03282014 - News Article - FBI raids NW Indiana township trustee office

FBI raids NW Indiana township trustee office

Chesterton Tribune
Posted 3/28/2014

http://chestertontribune.com/PoliceFireEmergency/fbi_raids_nw_indiana_township_tr.htm

GARY, Ind. (AP) — Federal and state agents have searched the northwestern Indiana office of what is among the largest township government units in the state.

Agents from the FBI, IRS and Indiana State Police obtained a warrant for Thursday's search of the Calumet Township trustee's office in Gary as part of an ongoing investigation, said Robert Ramsey, the supervisory agent for the FBI office in Merrillville.

Details about the warrant have been sealed by a federal judge, Ramsey told The Times of Munster and the Post-Tribune of Merrillville.

Agents left the offices with several boxes and a computer, but no one was detained.

Calumet Township Trustee Mary Elgin has faced scrutiny recently over the office's spending on assistance to Gary's low-income residents and the use of take-home cars.

Township attorney Ragen Hatcher said in a statement that Elgin is cooperating fully with investigators.

Elgin is suing the state to stop enforcement of a law approved by the General Assembly last year that would significantly reduce her control over more than $5 million in annual spending if she doesn't reduce administrative costs.

That law sets up a process for the town of Griffith to possible withdraw from the township — a move that could cost the trustee's office at least $1.7 million. Griffith officials and residents have claimed for years that they put in far more revenue to the township than is returned in services.

Griffith Town Council President Rick Ryfa said he didn't know what impact the investigation would have.

"I am waiting as eagerly as anybody else to find out what they have found because I have no clue," he said.

Elgin said in a recent interview that fighting the 2013 legislation was among the reasons she decided to seek re-election this year. 

She is being challenged by Gary Councilwoman Kimberly Robinson in the May Democratic primary.

"I feel very strong about the township, township assistance, and helping the needy," Elgin said. "I feel very comfortable about what I've accomplished, but to leave that unfinished, I think that's a battle we have not finished yet."

03252014 - News Article - FBI returns to county to download computer files

FBI returns to county to download computer files

Chesterton Tribune
March 25, 2014

http://chestertontribune.com/PoliceFireEmergency/fbi_returns_to_county_to_downloa.htm

The FBI returned to the Porter County Information Technologies Department Monday to collect computer data pertaining to the plan commission. 

IT Director Sharon Lippens confirmed the presence of FBI agents in her office from about 10 a.m. to about noon on Monday. 

“They came in and said, ‘We need access to whatever the Plan Commission has access to.’ I didn’t ask why and they didn’t tell me,” Lippens told the Chesterton Tribune this morning. 

Lippens said the FBI did not tell her what data they were searching for but that she gave them the access they requested. The Plan Commission computer servers hold electronic copies of issued building permits. 

The FBI brought in their own hard drive to download the information to and were once again brought in by Plan Commission Executive Director Robert Thompson, Lippens said.

Thompson took FBI agents to the IT Department last Wednesday to ask Lippens specific details on the Plan Commission’s computer server such as the serial number, the make and model. 

Thompson has declined to comment to avoid impeding the investigation.

He did say earlier this month that the FBI has entered his office on more than one occasion asking for copies of the building permits for Porter Regional Hospital and the 60,000 sq. ft. medical office building attached to it. 

While newer versions of the permits are available, the original handwritten copies for the two buildings have reportedly gone missing from the plan commission office. 

The hospital is located in Liberty Twp. on the northwest corner of Ind. 49 and U.S. 6. 

County officials have reported numerous visits by the FBI since November. 

The bureau has taken documents related to the December 2012 contract between the County Commissioners and Porter Hospital for clinical services in the County’s Employee Health Plan, conflict of interest disclosure statements filed in the County Clerk’s office from 2007 to 2013, and project bid proposals related to 2010 and 2011 contracts with the County Highway Department. 

03242014 - News Article - FBI taps into Porter County computers

FBI taps into Porter County computers
NWI Times
March 24, 2014
http://www.nwitimes.com/news/local/porter/fbi-taps-into-porter-county-computers/article_6d0c1185-595b-50bc-ad98-a547d992fbcf.html

VALPARAISO | FBI agents downloaded computer information Monday as part of their ongoing investigation into county government.

Four agents spent several hours at the county's information technologies department during the late morning downloading data files from the county server to an external hard drive they brought, said department Director Sharon Lippens.

Lippens did not know exactly what information was targeted by the agents.

The FBI declined comment when contacted Monday afternoon.

Plan Commission Executive Director Robert Thompson, who also confirmed the presence of the FBI at the county administration center Monday, has had agents visit his office multiple times recently.

Thompson said neither he, nor to his knowledge anyone he supervises, have done anything inappropriate.

"I am fully cooperating with law enforcement authorities," he said.

Thompson declined further comment to avoid impeding the investigation.

FBI agents have made numerous visits to county government during the last several months.

Agents were at the IT department last week seeking information about models and makes of computer servers used by the county, Lippens had said.

Agents have also appeared at the plan commission office seeking copies of building permits for the new Porter Regional Hospital and the nearby medical office building at Ind. 49 and U.S. 6.

Thompson has said his office is unable to locate the original building permits for those two buildings.

The FBI has also visited the county highway department, where agents sought records of materials purchased by the Porter County Board of Commissioners in a competitive bidding process in 2010 and 2011.

Porter County Clerk Karen Martin said in December an FBI agent showed up at her office seeking copies of conflict of interest disclosure forms designed to reveal a public servant's financial interest in contracts or purchases involving their government offices.

The FBI also took possession late last year of records related to the county commissioners' decision Dec. 18, 2012, to switch the provider of wellness and clinic service for county employees from HealtheACCESS to Porter Regional Hospital's CareEXPRESS

03212014 - News Article - FBI seeks computer info in latest visit to Porter County government

FBI seeks computer info in latest visit to Porter County government

Chesterton Tribune
March 21, 2014

http://chestertontribune.com/Porter%20County/fbi_seeks_computer_info_in_lates.htm

The FBI is continuing to investigate the Porter County Plan Commission. Wednesday agents inquired as to what kind of computer equipment it uses.

County ITS Director Sharon Lippens told the Chesterton Tribune this morning that the FBI visited her office mid-afternoon escorted by Plan Commission Executive Director Robert Thompson. 

“They asked (Thompson) what kind of server his office ran on. He didn’t know so that is why they came and asked me in my department. They asked for the serial number, the make and model of the server,” Lippens said. “That’s all what happened.”

Lippens said the FBI did not tell her why they wanted the information.

Thompson told the Tribune “no comment” when asked about Wednesday’s events. 

FBI agents also visited the Plan Commission office March 7 and March 10 to take copies of building permits issued for Porter Regional Hospital and the 62,000 sq. ft. medical office building connected to it owned by Sanders Trust. 

At that time Thompson confirmed the FBI visits but would not give further comment. 

The building permits have played a part in the County Council’s ongoing discussion of a 10-year tax abatement for the new hospital located at Ind. 49 and U.S. 6 in Liberty Twp.

County Council member Jim Biggs, R-1st, presented to the press printed copies of building permits that the County Assessor’s Office had on file that indicated Porter Hospital LLC as the property owner for both the hospital and medical office building.

The original handwritten permits for the buildings have reportedly been missing from the Plan Commission office, Biggs said, and he’s urged closer scrutiny on the Council’s part when considering the abatement. 

County officials have reported numerous visits by the FBI since November. Agents have taken documents related to the December 2012 contract between Porter County and Porter Hospital for clinical services in the County’s Employee Health Plan, conflict of interest disclosure statements filed in the County Clerk’s office from 2007 to 2013, and project bid proposals related to 2010 and 2011 contracts with the County Highway Department. 

03202014 - News Article - FBI visits Porter County IT department

FBI visits Porter County IT department

NWI Times
March 20, 2014 

http://www.nwitimes.com/news/local/porter/fbi-visits-porter-county-it-department/article_6131063c-5ba3-58ae-af3b-280406fc8e3e.html

VALPARAISO | The FBI continued its investigation into Porter County government Wednesday with a visit to the information technologies department.

Department Director Sharon Lippens said the agents, who were brought to the department by Plan Commission Executive Director Robert Thompson, asked about models and makes of computer servers used by the county.

They did not request any specific data, she said.

The FBI has visited numerous county departments since at least late last year.

Agents appeared earlier this month at the county plan commission office seeking copies of building permits for the new hospital and the nearby medical office building at Ind. 49 and U.S. 6.

Thompson has said his office is unable to locate the original building permits for those two buildings.

The FBI has also visited the highway department, where they sought records of materials purchased by the Porter County Board of Commissioners in a competitive bidding process in 2010 and 2011.

Porter County Clerk Karen Martin said in December an FBI agent showed up at her office seeking copies of conflict of interest disclosure forms designed to reveal a public servant's financial interest in contracts or purchases involving their government offices.

The FBI also has taken possession of records related to the county commissioners' decision Dec. 18, 2012, to switch the provider of wellness and clinic service for county employees from HealtheACCESS to Porter Regional Hospital's CareEXPRESS, Mike Anton, who serves as the servicing agent for the county's health plan, said in November.

03112014 - News Article - FBI eyeing building permits for Porter hospital office building

FBI eyeing building permits for Porter hospital office building

Chesterton Tribune

March 11, 2014

http://chestertontribune.com/Porter%20County/fbi_eyeing_building_permits_for.htm

The FBI would now appear to be interested in the construction of the new Porter Regional Hospital and the 60,000-square foot medical office building built on adjacent property.

On Friday and again on Monday, FBI agents entered the Porter County Administration Building and requested copies of the building permits for those two structures.

“I will simply say that I can confirm the FBI was in here Friday afternoon and again on Monday morning,” Plan Commission Executive Director Robert Thompson told the Chesterton Tribune today. “They took copies of building permits for both Porter Regional Hospital and for the medical office building. I will give no further comment.”

Those records have also recently received scrutiny from members of the Porter County Council as it works to understand the details of a 10-year tax abatement granted to Porter Regional Hospital.

County Council member Jim Biggs, R-1st, held a press conference last week where he expressed concern about the medical office building, contesting that it should not be included as part of the abatement because the building is owned by someone other than the hospital: The Sanders Trust of Birmingham, Ala. That firm has not approached the council to request an abatement, Biggs said at the time.

Some of the materials Biggs shared with the media were in fact the building permits for both facilities. Both indicate only Porter Hospital LLC as the property owner and both were applied for by The Robins and Morton Group of Birmingham, Ala.

The Robins and Morton Group was contracted for construction work on the two structures. 

The permit for the hospital was issued in August 2010 while the one for the office building was issued in September 2011 by the Porter County Planning Office.

This is the second reported instance where the FBI has seized Porter County government documents relating to Porter Regional Hospital.

On the first occasion, the FBI requested documents related to the contract for clinical services between Porter County Commissioners and the hospital signed in December 2012 as part of the county’s employee health plan. FBI agents obtained those documents in November from the Anton Insurance Agency, which services the plan.

Mike Anton of Anton Insurance said at the time that the FBI approached him after someone had suggested to federal investigators that there was something questionable about the contract. Anton, however, said that there is nothing to hide as the deal was completely transparent and above board.

In December, an FBI agent turned up at the Porter County Clerk’s office and took miscellaneous records containing conflict of interest disclosure statements filed within the municipal units of the county from 2007 and 2013.

Also, County Highway Supervisor Al Hoagland said the FBI came to his department in November and gathered copies of various bid proposals from projects done in 2010 and 2011.

03102014 - News Article - FBI pulls hospital construction records from Porter Co. government offices

FBI pulls hospital construction records from Porter Co. government offices

NWI Times
March 10, 2014 

http://www.nwitimes.com/news/local/porter/fbi-pulls-hospital-construction-records-from-porter-co-government-offices/article_7704b2c9-ca1b-5f13-8686-e000001920ab.html

VALPARAISO | The FBI has resumed its investigation into Porter County government, this time targeting records involving the construction of Porter Regional Hospital.

Plan Commission Executive Director Robert Thompson confirmed that FBI agents visited his office Friday afternoon and again Monday morning seeking copies of building permits for the new hospital and the nearby medical office building at Ind. 49 and U.S. 6.

FBI agents have made surprise visits at various other county departments over the past several months, including the highway department, where they sought records of materials purchased by the Porter County Board of Commissioners in a competitive bidding process in 2010 and 2011.

Porter County Clerk Karen Martin said in December an FBI agent showed up at her office seeking copies of conflict of interest disclosure forms designed to reveal a public servant's financial interest in contracts or purchases involving their government offices.

The FBI also has taken possession of records related to the county commissioners' decision Dec. 18, 2012, to switch the provider of wellness and clinic service for county employees from HealtheACCESS to Porter Regional Hospital's CareEXPRESS, Mike Anton, who serves as the servicing agent for the county's health plan, said in November.

Hospital officials on Monday declined to comment.

The medical office building targeted in the FBI's most recent visits was in the news last week when Porter County Councilman Jim Biggs, R-1st, announced he intends to have the structure removed from the hospital's 10-year tax abatement because it has a different owner.

There is nothing in the 2009 abatement agreement indicating the hospital's intention to include more than its main building, Biggs said.

03082014 - News Article - Lake Station ready to flip its first house

Lake Station ready to flip its first house
Post-Tribune (IN)
March 8, 2014

LAKE STATION — A nasty divorce left a waterlogged house for neighbors in this east side neighborhood. 

Several years and a major remodel later, the house will go on the market and give Mayor Keith Soderquist a chance to play George Bailey, the do-gooder hero of the classic movie “It’s A Wonderful Life.” 

Next month, the city will look to sell its first remodeled home after pouring $28,000 in big repairs into the once-shuttered house at 4800 26th St. The proceeds from that sale, expected to fetch a price in the mid $80,000 range, will go to more fixer-uppers the city owns. 

“You take a little bit more sense of pride when you own the home, because it’s yours,” said Soderquist , waving his arms around the new living room flooded with natural light. “It’s that aspect of waiting to buy your home. Wait for what? For when your kids grow up and are gone, and you have no memories of your own home?” 

Unlike larger cities in the area, which dole out millions of dollars in federal funds to fix up blocks of abandoned homes, Lake Station waited years to fix up a place it already owned. 

Proceeds from the sale will go to fixing up more abandoned homes the city owns throughout the city, Soderquist said. The next site will be on Lake Station’s west side, just off Clay St. 

Three or four more projects will follow, but the idea is to provide quality homes at affordable prices as a form of economic development, he said. 

The newly remodeled house, built in the 1950s, became an eyesore in an otherwise attractive east side neighborhood. A divorce turned nasty once an ousted ex-spouse turned on all of the water faucets and hoses in the home, flooding it while the homeowner was away. 

The house sat for about four years, with the bank holding the mortgage refusing to do anything with it, Soderquist explained. The bank deeded the property to Lake Station, meaning the city spent no money to obtain it. 

Using economic development money sitting in an unused fund, the city hired a carpenter and put city workers on the project. A practically new, mold-free house emerged 18 months later. 

New laminated flooring in the kitchen, living area and hallways are complemented by new thermal windows and decorative doors bought at steep discounts. Wooden decks greet visitors at the front and rear of the house; in the back, the deck is large enough to accommodate a grill and patio furniture. 

The expansive basement is framed for several rooms, with a masonry wall filled with decorative stone fragments at the foot of the stairs. 

“It’s an amazing job, and it’s really good to see the city doing something like this,” said Fifth District Councilman Rick Long at a recent City Council meeting. 

Lake Station remains on an administrative time-out with U.S. Department of Housing and Urban Development, so it must rely on its own means, Soderquist said. 

“Maybe we’ll get to the point where maybe we’ll need to acquire a whole block and we’ll need millions of dollars from the (federal) government,” he said. “We’re nowhere near that. We’re taking one home and trying to turn it around. Moving it forward, we’ll see.” 
Caption: ABOVE: Upgrades to the house at 4800 26th St. include thermal windows, a decorative front door, new laminated flooring and ceiling fans. LEFT: Mayor Keith Soderquist examines a wall of decorative stone fragments in the basement. | Michael Gonzalez/For the Post-Tribune ABOVE: Upgrades to the house at 4800 26th St. include thermal windows, a decorative front door, new laminated flooring and ceiling fans. LEFT: Mayor Keith Soderquist examines a wall of decorative stone fragments in the basement. | Michael Gonzalez/For the Post-Tribune

03042014 - News Article - Indiana Attorney General files suit against Ray

Indiana Attorney General files suit against Ray

Herald Argus
Posted: Tuesday, March 4, 2014 - 12:00 am 

http://www.heraldargus.com/news/local/indiana-attorney-general-files-suit-against-ray/article_3eab7f4a-225e-5d8b-91fa-8c4060883552.html

LaPORTE — Despite filing a lawsuit Monday against former La Porte County deputy auditor Mary Ray for some $660,000 worth of allegedly embezzled money, Indiana Attorney General Greg Zoeller said it's going to be an uphill battle before all the funds can finally be collected.

Zoeller spoke Monday after filing the suit—officially a complaint to recover public funds—in the La Porte County Courthouse. La Porte County is a co-plaintiff in the case, and La Porte County Attorney Shaw Friedman is a signatory on the lawsuit.

Zoeller said the complaint is the first step in allowing his office, which acts largely as a collection agency for municipalities, to go after Ray's assets.

Ray is being accused of taking some $153,000 from the county between Sept. 19, 2011, and Dec. 31, 2012. According to an audit filed by the State Board of Accounts on Feb. 21, there were 150 instances where she allegedly embezzled the funds.

Ray's assets, including four vehicles and a house, were previously frozen on Sept, 6, 2012, after a temporary restraining order was filed in La Porte Count Circuit Court.

Since then the state has asked for an additional $45,815 to cover the cost of the audit, and Zoeller said his office and the county are also asking for treble damages, three times the amount of missing funds, to cover the expenses and troubles incurred by the plaintiffs because of the loss.

The treble amount is $459,000.

The lawsuit contains two counts, the first being the roughly $200,000 of the embezzled amount and the cost of the audit, and a second count for the treble damages. All together the amounts total some $660,000.

"We save these types of actions for people who have made off with public funds," Zoeller said. "But this one is going to be a little more difficult because the local government doesn't have a (surety) bond on the employee handling the funds."

He noted that the bonding company is usually the one to go after the assets, while the bond covers most of the county's losses.

La Porte County Attorney Shaw Friedman said the problem with the bonds has since been corrected. He said the current board of commissioners, who took office at the beginning of 2013, moved early on to cover elected officials and their deputies with bonds in case of financial mismanagement.

But he said the events of this case took place before that happened, so there were no bonds in place. He noted that the county has insurance, but commissioners have elected to go after whatever assets they can from Ray before filing any claims. He said these insurance policies are expensive and hard to get.

Zoeller said his office, if it wins the case, can garnish Ray's wages, go after her bank accounts and any other assets it can find to recover all the lost money. But if she doesn't have a lot of money, it will take years of using these methods to get the money back.

"We'll have to see what kind of assets we have to find," he said. 

"But one of the reasons I always try and encourage local governments to have bonds is to make sure we have this insurance against embezzlement. It's not all that rampant throughout Indiana….it's less than 1 percent of the people, but it is a good insurance policy against those who might be tempted to take money."

The investigation began after a bank deposit bag was discovered with $3,200 in missing cash in a local library. When a $1,800 discrepancy between receipts and deposits was found, examiners from the State Board of Accounts launched a preliminary audit.

According to a press release from the attorney general's office, certain checks were held for a period of time instead of being recorded or deposited, and then substituted for unrelated cash payments to the county. Swapping the unrecorded checks for cash allowed the deposits to still balance with the amount of funds listed as receipted.

03032014 - News Article - [ATG] State, LaPorte County sue ex-employee to recover embezzled funds

[ATG] State, LaPorte County sue ex-employee to recover embezzled funds

Office of the Indiana Attorney General

3/3/2014 - 12:00 AM

http://www.in.gov/activecalendar/EventList.aspx?fromdate=1/1/2014&todate=12/31/2014&display=Year,Month&type=public&eventidn=162051&view=EventDetails&information_id=196665&print=print

LAPORTE, Ind. – Today the State of Indiana and LaPorte County filed a lawsuit against a former county government employee to recover more than $153,000 in public funds the ex-employee is accused of embezzling. 

Indiana Attorney General Greg Zoeller filed the lawsuit today in LaPorte County Circuit Court. Named as defendant is Mary Ray, a former deputy auditor in the LaPorte County Auditor’s Office.

In an audit issued February 21, the State Board of Accounts found 150 instances where county funds had been embezzled from the county Auditor’s Office between September 2011 and December 2012, totaling $153,002.46, and the audit concluded Ray was the employee responsible for the loss of those funds. 

The lawsuit in which the county has joined the state as plaintiff seeks repayment of $153,002.46 from Ray, plus an additional $45,815.25 in accounting costs incurred by state examiners who investigated and calculated the loss, for a total demand of $198,817.71. 

“When the very individual in charge of receiving and preparing deposits of taxpayers’ money is accused of embezzling that money, it is a profound violation of public trust, and we will use the legal tools at our disposal to compel repayment from this defendant in order to reimburse the public treasury for the amount lost in this brazen scheme,” Zoeller said. 

Today’s lawsuit, called a complaint to recover public funds, is a follow-up to a temporary restraining order and prejudgment attachment the Attorney General’s Office filed for and obtained against Ray last September. At that time, a preliminary audit by State Board of Accounts examiners had uncovered a potential misappropriation of funds in the auditor’s office by Ray. The prejudgment attachment the state obtained in September froze Ray’s financial assets for the time being while the SBoA conducted a full comprehensive audit. The prejudgment attachment prevented Ray from selling, concealing or transferring her house or vehicles, so that there would be assets available to reimburse the county if the court later were to enter a judgment. 

Until her retirement, Ray as deputy auditor had collected payments from other county departments, received various payments to the Auditor’s Office such as permit fees, both cash and checks, and prepared deposits for delivery to the County Treasurer. But in its final audit now completed, the State Board of Accounts found that the county had been shorted $153,002.46 through schemes such as check-kiting. Certain checks paid to the county were not recorded or deposited, but instead were held for a period of time and then substituted for unrelated cash payments to the county. Swapping the unrecorded checks for cash allowed the deposits to still balance with the amount of funds listed as receipted, the audit found. The State Board of Accounts determined Ray is responsible for the misappropriation, and asked that she be required to repay the full amount plus investigation costs. The SBoA audit then was referred to the Attorney General’s Office which serves as the state’s collection agent in such cases. 

If the court enters a civil judgment against Ray, then the Attorney General’s Office will pursue collections methods against Ray that can include seizure of assets and accounts, liens on property and garnishment of wages. Because there was not a surety bond specifically on Ray to cover employee theft, the entire amount, $198,817.71, is her legal responsibility, Zoeller noted. Funds recovered in the lawsuit will be returned to the LaPorte County treasury as reimbursement for the amount embezzled, with the auditing costs returned to the State Board of Accounts. The county also is seeking to obtain proceeds from its county insurance policy to cover the loss. 

The state Attorney General’s jurisdiction in such cases is civil only; the U.S. Attorney’s Office and county prosecutors have sole jurisdiction whether to pursue criminal charges.

The authority to freeze a defendant’s assets based on a preliminary audit to keep funds from being squandered, hidden or transferred while SBoA completes a final audit is based on a public accountability law the Legislature passed in 2009 at Attorney General Zoeller’s recommendation. 

“Most government employees are trustworthy and good stewards of taxpayers’ money. But having sued to recover public funds from embezzlers in many similar cases, the Attorney General’s Office now is working on developing a coalition of groups that will provide training to local government agencies on internal accounting controls and best practices that might help deter misappropriation of public funds in the first place,” Zoeller said, noting details will be announced in the spring. 

NOTE: The State Board of Accounts audit of the LaPorte County Auditor’s Office issued Feb. 21 is at this link: http://www.in.gov/sboa/WebReports/B43260.pdf. 

The complaint to recover public funds, filed in LaPorte County Circuit Court by the State of Indiana and LaPorte County against Mary Ray, is attached.