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Calumet Township Trustee Elgin, three employees, indicted for fraud, extortion

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FBI raid of Mary Elgin's office

An FBI evidence truck was parked outside Calumet Township Trustee Mary Elgin's office on March 27 in Gary as agents removed boxes of evidence and at least one desktop computer.

Calumet Township Trustee Mary Elgin and three "key" employees of her office are charged with federal counts of fraud and extortion for allegedly using taxpayer resources for political gain, the U.S. attorney announced Friday.

Federal prosecutors said Elgin expected her government employees to either purchase or sell campaign fundraiser tickets, enlisted subordinates to sell the tickets to employees during government office hours and placed employees who couldn't afford the tickets on payment plans.

Employees who failed to purchase tickets received unfavorable treatment by supervisors, including being given undesirable work and threatened with layoffs, an indictment in the case alleges.

"You gotta take that stick out and bust some damn heads," deputy trustee Alex Wheeler is quoted in the indictment as saying in the presence of Elgin as a way of motivating campaign fundraiser ticket sales.

Wheeler also is charged in the conspiracy.

Elgin did not immediately respond Friday to calls from The Times seeking comment.

Elgin, whose primary duty as trustee was managing emergency relief to some of the region's poorest residents, also used township employee work for personal gain by requiring some to create banners and signs for her high school class reunion during government office hours, the indictment states.

The announcement of the indictment, which was filed Thursday in U.S. District Court, Hammond, comes about two weeks before the end of Elgin's term in the Gary-based elected office.

It also followed a raid of her government offices earlier this year during which FBI and IRS agents seized several boxes of evidence and at least one computer.

Elgin, 70, faces charges of wire fraud, extortion, tax offenses and making false statements to federal agents, according to the indictment. Three of her office employees, Ethel Shelton, Steven Hunter — who is Elgin's son — and Wheeler, also face wire fraud and extortion charges.

Elgin and the co-defendants conspired to commit wire fraud by ordering other employees to raise funds and perform other Elgin re-election efforts while on the clock, the U.S. attorney alleged.

Elgin also faces counts of failing to file federal tax returns in 2012 and 2013, even though she earned more than $100,000 each of those years; providing false statements to the FBI during an investigation into her alleged wrongdoing; and attempting to extort a vendor who sought to do business with the trustee's office, federal prosecutors said.

Elgin was first elected trustee in 2003 on a platform of "integrity and principle," the federal indictment states.

But after election to her first term, "Elgin installed the individuals who spearheaded her campaign into the most lucrative supervisory positions" within the trustee's office, the indictment states.

Shelton, Elgin's personal trustee's secretary, collected money for political fundraiser tickets and kept track of the government employees who did or did not purchase tickets as part of her duties, the indictment alleges. She earned about $40,000 per year in compensation on the trustee's payroll, state records show.

Hunter, Elgin's son, served as deputy of information systems for the office, despite having "little or no experience in this area," the indictment states.

Hunter earned $50,000 per year in this post as of 2013, state records show.

As part of his duties, Hunter distributed fundraising tickets to his subordinates on government time, the indictment states.

Wheeler, who ran the trustee's job search program for about $46,000 per year in compensation, also distributed campaign fundraiser tickets on government time and turned in any money he was able to personally collect to Shelton, prosecutors allege.

The indictment also alleges Shelton and Wheeler each used township office time and resources when they sought elected seats on the Calumet Township Board.

Under Elgin's system, the higher the salary of an employee, the more fundraiser tickets he or she was expected to either buy or sell, prosecutors alleged.

Defendants in the case would attempt to conceal the campaign work on government time by announcing they were "on break" — or telling subordinates they were on break — before engaging in political activities, the indictment states.

They also tried to conceal the illegal activities by issuing "interoffice memos claiming to prohibit political activity" on government time, the indictment alleges.

Elements of the conspiracy occurred from Elgin's first election in 2003 until fall 2014, prosecutors allege.

In May, Elgin, a Gary Democrat, lost her bid for reelection to Democratic challenger and now trustee-elect Kimberly Robinson.

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