SOUTH BEND — A jury could decide by Wednesday whether to find an ex-director of the South Bend Housing Authority and two co-defendants guilty of stealing federal money for their personal gain.
According to closing arguments made in court Tuesday, the federal government alleges that Tonya Robinson, who led the housing authority from 2014 to 2019, was at the center of a scheme to pay fraudulent checks to contractors for work that was never actually done. Running this scheme alongside her, the government claims, was Albert Smith, the agency’s asset director from 2016 to 2019.
A third defendant on trial this week, Douglas Donley, is charged with fraudulently accepting more than $300,000 from the housing authority as a contractor without doing the required work.
Although some of the $5.8 million paid to contractors over the course of the scheme went toward work that was actually completed, the government argues that many of the payment checks were for repairs that never happened.
The indictments, filed in 2021, followed an FBI raid of multiple housing authority properties in 2019. The charges are brought by the federal government because the housing authority is funded by the Department of Housing and Urban Development and the relevant bank accounts are insured by the Federal Deposit Insurance Corporation.
The defendants deny the charges for different reasons. Attorneys for Smith and Robinson say the housing authority was deceived by contractors because of shoddy bookkeeping by a longtime employee, whom Robinson eventually disciplined.
Donley’s defense is that his business, D. Fresh Contractors, was used as a cover to embezzle money by Tyreisha Robinson — Tonya’s daughter and Donley’s ex-girlfriend — who was at the time a housing authority employee. The couple shared a bank account registered under the name of his business.
Other contractors who have already pleaded guilty to fraud and testified during the trial in exchange for more lenient prison sentences are Tyreisha Robinson; Archie Robinson III (no relation), owner of a business called Kleaning to Renovations Inc.; and Ronald Taylor Jr., owner of “A Taylor Made Handy Man.” All are from South Bend.
Luke Reilander, who leads the prosecution for the U.S. Attorney’s Office for the Northern District of Indiana, argued Tuesday that Robinson would instruct each contractor to cash the checks and bring back money to split between three people: her, Smith and the contractor.
The two defendants used this money, Reilander claimed, to bankroll gambling habits that lost Robinson at least $600,000 and Smith more than $450,000 over several years, according to records obtained from each defendant’s Four Winds Casino Players Club card.
Archie Robinson III, Tyreisha Robinson and Ronald Taylor all testified that they cashed bogus checks and split the money with Smith and Tonya Robinson between 2016 and 2019.
An FBI agent surveilled another contractor, Latassia Burger, on her way from the bank to drop off cash for Smith, according to Reilander. After Burger met Smith in the housing authority’s parking lot, agents organized a traffic stop by the South Bend Police Department and reportedly verified that the cash was gone from her car.
Payment records obtained from HUD showed that the South Bend housing authority paid about four times more to outside contractors in 2016 and 2017 than did other similar housing authorities; this occurred after years in which the South Bend agency nearly matched the average. Reilander said the anomaly prompted federal agents to investigate.
About a dozen housing authority tenants, who lived in units where allegedly bogus records showed that work had occurred, testified over the past two weeks to say that no such repairs were made.
Defense attorneys for Robinson and Smith didn’t dispute that each defendant gambled exorbitantly.
But they disputed the accuracy of the prosecutor’s figures, citing tax forms that show the defendants reported hundreds of thousands of dollars in winnings. Their explanation was that jackpot winnings are reported to the IRS but may not have shown up on the club cards.
After failing to file tax returns in 2016 and 2017, Robinson reported on her late 2018 returns that she won roughly $650,000 at the casino. Her defense attorney, Jeff Kimmell, said it was “confirmation bias” to ignore IRS figures and attend to the casino’s numbers.
Kimmell said fraudulent payments were snuck through unbeknownst to the ex-director. Tasked with managing more than 800 public housing units that consistently rank among Indiana’s worst, Kimmell claimed, Robinson relied on her employees to keep accurate records.
But Kimmell argues much was lost in the cluttered office of Steve Peterson, a longtime procurement manager who resigned in protest after then-Mayor Pete Buttigieg fired Robinson. Peterson took partial blame for the dysfunction, according to The Tribune’s reporting partner, WNDU.
Because it’s a criminal case, the government must prove beyond a reasonable doubt that each defendant knowingly intended to defraud the housing authority.
A 15-person jury will deliberate Wednesday and may reach a verdict. To find any defendant guilty, the decision must be unanimous.
Email South Bend Tribune city reporter Jordan Smith at JTsmith@gannett.com. Follow him on Twitter: @jordantsmith09
This article originally appeared on South Bend Tribune: Verdict soon to be reached in South Bend housing authority fraud trial