Saturday, March 08, 2014

IBJ Special Report: Former Business Associates Turn On Ozdemir, Accuse Him Of Corrupt Business Practices

The IBJ's Cory Schouten returns with another expose' on the mysterious Turkish businessman, Ersal Ozdemir, who has seized control of the Marion County Republican Party and pretty much gets whatever he wants in the form of public subsidies from state and local officials for his privately-owned construction and real estate development firms. Ozdemir made a good run at convincing state lawmakers to publicly-finance an $87 million soccer stadium for his Indy Eleven minor league soccer team and will likely return to the legislature next year again seeking a public handout. Unlike the first flattering expose' that glorified Ozdemir's rise as a successful immigrant businessman, today's feature story describes the man as he really is:
. . . Ozdemir has charmed elected officials with big ideas--and hundreds of thousands of dollars in political contributions.
His networking helped yield millions of dollars in subsidies for his developments in Indianapolis and Carmel, legislation tailor-made to save him property taxes, designation as a minority business enterprise that appears to stretch statutory definitions, and more than $4 million in federal stimulus funds to develop dozens of rental properties he owns outright.
He's the master of public subsidy--getting public dollars into projects, said a former high-ranking Keystone employee who spoke with IBJ on condition of anonymity. "But he wants everything to be closed book. His experience tells him you can do both.
Schouten's special report describes how Ozdemir used his political muscle with the Ballard administration to capture nearly 15% of the $29 million federal grant the city of Indianapolis received through the Neighborhood Stabilization Program. I thought these monies were supposed to be used to deal with the abandoned housing problem stemming from the onslaught of housing foreclosures following the 2008 economic meltdown. Ozdemir got close to $4 million which he used on projects like the affordable apartment project that his Keystone Construction built at 1400 S. Madison Avenue. A Department of Metropolitan Development employee, Paul Lambie, who was charged with supervising the distribution of the federal grant money, quit his job in protest over favoritism the Ballard administration was granting to Ozdemir. "From the start, I wasn't comfortable with the amount of profit that Keystone was making, fully funding their projects with public money while taking zero risk," Lambie told IBJ. "Lambie said one payment request was so egregious that he passed it off to his supervisor." According to Lambie, Keystone had been awarded money $387,299 for a project outside the eligible area for the federal grant program and was permitted to re-route it to the Madison Avenue project in violation of federal program rules, a move Lambie called "a handout for nothing."

On that smelly Broad Ripple Parking garage deal where Mayor Ballard gave Ozdemir's Keystone $6.5 million in taxpayer dollars yielded from the sale of the city's parking meter assets, Schouten finds that indeed the project's advertised price tag of $15 million was grossly exaggerated. Ozdemir's former construction manager, Jason Ellis, tells the IBJ that the parking garage/mixed retail structure actually cost $8 million to construct. Ozdemir paid $2.4 million for the two parcels of land on which it was built. Adding in other costs, the development cost about $12 million but Ozdemir borrowed $8.7 million based on a $15 million project, a figure he arrived at by charging "a huge monster development fee" according to Ellis.

According to Schouten, Ozdemir has lost two key employees in recent years, including his brother Sain and his company's CFO. Ellis is suing him, accusing him of commingling funds, overcharging clients and billing the company for lavish personal expenses, including his Carmel mansion located in a gated community. Ellis quit his job after he says that Ozdemir beat him out of his partnership interest in the firm. Despite the fact that Keystone's website and numerous e-mails described him as a partner, Ozdemir cut him out. Ozdemir's younger brother, Sain, similarly left the company after he had a falling out with Ozdemir over what he believed was a promised partnership interest in the company. Ellis claims that Ozdemir paid off Sain several hundred thousand dollars after he left the company over the dispute, an event Ellis' lawsuit claims has been "confirmed by multiple witnesses."

Ozdemir is being defended in Ellis' lawsuit, which was filed in the Hamilton Superior Court, by Barnes & Thornburg, including Larry Mackey, a white collar criminal defense attorney best known for prosecuting the so-called Oklahoma City bomber Timothy McVeigh. Mackey also defended real estate broker John Bales in his federal corruption trial up in the northern district of Indiana over a corrupt deal he brokered for the state of Indiana with Paul Page and former Marion Co. Prosecutor Carl Brizzi. Page pleaded guilty to wire fraud charges, while Bales and his business associate were acquitted after the federal prosecutor handling the case, a former Barnes & Thornburg attorney, failed to offer some of the more explosive evidence of public corruption surrounding the case to prosecute Bales. The law firm has pretty much controlled every major decision made by administration of Mayor Ballard in its role as a paid counsel to his office and has used that influence to benefit the law firm's clients. Ozdemir is seeking a declaratory of judgment against Ellis declaring that he's not a shareholder. "They have secured an unusually broad protective order barring public disclosure of discovery materials, claiming trade secrets," Schouten writes.

Schouten explores the questionable MBE certification that the Turkish businessman was awarded for his company by the state of Indiana and the city of Indianapolis. According to Schouten, Ozdemir's initial certification a number of years ago was turned down. Ozdemir appealed the decision, arguing that he should be considered an Asian "since his native Turkey spans Europe and Asia." "Ozdemir hails from Mersin, a city on the Mediterranean Sea, where his family runs a construction and development business," Schouten writes. After the state agreed to certify his business as an MBE, the city of Indianapolis added his business to the list of certified MBEs in March 2010. Schouten adds this interesting observation: "Out of the 977 companies on the list, only Keystone has no entry in the 'ethnic field'--which specifies the ethnicity of the owner. Mayor Ballard's MBE director, Greg Wilson, refused to discuss Ozdemir's application.

Although Ozdemir insists that his political contributions play no role in all of the public subsidies and government contracts his firm has won in recent years, Schouten takes note of the size of those contributions. Over the past decade, he and his firms have made about $250,000 in campaign contributions, including $46,500 for Gov. Mike Pence, $30,000 to the Indiana Republican Party, $23,800 to Gov. Mitch Daniels and at least $25,000 for Mayor Ballard. Ozdemir accompanied Ballard on at least one overseas junket. In 2013, Schouten describes special legislation that was put into a bill sponsored by Sen. Pete Miller (R-Avon) that granted a $34,700 retroactive tax exemption on "leased property located in Marion County to the bureau of motor vehicles," which was for the Keystone-owned building next to his subsidized apartment project on south Madison Avenue leased to the BMV. Sen. Miller told Schouten he did not know who inserted the language into his bill, and Ozdemir pleaded ignorance when asked about it by Schouten. The story notes that Ozdemir is hedging his bets in the event a Democrat retake the mayor's office. He recently hired U.S. Rep. Andre Carson's sister-in-law, Jasmin Shaheed-Young, as a marketing director.

Schouten made amends for his first expose' that overlooked Ozdemir's failed business deals a little more than a decade ago before he suddenly became flush with all kinds of cash to spread around to the politicians. He notes that his first company, Aymir Construction, "faltered, leaving behind a string of failed projects, lawsuits and more than a million dollars in local and federal court judgments." Ozdemir started up his new construction company, Keystone Construction, in 2002. Ozdemir has publicly credited his success in Indiana to his mentor, the late Beurt SerVaas, a former long-time City-County Council President who formerly served as an OSS officer during World War II and later worked as an off-the-the-books agent for the CIA with close ties to one of the biggest spies of the 20th Century, William Casey, former CIA Director under President Reagan. If one digs deeper, I'm almost certain a CIA tie to Ozdemir and his family back in Turkey can be unearthed. His career in the U.S. has closely paralleled Syrian immigrant Tony Rezko, a civil engineer who became one of the biggest and most successful political operatives in Chicago before he was convicted by federal prosecutors for public corruption deals within the administration of former Gov. Rod Blagojevich. It was later learned that a billionaire Iraqi businessman, Nadhmi Auchi, had funneled as much as $200 million to Rezko's businesses in Chicago. Federal prosecutors ignored the evidence of the money Rezko received from Auchi, who had been convicted in a French court of crimes several years earlier regarding the "Oil For Food" scandal with Iraq.


Anonymous said...

This is getting good. Jail time for Ballard? This is stinking so bad that Hogsett has probably been forced to inform his superiors that he has to "do something."

I wonder how bold the power elite will be in trying to sweep this under the rug? I'd hate to be the mid-level party hack that the system will try to set up as the fall guy. Actually, Ballard would make the perfect fall guy. He's not connected to anyone.

We need the real feds to come in and clean up Indy.

Anonymous said...

The City’s MBE department is redundant to the well-run State of Indiana MBE program and costs the City $1 million. The Keystone MBE application was handled personally by Mr. Greg Wilson and his Chief of Staff, Mr. Robert Ransom . Shut down the City’s corrupt WMBE Department and save the taxpayers the $1 million..

Anonymous said...

Applications are often completed with checklist assistance of or by counsel versed in such matters & reviewed by staff counsel versed in same, making approval more legally engineered than "personally handled."

Anonymous said...

It's funny when you read an article labled as news, when you have known nearly everything (minus a few specific numbers) in it for at least a year or more.

Anonymous said...

Anon 10:49,
Don’t apply for WBE status if you have a spouse who works in your business. Don’t apply for an MBE if you are not the right kind of minority. Being a top donor or having the right law firm can change all that. Enemies of the administration are eliminated by Greg Wilson’s hand-picked CO Contract Compliance Committee. A former committee member told me that “Open Door” laws are ignored. Ozdemir was able to have his application handled outside the regular procedures described by Anon 10:49. Depose Wilson’s staff and learn the truth.

Anonymous said...

It's even more hilarious to read a news piece that documents what you've watched unfold in your presence for the past seven years. Not a single inaccuracy. This is only the beginning of a very big story that will touch many people.

Gary R. Welsh said...

I wouldn't bet on it, anon. 3:48. Carl Brizzi spent 8 years auctioning off justice as Marion Co. Prosecutor and Joe Hogsett didn't do a damn thing to him.

Anonymous said...

At least in Illinois they put their corrupt politicians in jail after they are exposed. In iIndiana they just ignore the conduct.

Anonymous said...

Thanks Gary for keeping us up to date on Ersal "Pay to Play" Ozdemir from the very beginning. Too bad the folks on Pennsylvania St are too busy lauding him for investing in a bush league soccer franchise and supporting him in his endeavor to get another free multi-million dollar project. It reflects on how far the Star has fallen. Long gone are they days of Dick Cady investigating corruption in government. Instead we have Matthew Tully, who has the gall to write an entire book bemoaning the failure of inner city public schools while lauding Ozdemir's abilities to seek a blank check from the best legislature money can buy.

Anonymous said...

I hope someone mails all the AI posts about this guy, Ballard, and Straub to the Public Integrity Section of DOJ with a plea to help us in Indy!

U.S. Department of Justice
Public Integrity Section
Criminal Division
950 Pennsylvania Avenue, NW
Washington, DC 20530-0001

Marycatherine Barton said...

We so appreciate all these well-researched exposes of expensive government corruption you give us, Gary. As vidrebel.wordpress posts yesterday:

"America Has Entered the Silly Season. Destruction to Follow?"

Flogger said...

This is not low hanging fruit for our various Justice Systems, it is rotten fruit on the ground covered in flies and maggots.

We wait in vain for some sign our Justice System will react, but so far nothing.

Our local Oligarchs would appear to have received their immunization shots from at the very least an investigation.

Unigov said...

Ditto what Mary Catherine said. The only way to know which end is up is the real journalists like Advance Indiana.