HATTIESBURG, MS (WDAM) - A Hub City pastor has been indicted in federal court on charges for defrauding the U.S. government.
Rev. Kenneth Fairley was served with six-count indictment.
- Count 1 - Conspiracy to defraud the United States.
- Count 2 and 3 - Theft of government money.
- Count 4 - Conspiracy to commit money laundering.
- Count 5 and 6 - Engaging in monetary transactions.
Fairley, pastor of Mt. Carmel Baptist Church, appeared before Magistrate Judge Michael Parker Wednesday afternoon in the William M. Colmer Federal Courthouse in Hattiesburg where he was served his previously sealed federal indictment.
Fairley chose to have the reading of the indictment waived in open court.
Fairley was given to a $25,000 unsecured bond at the end of the hearing, and a date was set for April 18 in court.
According to the six-count indictment, Fairley and Artie Fletcher,
The indictment goes on to say that during the period of the conspiracy, HUD awarded the City of Hattiesburg funds for the rehabilitation of local residential properties within the city.
On Aug. 3, 2010, the city entered into an agreement with Pinebelt Community Services, which is a HUD certified Community Housing Development Organization. The purpose was to rehabilitate three Hattiesburg residences located on 127 E. 5th Street and 202 South Street.
The agreement was amended on July 19, 2011, to only correspond with two residential properties. On July 22, HUD provided $46,703.50 to the city of Hattiesburg which would ultimately come into Fairley's possession under Pine Belt Community Services.
Fletcher was the owner of Interurban Development, a for-profit development organization based in New Orleans, and was contracted by Pine Belt Community Services by Fairley.
According to the indictment, Fairley and Fletcher agreed for Fletcher to provide "seed money," given that the HUD agreement was a reimbursement contract that required Pinebelt Community Services to incur costs of the project prior to receiving the HUD grant.
Fletcher directed an individual known as the Neighborhood Improvement and Community Education Foundation, a non-profit based in New Orleans, to transfer the seed money from a financial institution account to an account controlled by Fairley.
The indictment went on to say that Fletcher authorized Fairley to complete bid requests on behalf of Interurban, which were then submitted by Pinebelt Community Services to the City of Hattiesburg as cost projections for the properties under the HUD grant.
Both Fairley and Fletcher agreed that Interurban would not perform the work, but instead Fairley would subcontract the work to local individuals who would perform the work for less money.
The excess money paid by HUD was the difference in the actual cost of work done by local individuals versus the fake costs submitted on the request for bids, which would ultimately enrich Fairley and Fletcher, according to the indictment.
A list of itemized repair costs submitted to HUD by Pine Belt Community Services revealed that $24,432.95 was spent on labor and materials for the 127 E. 5th Street location, and $13,373.31 was spent on the 202 South Street location.
According to subpoenaed records, all the labor and material costs were paid by Pine Belt Community Services through a Wells Fargo Checking account, not Interurban.
Fairley agreed to repay Fletcher the seed money by transferring funds to Interurban rather than from the NICE account.
The indictment stated that Fairley and Fletcher submitted documents that misrepresented the activities of Interurban and Pine Belt Community Services by inflating invoices and receipts knowing that Interurban had not performed work on either properties. Both concealed the conspiracy in attempts to shield the participants from prosecution.
The Department of Justice issued a statement regarding the federal indictments against Reverend Kenneth Fairley and Artie Fletcher.
The statement is as follows:
IRS Criminal Investigation Special Agent in Charge Jerome R. McDuffie also made a statement:
The maximum penalties for the crimes charged in the indictment are as follows:
- Conspiracy to defraud the U.S. - 5 years in prison and a $250,000 fine; Theft of government
- Money – 10 years in prison and a $250,000 fine
- Conspiracy to commit money laundering - 20 years in prison and a $500,000 fine or twice the amount of the criminally derived property involved in the transaction
- Engaging in monetary transaction in property derived from specified unlawful activity - 10 years in prison and $250,000 fine or twice the amount of the criminally derived property involved in the transaction.
Housing and Urban Development (HUD) administers Federal aid to local housing agencies (HAs) that manage the housing for low-income residents at rents they can afford according to the government entities website.
According to HUD.gov, there are approximately 1.2 million households living in public housing units, managed by some 3,300 HAs.
HUD also furnishes technical and professional assistance in planning, developing and managing these developments.
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This is a developing story. Stay tuned to WDAM.com for more updates as they become available.