WASHINGTON, D.C. – (RealEstateRama) — Criminal charges were filed in federal court alleging cash bribes and kickbacks between contractors and a Cleveland Housing Network official, as well as improper lead abatement practices at several renovation projects, law enforcement officials said.
Named in the four-count criminal information are: James Todt, 49, of Brecksville; Lizandro Orellana, 56, of Cleveland; Chris Peterson, 42, of Macedonia, and Modern Construction Group LLC.
Todt worked at the Cleveland Housing Network between 2005 and 2014, where his duties included supervising inspectors and project managers, as well as awarding CHN contracts on various projects for the non-profit community development organization. Orellana owned and operated Modern Construction Group LLC and Peterson owned and operated Top Notch Construction, according to the information.
Todt corruptly solicited and accepted things of value from Orellana and Peterson between 2009 and 2014. Peterson paid Todt up to $10,000 in cash in exchange for CHN work that Todt awarded to Top Notch, according to the information.
On numerous occasions, Todt provided Orellana with CHN’s internal cost projections for various projects, which were used to evaluate a contractor’s bid.
Orellana paid another person to do $3,650 worth of electrical work at Todt’s home in November 2012. In October 2013, Todt asked Orellana for assistance building a deck and installing windows at his home. Orellana provided a crew of six Modern employees to construct the deck, and directed employees to install seven windows. The labor cost related to the deck and windows was valued at approximately $8,736, according to the information.
In 2012, Peterson repaired the roof of a home in Seven Hills owned by one of Todt’s relatives, and performed repairs on a rental property owned by Todt in Brecksville, according to the information.
Todt also submitted false invoices and caused two checks totaling $15,280 to be deposited into his personal account, according to the information.
Additionally, Orellana had a lead abatement contractor license issued by the Ohio Department of Health, which allowed Modern Construction to bid on lead-based paint abatement projects for CHN homes. These projects often required Modern to gut a portion or all of a home’s interior, including the removal of doors, windows, walls, moldings and sometimes porches. Orellana understood the work was to be done by workers licensed to perform lead-based paint abatement and comply with federal and state standards, according to the information.
Modern Construction was contracted to conduct lead-based paint abatement on several CHN properties between 2010 and 2012. Orellana, due to his workload and to save time, directed employees to gut homes containing lead-based paint. Items and components covered in lead-based paint were removed without following abatement procedures. The employees directed to gut the homes were not licensed to perform lead-based paint abatement, which Orellana knew, according to the information.
“Sadly, cash bribes and free home improvements from contractors looking to get work on taxpayer-supported projects have not been eradicated from Northeast Ohio,” Acting U.S. Attorney Carole S. Rendon said. “Mr. Orellana also showed no regard for his employees, the environment or our community’s general well-being when he ordered items covered in lead paint to be removed and dumped.”
“These individuals defrauded a federal housing assistance program by conspiring to obtain monies and services for their own personal benefit,” said Stephen D. Anthony, Special Agent in Charge of the Federal Bureau of Investigation’s Cleveland office. “The FBI, along with its partners, will continue to investigate fraud against federally funded programs intended to help those in need.”
“The charges disclosed today prove our continuing resolve to root out fraud and corruption in all forms, especially when the programs involved should have been used to help our neediest families,” said Brad Geary, Special Agent in Charge, the Department of Housing and Urban Development – Office of Inspector General. “It is our continuing core mission to work with our Federal, State, and Local law enforcement partners and the United States Attorney’s Office to protect the integrity of our housing programs and to take strong action against those who seek to personally benefit from taxpayer-funded grants.
“Lead-based paint in homes continues to pose a public health threat, often to children who may be exposed to it,” said Jeffrey Martinez, Acting Special Agent in Charge of EPA’s criminal enforcement program in Ohio. “If the proper abatement procedures are not followed, the problem only becomes worse. EPA’s mission of protecting public health and the environment means we will prosecute and punish those who jeopardize public safety for their own personal gain.”
“Accepting bribes and kickbacks is unacceptable, especially when it involves something as important as lead abatement,” Ohio Attorney Mike DeWine said. “The Ohio Attorney General’s Office helped investigate this case, and we’ll continue to work with our federal, state, and local partners to go after those who commit fraud or other crimes.”
Todt, Orellana and Peterson are named in Count 1 – conspiracy to commit bribery concerning programs receiving federal funds. Count 2 and 3, theft concerning programs receiving federal funds, apply only to Todt. Orellana and Modern Construction are named in Count 4, violation of authorized state lead-based paint program requirements.
This case is being prosecuted by Assistant U.S. Attorney Robert J. Patton and Special Assistant U.S. Attorney Brad Beeson. It comes following an investigation by the FBI, HUD-OIG, U.S. EPA, Ohio EPA, Ohio Bureau of Criminal Investigation, Ohio Department of Health – Environmental Compliance Program and the Cleveland Division of Police.
If convicted, the defendants’ sentences will be determined by the court after a review of the federal sentencing guidelines and factors unique to the case, including the defendant’s prior criminal record (if any), the defendant’s role in the offense, and the characteristics of the violation.
An information is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.