The mission of the U.S. Department of Housing and Urban Development is to “create strong, sustainable, inclusive communities and quality affordable homes for all.” Photo via fb.com
A building owner working on two real estate projects pled guilty to a felony charge of submitting false claims to the U.S. Department of Housing and Urban Development in conjunction with receiving local and state funds.
The city of St. Johns and the Michigan State Housing Development Authority administered the grants to Maple Rapids resident James Francis Ortman, said U.S. Attorney Patrick A. Miles, Jr. in Grand Rapids on Tuesday.
“When used appropriately, HUD grants encourage development and new job opportunities in our local communities,” Miles said. “This office will vigorously pursue those who seek to line their own pockets by diverting from their intended purpose scarce grant monies that are funded by the hard-working taxpayers of this district.”
Ortman admitted at his change of plea hearing before U.S. Magistrate Judge Ellen S. Carmody that in 2008 the city of St. Johns awarded him a federal grant as part of a Downtown Façade Project for his building located at the corner of North Clinton and East Walker streets.
In order to receive the grant, Ortman represented to the city that the façade improvements would cost $416,999, and the project would ultimately create four permanent jobs for low and moderate-income people.
The grant provided that if the project truly cost that amount, and if Ortman invested $216,999 of his own funds into the project, HUD would fund the remaining cost of $200,000.
Ortman admitted at the hearing that he did not invest his own funds as represented, and he submitted false documents to the federal government to make it appear as if his actual costs equaled the projected amount.
As a result, he received the full amount of the grant, when he should have received less than half of this amount.
Ortman further admitted that he committed fraud in conjunction with a Rental Rehabilitation Grant that the city awarded to him in 2009.
The terms of that grant required Ortman to construct apartments for income-qualified individuals in various buildings that he owned in St. Johns.
Ortman admitted that he submitted claims for grant payments to the federal government for work that he did not actually complete, and he diverted those grant payments to other business ventures that were in financial trouble.
As a result, many of the income-based apartments were never completed.
Ortman caused a combined loss of more than $200,000 to the federal government in conjunction with the façade and rental rehabilitation grants.
“HUD’s Office of Inspector General, working with the U.S. Attorney’s Office, will relentlessly hunt for predators who, despite their best efforts to conceal their theft, have swindled the taxpayer and hurt Michigan’s neediest families,” said Barry McLaughlin, special agent in charge, HUD-OIG Region V.
“Theft of HUD grant funding amounts to stealing from hard-working taxpayers,” added Paul M. Abbate, special agent in charge of the FBI Detroit Field Office. “The FBI, in concert with our law enforcement partners, remains dedicated to pursuing those who selfishly misappropriate public funds intended for the public good.”
Ortman is awaiting his sentencing hearing, when he will face a maximum term of imprisonment of five years, a fine of up to $250,000 and will be ordered to pay restitution to HUD.
The Detroit office of the U.S. Department of Housing and Urban Development Office of Inspector General, along with the Lansing office of the FBI, investigated the case.
Assistant U.S. Attorney Ronald M. Stella is handling the prosecution of the case.