Houston Real Estate Developer Heads to Federal Prison for Disaster Fraud
|Jan. 18, 2013|
HOUSTON – Jon August Holverson, the owner of Bayou City Properties, will be spending nine years in federal prison for conspiring to obtain approximately $1 million in disaster relief funds by fraudulent means, United States Attorney Kenneth Magidson announced today. Holverson, 52, of Bellaire, pleaded guilty in December 2011 to conspiracy to commit fraud in connection with a benefit authorized pursuant to a presidentially declared disaster and a substantive count of fraud.
Holverson had his bond revoked by U.S. District Judge Melinda Harmon in May 2012 following a pre-sentencing hearing that determined he committed obstruction of justice involving a local appraiser and the value of his properties allegedly damaged by Hurricane Ike. Today, Judge Harmon sentenced Holverson to five years imprisonment for conspiracy and nine years imprisonment for the substantive FEMA fraud count, to be served concurrently. He was also fined $30,000. He was further ordered to serve a three-year-term of supervised release following completion of his prison term.
Holverson admitted he conspired with his brother, Jeffrey Holverson, 49, of Tomball, and Timothy Berges, 55, of Pasadena, to commit disaster fraud between Sept. 26, 2008, and Feb. 16, 2011. Jon Holverson filed an application for a Small Business Administration (SBA) commercial disaster loan in the aftermath of Hurricane Ike, requesting more than $1 million. In order to get the SBA to disburse the loan funds, he admitted he submitted more than $850,000 in false invoices and cancelled checks purporting to show payments to his brother’s company, Quality Construction. When he was contacted by representatives of the SBA, Jeffrey Holverson falsely affirmed he had performed the work and been paid the money.
At the hearing today, the court took note that Holverson’s fraud and manipulation continued throughout the pendency of his sentencing in voluminous filings containing receipts and invoices unrelated to the SBA loan in an attempt to artificially lower his sentence. During court proceedings and in filings, it was pointed out that U.S. District Judge Lynn Hughes made similar findings against Holverson. In May 2010, Judge Hughes found that Holverson’s claim against insurance company was brought in bad faith and in a naked grasp for someone else’s money relating to a property he claimed was damaged in Hurricane Ike.
Jeffrey Holverson and Timothy Burges also pleaded guilty to the conspiracy and both were sentenced to three years probation.
The investigation leading to the charges was conducted by special agents of the SBA – Office of Inspector General and Department of Homeland Security – Office of Inspector General. Assistant United States Attorney (AUSA) Ed Gallagher and Former AUSA Andino prosecuted the case.
The United States Attorney's Office for the Southern District of Texas is a member of the Department of Justice's Disaster Fraud Task Force, established to deter, detect and prosecute instances of fraud related to hurricanes and other types of disasters. Comprised of federal, state and local law enforcement investigating agencies, the Task Force combats all types of fraud relating to disasters and their aftermath, with an emphasis on charity fraud, emergency-benefit fraud, identity theft, insurance fraud, and procurement fraud.
Anyone suspecting criminal activity involving disaster assistance programs can make an anonymous report by calling the toll-free fraud hotline, 1-866-720-5721 or contacting the Disaster Fraud Fax at 1-225-334-4707 or the Disaster Fraud e-mail at email@example.com, 24 hours a day, seven days a week until further notice. Information can also be sent by surface mail, with as many details as possible, to:
National Center for Disaster Fraud
Baton Rouge, LA 70821-4909