Former Gary official pleads guilty to mortgage scheme - Post-Tribune

Former Gary official pleads guilty to mortgage scheme - Post-Tribune:

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Updated: January 14, 2012 2:02AM

The former director of community development for the city of Gary admitted Friday morning in federal court to working with a local businessman in a mortgage fraud scheme that took in almost $200,000.

Jacquelyn Drago-Hunter pled guilty to one count of wire fraud.

Speaking softly throughout the hearing and wearing a black outfit with a white scarf, Drago-Hunter admitted under questioning by her attorney that she worked with Jerry Haymon to defraud a bank by jacking up the purchase price of a house in Gary. Drago-Hunter said Haymon, who has already pleaded guilty in the case, had originally convinced a woman and her son to sell him a house they owned in Gary for $36,000. However, he set up a side agreement with another man to buy the house for $74,000, far more than the house was actually worth.

Drago-Hunter’s role was to create two separate closing documents, one to fool the owners into thinking they were selling the house for the original asking amount, and another reflecting the $74,000 purchase price, which was given to the bank.

Assistant U.S. Attorney Gary Bell showed the two documents, noting that the first one said the owners received just $2,300, the actual amount they were paid. The second one, however, shows them receiving about $36,000. That, Drago-Hunter said, was a lie.

“What happened in reality is that the defendant and Jerry Haymon were scheming,” Bell said.

Drago-Hunter said that Haymon collected the difference between the prices by filing a lien on the property. The bank wouldn’t have accepted the lien, however, because he had just filed it a few days before closing, and so she wrote out the disbursement to make it appear it was going to the owners.

As part of Drago-Hunter’s plea agreement with the government, another charge of wire fraud and two counts of identity theft are being dropped. She faces up to 20 years in prison.

One of Drago-Hunter’s other co-defendants, Sheila Chandler, also pleaded guilty in the case. A federal jury found the fourth defendant, Phillip Rucker, guilty in December.

Drago-Hunter, who continued to work for the city of Gary for about a year after her arrest until October, is scheduled to be sentenced April 19.