HAMMOND | By 2010, Lake Station Mayor Keith Soderquist and his wife, Deborah, were pulling tens of thousands of dollars out of various funds as their gambling losses climbed toward $100,000.
Eventually, prosecutors contend, they began dipping into funds donated to the mayor's campaign fund and the city's food pantry.
Their defense attorney, Scott King, contends the withdrawals were merely the couple repaying themselves for legitimate expenditures they had made earlier out of their own pockets.
A federal jury may decide next week which story to believe in what is likely the highest stakes the couple have ever faced.
The trial of the couple on charges of conspiracy to commit wire fraud, seven counts of wire fraud, and three counts of filing a false tax return began Tuesday in U.S. District Court in Hammond before Senior Judge Rudy Lozano.
The prosecution is expected to rest its case Tuesday. Following the defense presentation, jury deliberations could begin that day or Wednesday.
The Lake Station mayor and his wife may have made more than 750 visits to the Four Winds Casino in New Buffalo, Mich., between Aug. 3, 2007, and May 27, 2013, based on players club card records kept by the casino.
At the same time, the couple were faced with large credit card debt, although King has indicated their financial woes were tied to a job loss.
Eventually, the couple's credit card debt reached the point where they stopped making payments and began negotiating settlements.
According to testimony, in some cases they were able to reach arrangements to have about half of their credit card debt wiped out. Even under that arrangement, the couple were left with large amounts of debt they had to pay off.
In 2010, the couple had $38,167 worth of debt forgiven — most of it several credit card accounts belonging to Keith Soderquist.
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In 2009, government records show that Keith Soderquist made early withdrawals from his retirement funds of about $44,000. By 2012, the couple had withdrawn nearly $100,000 combined from their retirement accounts — primarily from the ones under Keith Soderquist's name.
On the afternoon of May 24, 2010, the first ATM withdrawal of $100 took place from the Committee to Elect Keith Soderquist campaign fund. That evening government records showed that players club cards belonging to the two were used at the Four Winds Casino.
On Jan. 13, 2011, the first ATM withdrawal was taken from the city's food pantry bank account and again within 24 hours the players cards belonging to the pair were used at the casino, according to records presented at the Soderquists' trial.
The next day, ATM withdrawals of $500 were made from both the campaign and food pantry funds.
During the next three years, the couple allegedly made dozens of such withdrawals within 24 hours of visiting the casino, according to the records that Internal Revenue Service Special Agent Steve Martinez testified Friday.
In all, $35,304.25 in ATM withdrawals were made from the campaign fund and $5,040 in such withdrawals were made from the food pantry fund during this period, according to the records. The government contends a significant amount of those withdrawals, more than $20,000 in the case of the campaign fund, were taken within 24 hours of the couple's player cards being used during numerous visits to the casino.
According to Martinez, if the money from these funds were being used for personal purposes, they should have been recorded on the couple's tax returns. He said they were not listed in the returns.
Martinez also testified about casino records he obtained from the Four Winds Casino as well as the Blue Chip Casino, in Michigan City. Those records show Keith Soderquist losing $75,271 at the Four Winds Casino from 2009 through 2012 and Deborah Soderquist losing $60,246, based on their player club cards' records. Similar records also show Keith Soderquist losing $2,141 at Blue Chip from 2011 through 2012 and Deborah Soderquist losing $2,127 at that casino during those years.
In all, the couple reportedly lost nearly $140,000 during those years at the two casinos. These losses were almost all money lost at slot machines, according to record.
King during cross-examination has elicited testimony about how casino gambling is a legal activity. Clayton Mason, an executive with the Four Winds Casino, also acknowledged to King that the activity being tracked was for the players club cards assigned to the Soderquists and that others besides the couple could use the cards while gambling.