Northwest Indiana Discussion

https://www.facebook.com/pages/Gary-Free-Press/186249654744245
Gary Free Press
April 8
A fairy tale?:

Once upon a time, not in a faraway land, in a city named Gary....

What happened to Gary, Indiana?

"How a broken tax system destroyed a city; a brief history"

First Installment

How it all started:

It wasn’t that long ago, it was back in the nineties. Gary had a tax rate of around 11%. With something referred to as the “property tax replacement credit” that existed at the time, the net effective tax rate was still right at 9% of a property’s assessed value. That meant that you had to buy your property back from the city every ten years or so!

*This is assuming that you had a reasonably accurate assessment; however, in so many cases, particularly in Calumet Township, assessments were completely out of whack. These inaccuracies in assessment, coupled with the outrageous tax rates in Gary, are what led to the city’s rapid decline.

If a property owner was wrongly assessed by a factor of 3 or 4 times, their property tax liability for one year could easily exceed the actual market value of the property. When walking away from a capital investment that one may have had full equity in becomes a prudent business decision, the city was pretty much doomed early on.

So not surprisingly, back in the late ‘90s, Gary began to experience a tremendous amount of property tax defaults. So many, that the County was no longer able to manage the situation. They had to bring in a company that specialized in this work. It was a match made in Heaven—or so it would have seemed.

No one at the County ever bothered to look at the root cause of the growing numbers of tax-defaulted properties entering the system, they just turned this company loose on the problem. And for a while, it seemed like it was working. Many properties that had been languishing on tax sale lists for years, were sold to fresh buyers. Many of them were converted into productive uses. Some were not. But overall, the net effect of the program was helped to correct a problem that had existed for several years.

But here is where and when things started to go wrong. This company that was hired in from Indianapolis to help the County manage the bulging portfolio of tax-defaulted properties that had accumulated over a fairly long period of time, had apparently developed a taste for blood. They, along with several of their newfound “partners”, had been able to convince the County decision-makers that the answer to the County’s (and Gary’s) problems laid with spending a whole bunch of tax money doing legal work on thousands and thousands of nearly worthless lots, most of them useless, small lots scattered throughout the City of Gary.

It was an orgy of fees. Title work, legal fees, tying up the courts, hiring additional staff at the County, commandeering County workers to shift their focus to this project, and this company from Indianapolis gearing up with an entirely new staff and a suite of offices across from the County building. All of this effort; all of this tremendous expense, all for nothing. The County authorized the expenditure of millions of dollars on this initiative, only to later discover that they had just been duped. They spent millions with this company to acquire the titles to properties that had virtually no value whatsoever. Out of the millions spent by the County acquiring title to this long list of properties, they probably only recovered 60-70-thousand dollars through the sale of these small lots, most of which were sprinkled throughout the City of Gary. There were some properties located in other areas of the county, but 90% or more were in Gary.

But all was not lost. Rudy Clay was a County Commissioner at the time. It was his right-hand man, Roosevelt Powell, that benefitted financially from the goings on at the time. It was during this same period that US Research Consultants was born. This was a company that “he” (we are to believe that Rudy Clay was not directly a part of it) started to be able to skim a rake of cash off of the top of any property that happened to pay its taxes as a result of the Indy-based company’s title mill.

Powell’s US Research Consultants wasn’t the only company that was set up in business as a result of this costly and destructive initiative. Another friend of his, Jacqueline Drago-Hunter, and her now deceased husband, LC Hunter, started their own title company. Maxi Milian Title Company was born—essentially out of thin air. The fact that the Hunters had no experience in the real estate business was not any reason to stop the Commissioners from giving them the job of doing the title work on thousands of properties which they would ultimately acquire title to.

One has to wonder if her company had somehow co-opted workers in the Lake County Recorder’s office to help with the tedious chore of doing title searches. But just because then-Recorder Morris Carter was sentenced to 51 months in prison on unrelated charges, doesn’t mean he necessarily went into business with the Hunters.

*If the name Jackie Drago-Hunter sounds at all familiar, it is because she later became embroiled in a federal mortgage-fraud investigation with another one of Mr. Clay’s cohorts: Jerry Haymon. She was eventually sentenced to 15 months in the hoosegow. But alas, her checkered past wasn’t any reason for Rudy Clay not to put her in charge of the Department of Community Development for the City of Gary (seemingly, it may have been a prerequisite). You know the one, the one with millions of federal dollars flowing through it annually. Somehow, she was deemed to be a good choice for this position. The expression, “You are now entering the twilight zone”, just popped into my head for some odd reason.

Powell’s company didn’t have its own location. It operated out of the County’s own building. It utilized staff that was on the County’s own payroll. It used materials and postage paid for by the County itself, yet this same County, allowed “him” to take his skim and put it in his own pocket. Why would that be? Was it because Rudy Clay was getting his cut? Was it because Gerry Scheub was getting a piece of the action? Was it because they were taking care of Fran DuPey? Was it because just about every office-holder and attorney connected to this scam was benefitting from its largesse in some way? Was it because this once-small company from Indy, after coming to Lake County, had suddenly grown from relative obscurity to raking in millions just off of Lake County, and with buckets of cash overflowing, was it because they were able to distribute it back to where it was needed to keep the program going? To “convince” the County bigwigs that this was a program in need of expansion? Did the president of this company ever miss a Democratic fundraiser? Was there any Democratic candidate’s campaign fund that he did not heavily contribute to?

But while this company’s bottom line grew exponentially, do you suppose that any County official that mindlessly voted to keep it going every time they got the chance, ever took the time to examine its effects on the city most affected? How many times do you think they bothered to visit Gary to inspect what their handiwork had wrought? Besides Rudy Clay who happened to live in Gary, my guess would be none. But he never really cared, not as long as he was getting his; which you can bet he was.

Rudy would often prattle on about how Roosevelt Powell was his closest friend and advisor on this Earth. The president of SRI, the Indy-based tax sale company, Jim Hughes, would often say that Roosevelt Powell was the most important man in his organization. I am quite sure that he was! So much for conflict of interest issues, huh?

So with so many County officials and individuals ostensibly in positions to look out for the City of Gary involved in the feeding frenzy, how could we really expect them to take the time to wipe the dripping blood from their maws and instead help the wounded prey rather than continuing to gnaw at the body?

Onyx Electronics; everybody gets a piece:

Now it was Gerry Scheub’s turn. Rudy and Roosevelt had their fun. Now it was time for someone else to be first at the trough. The opportunity presented itself as the GUEA investigation heated up around Roosevelt Powell. His close ties to SRI were impossible to hide. Scheub saw his chance and he took it. He ushered his friend, Don Guernsey and his firm, Onyx Electronics, through all the doors he needed to take over the lucrative job of selling tax-delinquent properties for the Commissioners—another study in conflict of interest. At first, it was really just a charade. Onyx was just SRI’s proxy. They just had to learn to share. But as time went on, Onyx got greedy (big surprise, huh?) and began to force SRI out altogether. This of course was met with resistance, but what could they really do? They didn’t want to lose out on the County’s business altogether. They still wanted to hang onto the Treasurer’s sale account.

It was SRI that also helped usher many improprieties into the Commissioners’ Certificate sale system. It was Onyx that introduced a whole bunch more. Now the system is rife with problems. (More on this later)

The County can’t catch a break—neither could the taxpayers!

Remember the company that the County hired to do a reassessment of all of the properties in Lake County? The company they were left with (or stuck with) in the wake of the Enron/Arthur Andersen scandal? Do those three letters C, L, T ring a bell? Cole Layer Trumble.

In an Enron-linked and Enron-style implosion, the firm that Lake County had originally contracted with to perform the State-mandated reassessment, Arthur Andersen, went belly up amidst all sorts of improprieties in its operation being brought to light.

Lake County officials, being up against the wall to get the outside reassessment finished by State-imposed deadlines, opted to have Arthur Andersen’s subcontractor of choice: Cole, Layer, Trumble (CLT) perform the reassessment.

Maybe it should have been a red flag when Arthur Andersen officials were indicted by the Federal Government for all sorts of accounting improprieties which at first hid Enron’s losses from its shareholders, and then ultimately led to Enron’s ignominious and storied collapse. Maybe someone from Lake County should have questioned the abilities and track record of CLT; having been so closely linked to the now-imploded Arthur Andersen firm.

Since its collapse, the word “Enron” has become part of the popular lexicon to be synonymous with a large, failed corporation, often due to illegal accounting practices.

The Big Four: They saw it coming…

…and decide to do something about it to protect themselves.

For many years, the operating budgets of Gary, East Chicago, and Whiting were supported primarily by the big steel mills and BP. One can imagine when an asset as large as a steel mill or a refinery is multiplied my 9%, what kind of tax bills land in the mailbox. Something had to be done. At this point in the history of the economy, steel sales were down. There may have been times when property taxes were insignificant, no matter what the rate was; but this was not that time. The steel industry was going through some tough times. There was stiff competition from overseas, and there was a lot of consolidation happening.

The Big Four industries filed a lawsuit claiming that they should be able to self-assess their personal property and should be able to claim more obsolescence on much of their major industrial equipment. There were many facets to the lawsuit. They probably had only hoped to win a decision in their favor on one or two aspects of the case. But lo and behold, they won it on every point. Some say that Gary’s then-mayor, Scott King (remember him?) sandbagged the case—sold out the city he presided over. For whatever reasons, Lake County lost the lawsuit, the case was affirmed and the gross assessed values of the three cities which were affected were eviscerated overnight.

In Gary, USX’s property tax contribution went from paying nearly 50% of the city’s operating expenses down to around 25%. Needless to say, this had a drastic impact on the city’s financial condition.

This is the point in time where city officials should have begun getting their financial house in order and should have begun planning for leaner times. Unfortunately, they did no such thing. They instead continued with their profligate spending practices—year after year after year.

It has often been suspected that now faced with this enormous deficit of assessed value, that there were tacit directives in place at the Calumet Township Assessor’s office to supplant this deficit artificially by increasing the assessed values of the properties belonging to homeowners and businesses. Many still opine that there was a concerted effort by the Calumet Township Assessor’s office to prop up the gross assessed value of the city—a city that not that long ago had a robust assessed value--by artificially inflating the assessed values of numerous properties. It would be futile anyway. There was just no way to make up for such a large deficit of assessed value.

Whether or not it was intentional, this is what happened. But can you imagine the daunting task of trying to replace several-hundred million of lost assessed value by haphazardly adding it here and there? What a mess! The proof is in the pudding. Any study of the events which transpired following the decision in favor of the Big Four will surely support these suspicions.

Booker Blumenberg was the Calumet Township Assessor at this point in time. While he steadfastly railed against the USX decision, it was a lost cause. He was like a broken record playing the same song over and over for years. He just could never get past it.

*This was before the tax caps. The irony here is that if Blumenberg had unilaterally lowered everyone else’s assessments except USX’s--instead of randomly increasing them in the futile attempt to make up for the USX loss--USX’s tax contribution could have been kept at an equivalent level. The tax rate might have gone through the roof, but everything being relative, USX would have continued to pay a similar proportionate amount of the gross property tax collections.

Those “troublemakers” in Miller:

(Back to the outrageous tax rates for a minute.) Cole Layer Trumble (CLT) again. This is the name of the company that took things from already bad to a whole lot worse. But do not fret, it only cost the taxpayers of Lake County 25-million dollars to have this outside firm come into our house and completely botch everything! The explanation given why we needed to spend 25-mil on this outside firm to assess property in Lake County: because the system in Lake County was too corrupt to get accurate assessments.

So we went from a system whereby huge amounts of assessments were inaccurate due to corruption, to a system whereby an even larger number of these CLT reassessments were inaccurate due to gross incompetence. It cost the County 25-million for this firm to come in a screw everything up even worse. The amazing thing was that despite the County being fully aware of how badly CLT botched everything, they still paid all of the outstanding invoices. It was fully apparent that they had made a colossal mess of things at a time that the County still owed them 10-million. The County should have said, “…hold your horses, boys, not until you fix this mess…” But that is not the Lake County way. Evidently someone on the CLT team had an angel (or angels) at the County; because it seemed they couldn’t write the check fast enough.

But here is what CLT did that woke up some sleeping giants in Miller: CLT raised the assessed values of lakefront homes in the Miller section of Gary several-fold. Homes that had previous assessed values of a couple-hundred thousand, overnight had assessed values of upwards of $500,000.00 and up. Tax bills for many of these homeowners leapt from 10K per year to way over 50K per year. Something had to be done. People couldn’t afford to stay and they couldn’t sell either. Who in their right mind would be willing to purchase a home with an annual tax bill of 50K?

*After the CLT reassessment, a 500K home in Gary would have had an annual tax liability of around 45K. A home with a similar assessed value in Munster or St. John would have had an annual tax liability of around 10K or less. And in either of these other communities, the level of services received in return for property taxes would be significantly higher. In addition, all metrics which would determine the standard of living would score near the top of the charts, while all metrics for Gary would score at or near the bottom.

So a bunch of people from Miller got together and did something about this horribly damaging situation. But I think that it needs to be said here that no one from the City of Gary, and no one from the County of Lake stepped in to help remedy the situation. They were on their own. Left twisting in the wind by the elected officials at all levels that they most likely helped vote into office.

They filed a lawsuit. They went downstate. They met with the Governor. They lobbied legislators. They spent a lot of money and a lot of time. But they got something. They got the 2% circuit breaker. This meant that a taxpayer of a home could not be charged more than 2% of its gross assessed value. This was some relief, to be sure.

This meant that people could afford to stay in their homes. This meant that the exodus could be called off. They saved the Miller community. (I would like to mention that all of these things that the Miller group did, took years. Many people who did not have the stomach for this challenge had already left. Surely many of them took financial hits when they were forced to sell in the face of these problems.)

That’ll teach ‘em to have nice homes in Gary!

Millionaires overnight…not!

Thanks to CLT, a lot of people became millionaires overnight—at least according to their terribly skewed calculations. Unfortunately, the reality was that CLT sent many property owners to the poorhouse.

The properties weren’t worth any more than before arbitrarily and carelessly CLT decided they were; the only problem was the properties still had the same actual worth as before CLT cranked up their values, but now these properties had much, much higher tax liabilities attached to them. That is a factor that of course makes them less valuable. So while their assessed values were being artificially raised, their actual market values were being driven down even further--a sure recipe for disaster.

The Nexus nexus:

Still reeling from the destruction laid out by CLT, the County, to comply with new legislation that provided for assessments to be derived from market values, instead of the previous arcane system based entirely upon subjectivity and/or who you know, a firm, again out of Indianapolis, by the name of Nexus Group, was hired to create trending ratios which would then be applied to existing assessed values which were assigned by CLT. The phrase: “garbage in, garbage out” comes to mind. It hardly makes any sense to apply incremental or decremental trending ratios to assessed values which are still in gross error due to the incompetence of CLT. And it’s not like
Nexus provided good trending ratios anyway. Property owners in Gary probably experienced the biggest leaps in their properties’ assigned assessed value following Nexus’ handiwork than ever before in history.

Nexus likes to blame the Calumet Township Assessor’s office, and they in turn like to blame Nexus. But not to worry, there is plenty of blame to go around! (Nexus was also responsible for making a bunch more property owners false millionaires. And again, the reality was that a whole bunch more property owners got sent to the poorhouse as a result of their handiwork.)

Cottage Industry:

It is so very unfortunate that rather than identifying the ever-growing list of factors which have led to the accelerated destruction of this city, that those involved in benefitting from the largesse of this broken system; those that have made careers out of misinterpreting and mangling state statutes; those that have conspired in the furtherance of these schemes; those that are directly to blame for the downfall of this city over the past decade, are also those ostensibly in the positions to protect the taxpayers from just such abuses.

If we the taxpayers cannot look to them for protection, but instead have to be on constant alert from their systematic attacks, this already-destroyed city will be doomed into the foreseeable future.

Why Gary? Why did all of the so-called leaders let this happen to Gary?

Then came the actual tax caps:

Following the temporary legislation that provided the 2% circuit-breaker relief, the Legislature passed the 1%, 2%, and 3% tax-cap legislation. This was even better for homeowners, or at least so it sounded. If you owned a home on the lake, or anywhere else in the state for that matter, and you lived in it, you would not have to pay more than 1% of its gross assessed value. This legislation effectively silenced those pesky folks in Miller for good.

However, along with the enacting of the 1-2-3 tax caps, the State allowed distressed municipalities to petition the State for relief from the tax caps. This went on for four years. The only city in the entire state that went down to Indianapolis on an annual pilgrimage to beg for forgiveness for their profligate spending ways was Gary, Indiana. (I’ll bet that is really a shocker, huh?) And the State, never wanting to make any waves, and never wanting to be accused of any kind of racism, went along with the program each and every time.

But as good as the tax caps initially seemed to be, there were many unforeseen pitfalls. The legislation does not prevent municipalities from charging taxpayers user-fees. So for all of the things that taxpayers had come to rely on being paid for out of their property taxes, they are now getting hit with a growing list of user-fees.

First in Gary, it was the garbage fee. The City of Gary had always collected the trash with its own trucks. The costs for this service were paid for by the taxes paid by Gary taxpayers. Not anymore. Now it is paid for by a user-fee. Then there was the fire hydrant maintenance fee. Now it is paid for by an additional charge on the water bill. Then there is the new storm water fee. And most recently there is the Little Calumet River maintenance fee. There is seemingly no end in sight when it comes to these fees. Do you remember just a little while ago when Merrillville wanted to get permission to charge its taxpayers an additional fee so that it could hire more police? The clear implication here was that Merrillville needed more police to combat the influx of crime leaking southward from Gary.

If there is no limitation on the application and addition of user-fees, there will be more and more of them as time goes on. User-fees, that charge for things that have historically been paid for out of the proceeds of one’s property taxes, sound an awful lot like taxes. They sound like an end run around the tax caps, don’t they? Where and when will they stop?

When you add up all of the user-fees, and add them to one’s “capped” tax bill, in many cases, the total charges are far higher than before the tax caps! Let down by our elected officials again…imagine that!

The long-promised and long-awaited benefits of the tax caps proved to be illusory and ephemeral…as they are really not tax caps at all; in fact, it seems that they have just opened the door (or flood gates as it were) for what appears to be a never-ending stream of new taxes thinly disguised as user fees.

When you let individuals that have a long history of flagrant spending and corruption cast the votes on whether or not it is OK to enact new taxes or enact new user-fees, don’t be surprised when they unanimously vote “YES”!

After all, it is because of the myriad property tax problems that we now have a new county income tax to also deal with. But it wasn’t enacted due to being put to a popular vote, it was passed by the very same body of public officials that have been such poor stewards of the tax money of ours they already have the responsibility to manage.

No sooner did this Lake County Council manage to shove the income tax down the throats of Lake County taxpayers did they start to convene to figure out creative new ways to spend this new windfall. But never once have they so eagerly met to discuss ways to reduce their budgets and reduce the ever-growing burden on taxpayers. Their province is not public service. Their province in patronage.

Power to the people (or person)

Roosevelt Powell is still winning over elected officials and able to wield undue influence over these people. One cannot help but wonder why an individual only recently released from the federal prison system would have been granted an all-access pass to City Hall, not to mention the Gary Airport as well. He can be seen moving effortlessly in and out of the Mayor’s suite at Gary City Hall on any given day. At the Gary Airport, he gives the appearance that he owns the place. How is it that an individual with such a recent criminal conviction can have what seems to be unrestricted access to the Mayor? One can only wonder exactly what sweet-nothings he whispers in her ear. When it is contemplated that he went to prison for his shenanigans with the GUEA organization, it makes your imagination wonder as to whether or not he may have protected its then-attorney at the time he and his co-conspirators pulled off their scheme. Its then-attorney is none other than our now-mayor, the “Honorable Mayor”, Karen Freeman-Wilson. This is a theory that a great many individuals that are “in the know” subscribe to.

So now, besides an ever-growing list of new user fees (taxes in very thin disguises), we have the new Lake County Option Income Tax (LCOIT); this to act as a Band-Aid to shore up the County’s financial shortfalls. However, it needs to be stated that due to the broken tax system, Gary residents will be required to pay this new tax, this new income tax, but they will NOT receive any of the property tax relief that was advertised when the tax’s proponents were having their poorly publicized perfunctory public meetings--making sure they met the minimum standards for public notification—as they race the legislation through the system. Nobody even knew how it was supposed to work; not even those that were responsible for engineering it (maybe that’s the wrong word to use. The word “engineering” implies that someone actually gave some thought to the process.)

This new income tax will wind up draining more money out of the pockets and bank accounts of Gary residents while providing them with none of the property tax relief that they were told they would receive. This LCOIT will however reduce the property tax burden for taxpayers in other nearby communities—in communities that have their houses in better fiscal order. The taxpayers of many of these other nearby communities will have their property tax burden reduced; but it will be reduced at the expense of Gary taxpayers. Did they mention that to you when they were trying to lull you into a state of serenity?

Market value…what market value?

The new system of real property assessment in Indiana is based upon market value. This means that the assessed value of any real property should mirror its actual market value. But what happens when there is no market for some property? And what happens when a property that is unmarketable is assigned an assessed value much higher than it is worth? It becomes worth even less; because now, besides being unsellable, it has a disproportionate liability attached to it.

In most places, people complain when the real estate market is flat. But there are conditions far worse than that in Gary. In Gary, not only are most property owners unable to sell their property, they are also, in many cases, unable to retain ownership of their property—even if their mortgage is paid off. When annual tax burdens approach—or at times exceed—the actual market values of the property, a condition exists whereby property is unsellable. It is a situation by which it will be impossible to attract investment—one of the cures for the hollowed out gross assessed value of the city.

It is painfully ironic that the Calumet Township Assessor still sees fit to continue to increase the assessed values of many properties citywide while these actual market conditions exist.

Again, the proof is plain to see: just 2 or 3 years ago, the City announced during one of Evan Bayh’s visits that there were approximately 4000 abandoned structures in need of demolition citywide. More recently, that number has been adjusted upward to more than 10,000. They didn’t miscount a few years ago. The number has more than doubled because property owners are packing up and leaving in a mass exodus-like fashion. Ten thousand structures in need of demolition today will become 12,000 in another year if nothing is done to reverse the trend.

*And even more recently, just a week or so ago, the Director of the Department of Redevelopment for the City of Gary, Mr. Joe Van Dyk, was quoted as saying the number of abandoned structures in the city was 15,000.

And this may come as a surprise to individuals not to be considered real estate professionals, but continuous gunplay, increased violence, and dead bodies turning up from one end of the city to the other are not generally considered factors that stimulate the interest of the investment and/or business community. This kind of stuff does NOT drive up the values of real estate. In drives it into the basement. It makes it virtually worthless.
So in spite of what may seem to the uninitiated buyers as seductively low real estate prices, one would soon determine that there is good reason for these low market values. It is a sucker’s bet.

The local assessors need to face the cold, hard facts of reality. They need to recognize that they are way off the mark on the majority of their assessments. Bringing assessments in line with the actual market values—like the legislation requires them to do—will be another important step in addressing curing the disease, rather than just prescribing something to deal with one of its many symptoms.

It will be many years before the city’s gross assessed value is again robust. But it will be many more years if we continue to improperly treat the symptoms instead of properly treating the root causes of the disease.

Common Denominators/Criminal Enterprise?

Maybe it’s just a coincidence, but there seems to be a clear pattern developing. So many individuals that are directly and closely involved with the administration of the City of Gary—both past and present-- have incredibly close ties to individuals that have criminal pasts, or they themselves have criminal pasts. Really, just about everywhere you carte to look around the city, there are serious problems which require the constant attention of the federal government. This is not typical of your average city. Most people in most places that have chosen public service as a career path, are honest and hard-working.

It would seem to provide a textbook example for a RICO case. Maybe someday….

Cause and Effect

Things didn’t just happen. The city wasn’t destroyed without reason. It is a simple matter of cause and effect.

Until someone begins to explore and investigate the root causes of the problems plaguing the city, everything else will just amount to a temporary patch job.

The City of Gary will begin to normalize and recover the instant it is no longer run roughshod over by a bunch of criminals, miscreants, and malefactors.

However, it is unlikely that this will happen while there is a city government in place that is far too eager to take advantage of the flaws and faults in the system and manipulate it for their personal and/or political gain, rather than probing any of the root causes which have resulted in these flaws and faults.

As long as a tax system remains in place that is broken and twisted and contorted, the further destruction will continue.

No good doctor would prescribe an aspirin for a bullet wound to the head. He wouldn’t put a Band-Aid on a malignant cancer, either. Good doctors know to look for the root cause of a malady, otherwise, they find themselves treating symptoms rather than preventing their causes.

If we want to cure the ills that have befallen our city, and have led to the destruction of this city, we must be willing to look beyond the symptoms and look at the root causes. These causes of the disease are treatable. They may be complex, or unpopular, but they are treatable, nonetheless—if the will to identify them and treat them exists. If not, we can all just watch as this city enters the stages of its final death throes. It won’t be pretty!

Things will not just fix themselves. The broken tax system upon which the foundation of everything else is currently based, must first be fixed. It is only by making the necessary repairs to this broken system that the current direction in which things are heading can be turned around; that is if the direction we want the city to move in is forward. For those who are content with the city’s continued backward slide, they can continue to do nothing. But obviously, there is only one acceptable choice, or at least that’s what one would think; but then again, this is Gary, Indiana, in the heart of Lake County!

So what is the answer? The answer is to find a better solution. The answer is most definitely not continuing headlong into the buzzsaw. The answer is not to continue implementing policy that has led to the problem.

The clue is that people have property that they literally cannot give away, yet are required to pay taxes based on outrageous assessed values.

When true and accurate market values are reflected in the assessments, certainly there will not be enough money to run the city like the politicians would like. However, it will stop the exodus from the city, which is Step One.

Let’s see what happens next…stay tuned….

...and everyone lived happily ever after...not!

Outstanding article. GFP presents a theory on Gary's demise, does Hammond have some similarities?

You bet.

The destruction of Gary started back in the 60's.

A lot of speculation and argument, all very interesting - as hypothesis - that if there is evidence for, ought to be submitted to the USAG. I mean, if the feds are popping guys like Philpot and Van Til for chump-change violations, surely the allegations express and implied here warrant a deeper investigation.

http://posttrib.suntimes.com/news/30304022-418/local-investor-to-plead-guilty-in-mortgage-fraud-scheme.html

Local investor to plead guilty in mortgage fraud scheme

By Teresa Auch Schultz tauch@post-trib.com October 6, 2014 2:36PM

Updated: October 7, 2014 2:04AM


The local owner of a house-buying company that received national accolades in 2006 will now plead guilty to taking part in a $2.5 million mortgage fraud.

Minas Litos, owner of Red Brick Investment Properties in Merrillville and several restaurants in the area, faces up to 20 years in prison in exchange for pleading guilty to one count of conspiracy to commit wire fraud and 16 counts of wire fraud, according to a plea agreement filed Monday in the U.S. District Court in Hammond.

He has also agreed to pay restitution, although it is unclear how much that will be.

A change of plea hearing has been set for Tuesday afternoon.

Red Brick was a franchisee of HomeVestors of America, a national company that buys and resells homes, often under the name “We Buy Ugly Houses.”

HomeVestors recognized Red Brick in 2006 as the top rookie company in the nation, and Litos said at the time he saw his company as helping revitalize neighborhoods.

However, Litos admits in the plea agreement that he and others, including the charity Coalition of Concern, run by Gary businessman and convicted felon Jerry Haymon, defrauded banks from 2007 and 2009 by lying when they sold 45 of the homes, most of which were in Gary. The scheme took in more than $2.5 million from lenders, according to the indictment.

Litos and others would give buyers money in order to convince companies to lend them money. They would also provide the down payments - which the indictment says totaled more than $600,0000 - for buyers without telling the banks where the money came from.

The agreement says that Coalition of Concern acted as a go between in several of these relationships, wherein Litos would give the money to Coalition of Concern and the group would then give the money to the buyers.

He would then pay money to the buyers, which was also not disclosed to the lenders, according to the agreement.

Most of home buyers defaulted on their mortgages, according to the indictment, and many of the homes are now vacant.

Haymon is serving a 41-month prison sentence in connection to his own mortgage fraud scheme, in which he admitted to a similar scheme involving four homes in Gary, including one house that he had received money from the city of Gary to renovate.