adverse financial consequences of the COVID-19 pandemic … that would qualify her to receive distributions from her [retirement savings account],” Johnston wrote.

Despite the market value of her retirement plan declining for the first three months of 2020, her retirement account balance bounced back to pre-pandemic levels by the time she made her first request for a withdrawal under the CARES Act, Johnston’s disclosure said.

Schmitt, Mosby’s hired expert accountant, performed a similar analysis of her net worth, but did not include the spring rebound.

The CARES Act does not designate a decline in net worth as a permissible consequence to make a coronavirus-related retirement account withdrawal.

“Based on my experience in reviewing the personal financial statements of individuals, utilizing retirement plan withdrawals to invest in real estate are not the financial decisions and actions of an individual experiencing financial adversity, particularly the specific adverse cash flow consequences cited in the CARES Act,” Johnston said.

Federal prosecutors used Johnston’s disclosure to argue why they believe U.S. District Judge Lydia Kay Griggsby should bar the testimony of Mosby’s experts at trial.

In their own filings, Mosby’s lawyers renewed several legal arguments Griggsby previously rejected. They also asked Griggsby to prevent the government’s experts from testifying.

Expert witnesses, and concerns about their testimony, have been a theme of Mosby’s criminal trial to date. The government asked for the case’s second postponement in September after Mosby’s defense failed to disclose all of its expert testimony.

The defense lawyers argue the government should be prevented from being able to tell the jury how Mosby spent the money she withdrew from her retirement under the CARES Act, something Griggsby rejected in September.

“How Ms. Mosby spent the money has no bearing whatsoever on whether or not she experienced a situation contained in the definition of adverse financial consequences,” her attorneys wrote.

Mosby spent the $80,000 on down payments for an eight-bedroom house near Disney World and a condo on the Gulf Coast. Federal prosecutors say she duped mortgage lenders by disguising her intention for the vacation house to secure a lower interest rate, and by neglecting to disclose a federal tax lien against her to lenders.

For the eight-bedroom home, which Mosby has since sold for a profit, she signed what’s known as a “second home rider” that prevents her from immediately using the property as a vacation rental, according to publicly available mortgage documents. However, prosecutors claim Mosby already had hired a rental management company, which would be a violation of the rider.

Mosby’s attorneys do not deny a management company was hired, but instead claim the management agreement did not violate the terms of her mortgage.

Attorneys for Mosby also say the government hasn’t disclosed to them evidence that could indicate her innocence, which is commonly referred to as Brady material. This is the second time Mosby’s lawyers raised the argument, with the government countering they don’t need to point out what parts of the evidence are beneficial to the defense’s case.

Now, Mosby’s lawyers are asking for Griggsby to impose sanctions on the government. They proposed dismissing the indictment against Mosby.

Monday’s deluge of filings are the first in Mosby’s case since she left office Jan. 3 after two terms as Baltimore’s top prosecutor.

The parties are due in court again Jan. 17 to address whether Mosby’s defense should be held in contempt of court for revealing confidential juror information, whether Mosby’s trial should be moved to Greenbelt and if a limited gag order should be applied to lawyers in the case while directly outside of the courthouse.