Gary businessman pleads guilty to mortgage scheme, tax evasion
Post-Tribune (IN)
November 10, 2011
November 10, 2011
Gary businessman Jerry Haymon is admitting not only that he lead a mortgage fraud scheme that took in at least $200,000 but that he also took at least $1 million from his charity and lied about it on his taxes.
According to a plea agreement filed Wednesday in the U.S. District Court in Hammond, Haymon will plead guilty to one count of tax evasion and four counts of wire fraud that are connected to four homes Haymon helped sell, including one he renovated using grant money from the city of Gary.
He faces up to 20 years on each of the wire fraud counts and up to five years on the tax evasion count. Prosecutors say in the agreement they will recommend he receive the minimum of the sentencing guideline range.
Haymon, who owns Priced Right Construction and the not-for-profit Coalition for Concern, and three co-defendants were charged a year ago with the mortgage fraud case in which they lied to sellers and mortgage lenders to reap a portion of the sales of the four houses. Haymon admits in the agreement that he and the other defendants would find people wanting to sell their homes, usually for $30,000 to $40,000. They would then recruit people to buy the homes for tens of thousands of dollars more. Haymon says in the agreement that he and his co-defendants would file a mechanic’s lien on the properties for work that was never done and use the liens to pocket the difference between the original asking price and the selling price. They would fool the sellers and the banks by creating two closing documents, one with the original asking price that was used for the sellers and another that used the selling price and included forged signatures for the sellers.
For example, Haymon says in the agreement that he paid “SH” $10,000 to buy 3829 Connecticut for $74,000, when the owners were asking for just $36,000. He implicates co-defendants Jacquelyn Drago-Hunter, the suspended director of Gary Community Development, and Phillip Rucker, a former Gary reserve police officer, for taking part in the scheme.
According to the plea agreement, he says Drago-Hunter would act as the closing title agent who gave the lien money to Priced Right and that Rucker helped to recruit one of the buyers, receiving a kickback for his efforts. Both Drago-Hunter and Rucker have pleaded not guilty in the case. The other defendant in the case, Sheila Chandler, has already pleaded guilty.
One of the houses was 4028 Tennessee St., which Haymon in 2008 said he renovated using money from a $75,000 grant he received from Gary City Councilman Ronier Scott . According to the agreement, Haymon renovated the house in 2007 and tried to sell it. After his efforts failed, however, he and Chandler paid Chandler’s sister $10,000 to buy the house. He received $49,851 from the closing of the house, using it to pay off Chandler, her sister and others, according to the agreement.
Haymon also admits in the agreement that he and the others lied to the banks about the buyers, creating false financial histories for them so they could get the loans.
As part of the plea agreement, Haymon claims the fraud scheme caused a loss of $200,000 to $400,000.
According to the agreement, the tax evasion count is part of a separate case, although the case cannot be found on public court records yet. Haymon says in the agreement that the count stems from 2004 when he cashed 120 checks made out to his charity, Coalition for Concern. He admits he moved at least $1 million to his personal bank accounts then kept even more of the cash. Along with not reporting this money on his federal income tax report, Haymon claimed he owed no federal income taxes for 2004.
Haymon stipulates in the agreement that the government can “readily” prove he owes from $400,000 to $1 million from the tax evasion. He also agrees to pay full restitution to any victims in the case.
A change of plea hearing had not been scheduled as of Wednesday evening.
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