Grand jury indicts four in complicated fraud scheme
Post-Tribune (IN)
October 23, 2010
October 23, 2010
Jerry Haymon once said he used cash from the Gary City Council to renovate a house at 4028 Tennessee St. and make "a beautiful home for a family that would have never been a homeowner."
But a federal grand jury said Friday the house was one of four used by Haymon, Gary Community Development Director Jacquelyn Drago-Hunter, Gary reserve police officer Phillip Rucker and mortgage broker Sheila Chandler to commit a complicated fraud scheme.
Together they illegally pocketed $301,247, according to a grand jury indictment unsealed Friday. They are all charged with wire fraud, and Drago-Hunter faces two charges of aggravated identity theft.
Haymon surrendered Friday, according to his attorney, and court records show he pleaded not guilty. A Gary police spokesman said Rucker is on leave from his volunteer duties until the case is settled.
The Post-Tribune first reported on Haymon's activities in a 2008 investigation.
Fake documents, promises
The grand jury said the defendants faked documents, made false promises and forged signatures as they executed their scheme between Oct. 1, 2007, and Nov. 5, 2008.
It said Haymon and others convinced people they could help sell their properties. Then they found people to buy them far in excess of their market value.
Haymon and others gave money to the buyers to create the false impression that the buyers were financially secure. That helped them obtain loans.
Chandler prepared false loan applications for the buyers that were submitted to lenders, the grand jury said, and Haymon filed fake mechanics liens to obtain portions of the loans.
Drago-Hunter, who is named as an owner of Maximilian Title, is accused of then preparing false HUD-1 settlement statements and disbursing the loan money. Haymon, Drago-Hunter, Chandler and Rucker shared the illegal cash, according to the indictment.
Versions of this scheme took place at 3829 Connecticut St., 3617 Johnson St., 3758 Buchanan St. and 4028 Tennessee St., the grand jury said. All four are found in Gary's Glen Park area.
Two closings alleged
Haymon used his Priced Right Construction and Management LLC and K&L Consultants LLC businesses to commit part of the crime, the grand jury said. He is also identified as the leader of the not-for-profit Coalition of Concern.
Haymon agreed Priced Right would buy 3829 Connecticut for $36,000 from "DB and JW," then an associate offered "SH" $10,000 to pretend to buy the property for $74,000. Priced Right filed a mechanics lien for $35,000 on the property even though Priced Right had done no work there.
Drago-Hunter closed the sale twice on Feb. 29, 2008, the grand jury said. First she prepared a false HUD-1 settlement statement that said "DB and JW" sold to "SH." The grand jury said the signatures of "DB and JW" were forged.
That paperwork said the sellers got $36,237, which the grand jury said was false. Drago-Hunter then sent $35,000 to Priced Right but didn't note it on the HUD-1.
During the next closing, the grand jury said, Drago-Hunter prepared a second HUD-1 that said Priced Right purchased 3829 Connecticut for $36,000. She then disbursed additional money to Maximilian but didn't state it on the paperwork.
Finally, Haymon paid a $13,000 kickback to the unnamed associate who first recruited "SH." The grand jury said there were also kickbacks to a mortgage broker for "SH" and others.
Similar schemes took place at the other addresses, the grand jury said, with Chandler helping with two sales and Rucker helping with one.
Rucker participated by recruiting one buyer to purchase 3758 Buchanan in July 2008, the grand jury said, and accepting a $5,000 kickback along with Chandler and unnamed others.
Chandler is accused of telling a title company, lender and others she was a loan processor for a mortgage company for the sales at 3758 Buchanan and 4028 Tennessee. The grand jury also said she prepared false documents and accepted a $3,000 kickback along with unnamed others.
Chandler faces nine charges in a separate but similar indictment filed in May. She and four others are accused of taking more than $600,000 in that case, which is set to go to trial Jan. 18.
City Council money used
The Post-Tribune asked Haymon about his activities with the Coalition of Concern, Priced Right Construction and K&L Consultants in 2008.
The Coalition received $75,000 from the Gary City Council under a 2007 grant agreement with Councilman Ronier Scott , who represents Glen Park. It was unclear from the terms of the deal what services Haymon was expected to provide.
But Haymon later said that money was used to fix up 4028 Tennessee. In 2008, property records said it was owned by Priced Right Construction.
"Gary was getting ready to put it on the demolition list," Haymon said that year.
Federal agents sent a subpoena to Gary City Hall in November 2009 seeking copies of the grant agreement, a city attorney said at the time.
Scott also directed at least $103,500 to the Coalition of Concern between 2004 and 2006, records show. Haymon originally denied receiving it but later acknowledged the money.
He also provided a letter that said K&L was under the scrutiny of the Indiana Attorney General's consumer protection division until May 2008, when the office took no action against it.
Scott said he was surprised to hear about Friday's indictment, even though he's been contacted by federal agents about the case in the past.
The document references "others known and unknown to the grand jury" while outlining the scheme, but Scott said agents gave him no reason to think he's targeted."They're just coming to me for information," Scott said.
Clay mum on Drago-Hunter
Gary Mayor Rudy Clay failed to return several calls seeking comment about Drago-Hunter, who manages millions in federal dollars while running his city's community development office.
Darnail Lyles, Chandler's attorney, said he had yet to see the indictment. Haymon's attorney, John R. Cantrell, said he had not yet given it a close read and declined to comment.
An attorney listed in court records for Drago-Hunter said he no longer represents her. No attorney was listed for Rucker.
Lt. Samuel Roberts, a spokesman for the Gary Police Department, said Rucker finished his most recent volunteer shift for the GPD at 8 a.m. Friday.
He said Rucker told Police Chief Gary Carter about the indictment, and Carter put Rucker on leave.
Roberts said, "one is innocent until proven otherwise."
Jacquelyn Drago-Hunter
Gary Community Development director and Maximilian Title owner
Jerry Haymon
Priced Right Construction and Management LLC and K&L Consultants LLC
Phillip Rucker
Gary reserve police officer
Sheila Chandler
Mortgage broker
Mortgage broker
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