Northwest Indiana Discussion

http://nwigazette.com/2013/11/16/sources-say-ls-mayor-wife-targets-of-fbi-probe/

On Friday FBI agents walked into the offices of Lake Station, Indiana at 1969 Central Avenue and ordered all employees to step away from their computers according to sources close to the investigation. Although the Gazette has confirmed no computers were seized, the FBI reportedly got all the information it needed by using high tech equipment to download from the City servers. This represents a significant step in an ongoing investigation. You will recall that the indictment and arrest of George VanTil, the most recent indicted politician in Lake County, was preceded by a similar public FBI raid. Not only is judicial review in the form of a warrant required before FBI agents can take such action, the US Department of Justice has strict guidelines dealing with public corruption cases.

Sources say that the crux of the investigation centers around two incidents. The first relates to using campaign funds for personal use. Sources tell me this aspect of the case is unclear. Several point to various expenses which appear to be personal but there is none that stands out when viewing reports of similar local politicians.

The second investigation is related to an “add-on” charge by a street contractor. According to a source close to the investigation, the Mayor suggested he would get an additional charge approved on a construction project that was in progress. In exchange, the contractor would pay the Mayor’s wife a sum of money. Such charges are often scrutinized by the State Board of Accounts as well as Federal Prosecutors because they can be used to award bids to friendly contractors. In many cases, the bid comes in low and the contractor then submits additional charges which are approved by the municipality. Other contractors have no opportunity to compete because they are not assured of having additional charges approved later. In this case, however, sources say the contract was awarded prior to the time of Soderquist’s election.

Soderquist is also on the governing board of the Lake County Democratic Organization. If indicted, Soderquist would be the second current sitting member who is under federal indictment.

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A Post Tribune Article:

Gary businessman gets 21 months in prison for mortgage fraud
HAMMOND — A Gary businessman will serve 21 months in prison for his part in a mortgage-fraud scheme that federal prosecutors say defrauded banks out of $600,000 and hurt the values of nearby homes.

U.S. District Judge Joseph Van Bokkelen also ordered Jeffrey Youngheim, one of the owners of Property Liquidators, to pay a $200,000 fine.

“Economic crimes should have economic consequences,” Van Bokkelen said in handing down the sentence Wednesday afternoon in U.S. District Court in Hammond.

Youngheim pleaded guilty in June 2012 to one count of wire fraud in connection with scheme that involved his co-owner, Richard Loveless, and six other defendants. The scheme revolved around fraudulently inflating the selling prices of 25 homes by tens of thousands of dollars. The defendants did this by having cooperating construction companies file liens against the houses claiming that the companies had renovated the homes.

Co-defendants have testified, however, that more than 90 percent of the claimed repairs were never done. Many of the homes went into foreclosure and sat vacant because the buyers couldn’t afford the payments.

Though most home sellers were kept in the dark about the scheme and never knew their homes sold for far more than they had asked, federal attorneys argued that Youngheim and Loveless knew the repairs weren’t done but signed off on them anyway on closing documents.

Van Bokkelen ruled Youngheim was responsible for $215,000 of the overall loss.

Youngheim’s attorney, R. Brian Woodward, asked that his client serve probation instead of prison time and noted that Youngheim’s company restored more than 200 homes in Gary and rented them out as low-income Section 8 housing, which also put them back on the property tax rolls.

“He spent 28 years building his business,” Woodward said. “He was hands-on.”

He also noted that if both he and Loveless, who has also pleaded guilty in the case, were in prison at the same time they would not be able to maintain their rental homes and would likely have to lay off employees.

Assistant U.S. Attorney Jill Koster disputed this, however, saying that argument essentially came down to “we’re too big to fail.”

“It’s not a get-out-of-jail free card,” she said.

Youngheim apologized and said he has suffered by having banks close his accounts and end his lines of credit.

“Again, there are no excuses for the mistakes I’ve made, and I take full responsibility,” he told the judge.

Van Bokkelen said he was concerned by the crime of mortgage fraud because it harms not only lenders but also nearby homeowners whose property value and neighborhoods suffer when the homes involved in the fraud go into foreclosure and sit empty.

“It harms the entire financial integrity of this country,” he said.

Van Bokkelen also noted though most of Youngheim’s rentals are Section 8, he gets paid more by the government that way than if he rented them on the open market.

The judge said he would be open to staggering Youngheim’s sentence with Loveless’ sentence so they are not in prison at the same time, keeping one of them available to run the company. Loveless also was to have been sentenced Wednesday, but that was delayed by the length of Youngheim’s hearing.

The government argued in court records that the five homes Youngheim and Loveless sold as part of the scheme went for a total of $386,000, compared to the $53,000 that four of the homes later sold for a few years after the scheme.

The process to demo a derelict house is lengthy and expensive. The city has to document that the property presents a public safety hazard. Once that happens, a judge has to approve a court order to enter the home and assess how much it will cost to repair the property. If the repairs exceed 50% of the appraised value of the property,then the demo process moves forward. At every step of the process, the property owners can contest the findings or have their attorneys
ask for continuances.There are several attorneys who specialize in representing owners of derelict properties. Their names appear in the minutes for the BOPW hearings every month. They are probably friends of JCMT, which is why he will never print their names on the boards.However, other posters who actually care about Hammond may choose to publicize the names of these attorneys, who are on the same level as ambulance chasers. Frequently, once the property is put out for bid to demolish, "new" owners appear out of nowhere, claiming they just bought the house and didn't know it was on the demo list. In the meantime, people like Mary Ellen who are honest and pay their taxes have to live next to these dumps.[/b]