News and Press Releases

Former Dauphin County Assistant Program Administrator and Two Others Sentenced this Week for Fraud and Kickbacks in Home Loan Program

FOR IMMEDIATE RELEASE
December 15, 2011

     The United States Attorney's Office for the Middle District of Pennsylvania announced that three men indicted for their involvement in fraud and kickbacks related to the Dauphin County Home Loan Program were sentenced this week in federal court.

     According to United States Attorney Peter J. Smith, Timothy Allen Truax, Chandler Wells and Dean Bergstresser were sentenced by United States District Court Judge William C. Caldwell.

     Truax, age 39, of Steelton, Pennsylvania, was sentenced today to a 30 month term of imprisonment, followed by one year supervised release and order to pay $135,054.43 in restitution to the Dauphin County Office of Community and Economic Development (OCED).

     Previously, Bergstresser, age 49, of Harrisburg, Pennsylvania, was sentenced to four months in prison, one year of supervised release and restitution in the amount of $6,300 and Wells, age 40, of Wellsville, Pennsylvania, was sentenced to three months in prison, two years of supervised release and restitution in the amount of $39,209.

     All three men sentenced this week will voluntarily surrender on January 9, 2012 to begin serving their prison sentence.

     On February 16, 2011, a federal grand jury in Harrisburg returned indictments charging Truax and three area contractors, Bergstresser, Wells and Timothy Ladika, on charges relating to fraud and kickbacks in the awarding of contracts for this federally funded program.

     Truax was charged with theft of approximately $85,500 in the form of kickbacks he received from contractors who were awarded contracts by Truax.

     Bergstresser, Wells and Ladika were all charged in separate indictments with receiving federally funded contracts through a combination of rigged inside information bidding, improper no-bid awarding of contracts, or receiving federal monies where no work was performed. All three are also charged with giving kickbacks in connection with these transactions. Wells received $114,909 through this scheme; Bergstresser, $227,673 and Ladika $14,745.43.

     The funds were provided to Dauphin County by the United States Department of Housing and Urban Development (HUD) for grants to low income families to rehabilitate their homes, to repair a conditions about the homes that were considered to affect health, safety or accessibility, and for low income families whose homes have energy efficiency or code violations.

     Truax was employed by Dauphin County's Office of Community and Economic Development (OCED) as the community development block grant monitor and home rehabilitation specialist. Truax was responsible for the review of applications for grants and solicitation of bids from contractors to perform the work.

    Truax gave contractors inside bid information so that they would be a low-bidder and be awarded the contract. In other instances, Truax awarded the contract to one of the contractors without soliciting bids from others. Truax also falsified applications for grants, approved those applications and then gave the grant money to contractors when no work was performed.

     Truax mismanaged the program and misappropriated funds in exchange for money given back to him by the contractors. Count I of the Indictment charged Truax with theft of government funds and in Count II with solicitation of money in connection with the administration of the federally funded program.

    All four pleaded guilty.

     According to U.S. Attorney Smith the investigation began as the result of information provided by the Dauphin County OCED. Truax was suspended and later resigned from his position with the agency. OCED cooperated fully with the investigation.

     Anyone with information concerning public corruption or fraud against the Government should call the FBI at 717-232-8686 or HUD Office of Inspector General at 215-430-6756 or the U.S. Attorney's Office via email at usapam.contact@usdoj.gov.

     The case was investigated by HUD's Office of Inspector General, the Dauphin County District Attorney's Office and the Dauphin County Criminal Investigation Division.

     The prosecution of the case was handled by Assistant United States Attorney William A. Behe.

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