Wednesday, December 21, 2011

City-County Councilor Paul Bateman Indicted For Money Laudering And Wire Fraud

The Indianapolis City-County Council is starting to look more like the Chicago City Council, and it should since some of its occupants engage in the same sort of self-dealing that has sent many Chicago aldermen to prison. The second sitting councilor in as many years has been indicted on charges of bilking a nonprofit foundation he helped oversee. Councilor Paul Bateman (D) and others faces charges of money laundering and wire fraud in connection with their administration of the now bankrupt Russell Foundation. According to a federal indictment handed down in Indianapolis, Bateman, Manuel Gonzalez and a founding member of the foundation, Michael Russell, defrauded an elderly physician out of $1.7 million of his funds that were supposed to be used for charitable purposes. From the Star:
Bateman was charged with eight counts of wire fraud and 10 counts of money laundering, Russell with eight counts of wire fraud and 12 counts of money laundering, and Gonzalez with three counts of wire fraud and two counts of money laundering.
Each count of wire fraud carries a sentence of up to 20 years in prison, and each count of money laundering up to 10 years in prison upon conviction, said Joe Vaughn, lead prosecutor on the case for the U.S. attorney's office . . .

Instead of investing the money, the three men used it for a variety of personal expenses for themselves, family members, friends and others associated with the foundation, according to the indictment.

The purchases included vehicles, entertainment, clothing, jewelry, travel, housing and home furnishings, the indictment states.

The Russell Foundation was created in 2003 ostensibly as a nonprofit, tax-exempt corporation "organized exclusively for charitable, religious (and) educational purposes," according to the indictment.

The indictment alleges the three men used the foundation to lure the physician first to invest about $702,000 in early 2007 in Indiana ethanol production and distribution.
Then, later in the year, the indictment alleges, the three men successfully schemed to obtain a $1 million corporate cash bond from the physician purportedly to invest in the foundation's humanitarian projects, with the physician being told he would get back $1.6 million in about seven months.

The indictment alleges Russell falsely told the physician at the time that he would receive his promised return on his investment "because there were going to be many additional investors in The Russell Foundation, when, in truth and in fact, and as Russell then knew, there were no credible potential investors in The Russell Foundation."

The indictment also alleges that within just a few weeks after each of the physician's two investments, nearly all of the money had been spent by the three men now indicted on a variety of personal items and uses. The foundation went into bankruptcy in May 2008, and a trustee was appointed to oversee the bankruptcy.

U.S. Attorney Joe Hogsett told reporters for the Indianapolis Star that Bateman and "an unnamed high-ranking Indianapolis Metropolitan Police Department officer", who was also a member of the foundation, used their positions to lend credibility to the Russell Foundation.  "The allegations in this indictment paint a picture of excessive personal greed," Hogsett said. "Such a violation of trust would be tragic under any circumstances, but the fact that this scheme allegedly involved a repeated violation of the public trust makes this case even more disheartening." It's unclear why the "high-ranking" IMPD officer mentioned by Hogsett in the Star's story has not been charged. It's also my understanding that there may have been more than one high-ranking IMPD officers involved in working for the foundation, which may have violated work rules against off-duty work for high-ranking officers. "At the time, there were reports high ranking Indianapolis Metropolitan Police Department command officers may have been questioned about their involvement with Bateman and the foundation," Fox 59 confirms in its report on Bateman's indictment. Convicted Councilor Lincoln Plowman, a former major in the department, had also worked for a strip club in violation of off-duty work rules for high-ranking officers. Plowman was convicted of soliciting a bribe from and attempted extortion of, an undercover FBI agent posing as a strip club owner in September. He has been sentenced to 40 months in prison.

Two and a half years ago, I painted a picture of what had taken place at the Russell Foundation in a post based upon information I received from a well-placed source. As I reported then,

People knowledgeable with the grand jury investigation of the nonprofit organization in the wake of its recent bankruptcy filing describe a small group of individuals squeezing every last ounce of blood out of the organization for their own personal benefit. There are tales of a California clothier being flown into town to fit the men in charge with the finest in tailored suits. The women had to settle for the best that Nordstroms had to offer. A northside jeweler crafted gold rings with "RF" initials to distinguish the illustrious crew doing God's work. Exotic rugs were purchased and then disappeared without the bill ever being paid. And a high-ranking Indianapolis police department official pulled double-duty as "chief of security" for the group. An IMPD police cruiser couldnt' cut it. He had a Cadillac Escalade to make his important rounds . . .
The source suspects the individuals in charge of the foundation went on the spending spree in anticipation of an $11 million investment from an outside investment firm. There were big plans. Talks with some of the country's wealthiest businessmen in America were supposedly underway--hence the need for a "chief of security". The focus was no longer on helping inner-city poor with housing and other needs. There was big talk of a high speed monorail from Indianapolis to Chicago, tapping a closed down steel mill in Northwest Indiana that would help put many unemployed in Da Region to work. Ethanol production was planned. It all required lots of walking around money we're told. Cash-filled wallets were needed to work the halls at the State House and our nation's capitol to win support for the foundation's projects according to one tale.
For some reason, the investigation seemed to stall after it was presented to a Marion County grand jury. It is unclear why it has taken so long for the criminal indictments to come to fruition and when the investigation got passed to the U.S. Attorney's Office. At the time the investigation was first announced, Bateman stepped down from his position on the council ethics committee but continued to serve on the council, although he did not seek re-election to his seat this year. Bateman, who is very close to former Center Township Trustee Carl Drummer, became a reliable vote for the Ballard administration, even when those positions were at odds with the position of his party's caucus, whenever Drummer lobbied him in his new position as a lobbyist for the Ice Miller law firm. Bateman was the only Democratic councilor to support the controversial parking meter lease privatization deal.

In an earlier post, I detailed here who all was working for the Russell Foundation at the time of its demise according to the foundation's website. In another post, I provided a listing of where the foundation claimed to have spent some of its money.


artfuggins said...

We should all be pleased that Joe Hogsett is doing such a great job attacking corruption. I hope he keeps it up.

Concerned Taxpayer said...

Where is the outrage? Where are the liberals who scream for resignation, prison time, huge fines, etc.?
Where are the opinion columns in the IndyRedStarRag, demanding a full investigation?
Where are the columns of letters to the editor, demanding immediate justice, firing the Councilor, and investigating the "high ranking IMPD superior?"
Oh....they're democrats.....sorry!

patriot paul said...

You mentioned Plowman. At the time when the Council voted on the smoking ban issue couple of years back, he voted no. The result of the final tally was 12 yes, 13 no. Had he recused himself, the vote would have been 12-12 (and who knows who else he influenced against the ban). Whether you are pro-ban or not, the issue shows corruption.
With respect to Bateman, the Star mentions also he served on "the special investigative Committee on Ethics". Excuse me while I cough. The article says Hogsett comments that there's a message for those who may think of abusing their influence associated with holding public office.
It is amazing that when public input is offered to the Council at some Council meetings that we often feel their minds are already made up and that our imput is merely an exercise in futility. I'm more convinced of that than ever. It is quite obvious the Council cannot police itself, especially when sitting on an Ethics committee that could block any attempt to investigate ANYTHING.

EMT said...

This attack on Bateman is absolutely ridiculous and, worse, is a blatant abuse of the system. Bateman didn't take any money and has been an asset to the community. In fact, the indictment accuses him of "lending credibility" but not taking money. Who would knowingly help someone scam but not actually take money?!!! No one and that's why the charges are absurd. Hogsett is clearly trying to make a name for himself because he has political aspirations and he's using Bateman to do it. Shame on him and the grand jury for going along with it. (The amount of time -- 6+ months -- shows me that there is no smoking gun here.) Russell may be a crook but Bateman's was a good guy would was hoodwinked like everyone else.