A Logansport contractor has been indicted by a federal grand jury for misuse of grant funds.
Gary Hayden Sr., owner of B&G Construction, is charged with theft from local government receiving federal funds.
The indictment stems from contracts that Logansport awarded to B&G to tear down blighted houses using state Blight Elimination Program (BEP) grant money funded by the federal Troubled Asset Relief Program (TARP).
The money B&G received is more than $10,000, according to the indictment, but it gives no specific amount. The Indiana Housing and Community Development Authority, which administers BEP funds, awarded Logansport $925,000 through the program in October 2014. The city then approved demolition bids submitted by Aulbach Construction and B&G Construction for the project. Demolition work on the first of 31 properties that were razed under the BEP began in October 2015.
The indictment states that Hayden received money between February 2016 and February 2017 after submitting invoices for his work to the city. The grand jury found that Hayden “failed to disclose that he disposed of demolition debris on-site in violation of the agreements with Logansport and the BEP technical requirements.”
The city used BEP money to demolish houses during the administrations of former mayors Ted Franklin and Dave Kitchell.
Kitchell said the federal government came to Logansport to investigate the matter. “This is not something we initiated. It’s something that the federal government initiated,” he said. “The feds obviously have rules about the way they want things done.”
The city had to correct the work after the fact at its own expense. On July 1, 2019, the Logansport City Council approved the expenditure of up to $475,000 for the remediation of properties in the BEP that were not properly razed so that the ReVere Homes project could be completed.
The council authorized the use of up to $300,000 from the Rainy Day fund and up to $175,000 from the CEDIT fund to remediate properties. Indianapolis-based Crestline Development built 30 new homes for the ReVere project — 19 of them on properties where blighted homes had recently been removed through BEP funding.
Kitchell said that, before he left office, he contacted U.S. Rep. Jim Baird (R) and U.S. Sen. Mike Braun (R) about finding a way to secure federal funds to offset the expenditure. Compensation for the clean-up work could also come from any bonds B&G had on the demolition projects or even from freezing the company’s assets, Kitchell said.
Franklin said that he was unfamiliar with the indictment but added that the time span cited in the indictment was after he left office in December 2015. He also indicated that city inspections happened on BEP sites during his administration “two to three times a day.”
Dave Morris, current City Council president and councilman during the Kitchell administration, said that since 2016 B&G and Hayden are no longer allowed to receive city contracts or do city work. According to Morris, this started with B&G not fulfilling contracts for demolitions in a timely manner and other issues that occurred before details of the indictment became known.
“The city won’t allow him to bid on any work,” Morris said. B&G is currently handling the demolition of the west end of Cass Plaza on Market Street, which is privately owned by Hamstra Group based in Wheatland.
After the Feb. 19 indictment, Hayden made an initial appearance on Feb. 20 before Magistrate Judge John E. Martin in the U.S. District Court, Northern District of Indiana, Hammond Division. Martin then released Hayden on a $20,000 bond.
According to the Cornell University Law School, the charge carries a penalty of up to 10 years in prison and fines. Hayden’s next court appearance is scheduled for March 6.
A phone call from the Pharos-Tribune to B&G was not answered, and a message left on the company’s answering system wasn’t returned by press time.
Current Logansport Mayor Chris Martin was advised by lawyers not to discuss the matter since it did not happen during his administration. That advisement extends to the entire administration, including Deputy Mayor Stacey Cox, who was clerk-treasurer during the Kitchell administration.