LEXINGTON, KY—A home builder from Georgetown, Kentucky is accused of fraudulently obtaining more than a million dollars in loans from a Frankfort bank.

A federal grand jury in Lexington indicted 58-year-old Lee C. Tevis for bank fraud, conspiracy, making false statements in a loan application, aiding and abetting bank embezzlement, and aggravated identity theft.

http://liarcatchers.com/fraud_investigation.html

The indictment alleges that starting in 2006 Tevis began construction on a house and fraudulently obtained more loans from American Founders Bank (AFB) than he was entitled to receive. He obtained the loans by setting up shell corporations in the names of other people to bypass AFB’s loan limits.

Tevis allegedly used some of the money from loans obtained to construct a house in Frankfort to pay off debt on other construction projects.

Since Tevis reached his loan limits, he allegedly set up a bogus corporation named Two Amigos, LLC, in the name of his company’s foreman, even though Tevis was the true recipient of the loans. The indictment accuses Tevis of using the Social Security number of the foreman’s 5-year-old son to pass the bank’s credit check.

Tevis fraudulently received approximately $1.4 million in loans from the bank, according to the indictment. The bank eventually foreclosed on the home, but allegedly suffered a significant financial loss.

The U.S. Attorney’s Office for the Eastern District of Kentucky, the Federal Bureau of Investigation (FBI) and the Federal Deposit Insurance Corporation, Office of Inspector General, jointly announced the indictment after it was returned.

The investigation was conducted by the FBI and the FDIC. Assistant U.S. Attorneys Andrew Sparks and James Arehart represented the U.S. Attorney’s Office in this case.

A date for Tevis to appear in court in Lexington has not yet been set. If convicted, Tevis faces a mandatory two years on the identity theft charges and up to 30 years in prison on the other charges. However, before the court can impose a sentence following a conviction, it must consider the U.S. Sentencing Guidelines and the applicable federal statutes.

The indictment of a person by a grand jury is an accusation only, and that person is presumed innocent unless proven guilty.

CHAMPAIGN —

State officials say they have found more than 1,100 inmates – including some in Peoria County – who they believe improperly collected unemployment benefits totaling more than $2 million while jailed in Illinois sometime in about the last year.

The report, based on a fraud investigation that was started in July, showed that 21 people jailed in Peoria County collected $72,350.

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One Cook County inmate collected almost $43,000, according to the Illinois Department of Employment Security, though most were paid far less.

Nearly all of the fraud occurred in mid-2012 from county jails across the state.

Department officials told The Associated Press on Tuesday that many of the recipients could face charges, though some may have been paid too little to make prosecution worthwhile. The department says it will also garnish tax returns where it can to recover money.

“Assuming that the individual knew that benefits were being paid for him, we would first start with that individual, take a look at the circumstances, take a look at the length of the fraud and take a look at their willingness to cooperate in repaying the dollars, and we would consider all of that,” department spokesman Greg Rivara said.

People collecting unemployment benefits have to certify every two weeks that they’re still eligible, Rivara said. That includes showing they’re available to work and looking for work.

Andy Shaw of the state-government watchdog group The Better Government Association said that while the $2 million may be only a tiny piece of Illinois’ multibillion-dollar budget deficit, “a couple million here, a couple million there and you’re starting to talk about real money.”

“When a branch of government sees potential fraud and uses existing resources to investigate it and ferret it out with the potential to save any amount of tax dollars, that’s a good thing,” Shaw said. “Government all too often turns its back on these things and ignores them. The fraud and inefficiency and abuse adds up.”

The department announced in July that it would begin comparing lists of jail inmates from around the state with rolls of unemployment recipients after a legislator from southern Illinois, Rep. John Cavaletto, said he had heard about potential fraud among inmates at a jail in his district. An inmate had used the phone check-in system that the Department of Employment Security allows people collecting unemployment to use to certify that they’re looking for work and available to do it. Internet check-in is also available.

Cavaletto was surprised by the department’s initial results.

“I didn’t know how big it was when we got into it because it kind of started with an isolated incident,” he said. “I really believe that’s just kind of the tip of the ice berg. How much through the years has this really been robbing us and how much fraud is going on here?”

The department compared a list of about 70,000 inmates jailed in Illinois, all but a handful between early this year and August, and compared them with the roughly 250,000 people in the state collecting unemployment. A few inmates on the list were also from 2010 and 2011, Rivara said.

Aside from the cost of employee time, which wasn’t immediately available, the department spent $25,000 to hire a firm to gather inmate information, Rivara said.

The agency had never before looked for fraud among jail inmates, Rivara said. He wasn’t sure why. Local officials, he said, would have had a very difficult time pursuing such potential fraud on their own since they don’t have state unemployment insurance rolls.

Most of the recipients were in Cook County, the state’s most populous county, where the department found 296 inmates that it believes improperly collected more than $722,000.

Other areas with larger numbers of jail inmates who, according to the department, wrongfully collected benefits included:

– Will County, where 21 inmates collected $85,159.

– Winnebago County – which has one of Illinois highest unemployment rates at 12 percent in August – where 20 inmates collecting $84,533.

– Lake County, with 20 inmates who collected $76,017.

Department officials and two attorneys assigned to the department by the state Attorney General’s office are now looking at inmates to decide who could be prosecuted and whether those cases might be handled by county prosecutors or by the state, Rivara said.

“That’s one of the things I think that needs to be worked out,” he said.

And the department will continue checking for potential fraud among jail inmates.

Shaw, of the watchdog group, said picking and choosing which cases to prosecute based on dollar figures makes sense.

“You have to determine the severity of it: was it one check too many or hundreds of checks too many?” he said. “The attorney general ought to charge people that have blatantly violated the law because that has the potential to be a deterrent.”

Cavaletto said the department needs to take further steps, though, to make it more difficult for people to certify that they’re looking for work and available to work. The phone system makes fraud too easy, he said.

“They’re going to have to make it more stringent than that,” the lawmaker said.

Rivara said the agency already takes steps such as requiring claimants to use their Social Security numbers and giving them special login names and passwords. He said he isn’t sure there are more realistic steps to take.