HAMMOND | The owners of the Paragon Restaurant in Schererville were indicted Thursday on federal charges of harboring illegal aliens working at their restaurant. They also are charged with making false claims to the state of Illinois over the number of children who attended T&M Daycare, which they operate in Calumet City.
On Thursday, a Grand Jury for the Northern District of Indiana indicted Michael McClellan, 38, and wife Tina McClellan, 36, of Richton Park, Ill. Michael McClellan was charged with one count of harboring illegal aliens and three counts of mail fraud. They also were charged with one count of making money transactions in criminally derived property, according to a news release from the U.S. Department of Justice.
Their attorney, Scott King, said they're prepared to plead not guilty to accusations at an upcoming arraignment hearing.
The federal indictment alleges Michael McClellan harbored illegal aliens at Paragon as well as at a home he owns behind the restaurant.
King said his clients were not aware of the immigration status of the employees of the restaurant. He said the employees were hired under previous owners.
When the couple purchased the business from someone else, they agreed to keep the staff as part of the deal, King said.
Federal officials also allege the couple submitted false quarterly reports that did not account for restaurant employees he had paid in cash. Federal authorities claim this was all part of a scheme to defraud the Indiana Department of Workforce Development out of unemployment insurance tax contributions.
From 2006 through 2010, the McClellans allegedly received reimbursements of at least $200,000 from the state of Illinois and the Healthy Start program by falsifying the number of children who attended T&M Daycare.
The McClellans used the criminally derived funds to buy the home behind Paragon, stated the court’s charging affidavit.
“Homeland Security Investigations holds employers accountable when they knowingly hire an illegal alien workforce to gain an unfair advantage over their law-abiding competitors,” said Gary Hartwig, special agent in charge of HSI Chicago. “Our goal is to level the playing field for those businesses that play by the rules.”
These charges were filed as the result of an investigation by the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the Internal Revenue Service's criminal division, the U.S. Department of Labor, the Social Security Administration and the Indiana Department of Workforce Development.
The couple were aware federal authorities were investigating and were fully cooperative, King said.
"The decision to indict was a surprise to them," he said.
The McClellans had their initial appearance Thursday in U.S. District Court in Hammond before Magistrate Judge Paul Cherry. They were released after each posting $20,000 bond. They will be formally arraigned Dec. 11.