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Feds indict land speculator tied to Gary casino property deal

Feds indict land speculator tied to Gary casino property deal

  • Updated

HAMMOND — Authorities have arrested a land speculator accused of defrauding Lake County’s property tax sales system to acquire land near Gary’s newly opened Hard Rock Casino.

Sergio Gutierrez, 49, of Hobart, appeared Tuesday in U.S. District Court in Hammond to plead not guilty to a charge of mail fraud, a felony punishable by years of imprisonment.

Magistrate Judge Joshua P. Kolar freed Gutierrez on a $20,000 and scheduled a jury trial in the case to begin Nov. 22.

A federal grand jury indicted Gutierrez in July, but sealed the case from public view until his arrest Tuesday in Hammond.

The eight-page indictment alleges Gutierrez defrauded local government out of $22,000 in taxes on four properties he owned in the 2700 block of Calhoun Street and the 2800 block of Dallas Street in Gary’s Black Oak section.

When Gutierrez refused to pay his taxes, the county placed the four delinquent properties on the auction block in its 2015 tax sale with the intention of selling them off to the highest bidder to recoup some of the lost tax revenues.

The indictment states Gutierrez has been buying tax sale properties since at least 2012, even after he was supposed to be ineligible to bid on properties since he refused to pay taxes on property he owned in Gary.

Gutierrez was forbidden by the county to bid on his tax-delinquent properties as well, but he evaded that requirement by having so-called straw buyers acquire them and turn them back over to him.

Randy H. Wyllie, attorney for the county auditor which oversees the annual county tax sales, thanked federal authorities Tuesday for initiating this case.

“It’s the tip of the iceberg. Many others use straw buyers to wash away the taxes we owe. I’ve been chasing them for years... I hope this case leads to many more investigations,” Wyllie said.

The county runs one of the largest tax sales in the state because many of the thousands of properties in it are in Gary where decades of unemployment, crime and other social ills have left the blighted city with too few legitimate taxpayers and an undervalued real estate market.

Tax sale speculators buy nearly worthless parcels of land for as little as $500 apiece in hope of reaping a windfall when a large corporation buys land to locate in Gary.

That opportunity arose three years ago when plans were announced for a $300 million Hard Rock casino at Burr Street and the Borman Expressway, within a few hundred feet of Gutierrez’s four properties.

The scramble of speculators competing to buy tax delinquent land around the casino during the 2018 county tax sale threw an unwelcome light on Gutierrez’s transactions.

Gutierrez sued in state court to defend his ownership of his Gary properties and had to testify in open court that he instructed his son, Corey Gutierrez, to purchase several properties he risked losing to the 2018 county commissioners' tax sale for failure to pay his taxes.

Gutierrez also acknowledged, according to an earlier Times story, that he knew employing his son as a straw buyer was a crime.

The federal indictment alleges Gutierrez covered up his straw purchase scheme in 2018 by having state court papers drawn up to falsely indicate his Gary properties were in the name of yet another individual, identified in the indictment only as Individual B.

Individual B later transferred the Gary properties back to Gutierrez who later sold his Gary properties to “Company A” for $675,000.

The indictment doesn’t identify “Company A” but an earlier Times story stated a firm acquiring the Hard Rock Casino’s site, bought up land near Gutierrez’s properties for hundreds of thousands of dollars.

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