The elected president of the Harvey Park District and its two top administrators pleaded not guilty today in federal court after they were indicted on charges accusing them of misapplying approximately $144,000 in park funds for non-public purposes by using district credit cards to pay for personal expenses. (Read the indictment.)
Julius Patterson, 51, of Harvey, Kendall Parrott, 48, of Markham and Linda Hudson, 47, of Harvey were arrested today by FBI agents this morning after being charged in an 11-count indictment returned by a federal grand jury Tuesday, Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois, and Robert D. Grant, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation said in a news release.
Parrott and Hudson were released on their own recognizance, and as a condition of their bonds, have agreed to step down from their positions, said Randall Samborn, spokesman for the U.S. attorney's office in Chicago.
Patterson is being held while bond is being set and due back in court at 1:15 p.m. today, Samborn said.
Each defendant is charged with three counts of wire fraud and one count of theft of government funds.
The indictment also seeks forfeiture of $144,035.92 from all three defendants.
"It is a sad state of affairs when citizens of a community, particularly youths, are cheated out of already scarce funds meant for playgrounds, ballparks and recreational programs by the people chosen to be entrusted with those funds," Fitzgerald said.
According to the indictment, Patterson, Parrott and Hudson each obtained corporate credit cards in the name of the Harvey Park District (HPD) that were to be used solely for business-related expenses. Instead, they allegedly converted and misapplied public park funds for their own personal expenses, depriving the south suburb and its citizens of their honest services between at least November 2002 and October 2004.
The indictment alleges Hudson instructed park district employees during business hours to drive her to various retail establishments, including shopping malls, nail salons and restaurants, where she used her HPD credit card to purchase items while the employees waited for her before she instructed them to drive her home or back to work;
Parrott allegedly used his HPD credit card for various personal expenses for himself and his family, including automotive parts and repairs, campaign expenses and prescription medications.
Patterson is accused of using his HPD credit card for personal items such as clothing.
After all three defendants used their HPD credit cards for personal expenses, Parrott allegedly concealed the scheme in part by instructing an unnamed park district employee that the items should be classified in the district's accounting books as genuine park district purchases, such as "board-related expenses" or "special events."
As part of the fraud scheme, Hudson allegedly directed an unnamed vendor to perform landscaping work at her home. After the vendor told Hudson and Parrott what the cost would be, Parrott allegedly instructed the vendor to bill the HPD for the work and the district paid for the services. Parrott also directed the vendor to perform work at one of Patterson's homes and bill the park district, which paid for the services, the indictment alleges.
Patterson allegedly instructed another vendor to perform automotive work on his and Parrott's personal vehicles and bill the park district, which then paid for the services. Patterson also allegedly provided payments to a third vendor in excess of the amount the vendor had proposed to charge the district for the services provided.
The indictment alleges that on some occasions, Patterson instructed the third vendor to kick back cash to him from the inflated district payments, while on other occasions, Patterson instructed that vendor to increase the amount of his bid and then kick back the increased amount to him.
After HPD accountants asked for specific documentation for certain expenses, Hudson and Patterson allegedly attempted to conceal the fraud scheme in part by directing the creation of fraudulent invoices to be submitted to the accountants. After an unnamed employee assisted Hudson with the creation of fraudulent invoices, Hudson authorized a bonus payment to that employee from the district's payroll account, according to the indictment.
In addition, Hudson, Parrott and Patterson each allegedly directed HPD employees to perform personal services during their scheduled work hours, including repairing Hudson's garage door, repairing a fence and painting the inside of her home; removing garbage from Parrott's home and setting up a tent in his yard; and performing yard work and removing appliances from various properties that Patterson owned. Hudson also allegedly directed payments from HPD payroll accounts to her family members even though they did not perform any work to justify the payments.
In a further effort to conceal the scheme, Hudson and Parrott allegedly hid evidence -- including credit card statements, payroll records and receipts -- in two backpacks and gave the backpacks to Individual A with instructions to hide them.
The government is being represented by Assistant U.S. Attorneys M. David Weisman and April Perry.
If convicted, each count of wire fraud carries a maximum penalty of 20 years in prison and theft of government funds carries a maximum of 10 years in prison, and all charges carry a maximum fine of $250,000 on each count.
Restitution is mandatory.
The court, however, would determine the appropriate sentence to be imposed under the advisory federal sentencing guidelines.
