United States Attorney
Northern District of Texas

1100 Commerce St., 3rd Fl.
Dallas, Texas 75242-1699

Telephone (214) 659-8600
Fax (214) 767-0978

PRESIDENT OF PURPORTED NON-PROFIT ORGANIZATION
IN IRVING, TEXAS SENTENCED TO FEDERAL PRISON
AND ORDERED TO PAY MILLIONS IN RESTITUTION

DALLAS - Barbara Hildenbrand, the President of Community Housing Fund (CHF) and co-defendant Gerald Stone, owner of Ranscott Construction in Irving, Texas, were sentenced today in federal court in Dallas, announced U.S. Attorney Richard B. Roper of the Northern District of Texas. U.S. District Senior Judge Barefoot Sanders sentenced each defendant to 24 months in prison and ordered both to surrender to the Bureau of Prisons on March 8, 2007.

In June 2005, Hildenbrand pled guilty to two counts of defrauding the Department of Housing and Urban Development (HUD) and Stone pled guilty to one count of conspiracy to commit theft from an organization and one count of attempting to evade or defeat tax.

At today’s sentencing hearing, Judge Sanders also ordered that Hildenbrand and Stone pay $672,221 in restitution, jointly and severally, to HUD. In addition, Stone was ordered to pay $263,516 in restitution to the Internal Revenue Service for the tax evasion conviction.

Hildenbrand and Stone both agreed that their criminal conduct in the scheme represented a total loss of $228,400. Using proceeds he derived from the conspiracy, Stone purchased the 1964 Rybovich yacht named “Shelby Jean,” and a condominium located in North Palm Beach, Florida. Specifically in January 2000, Stone used $246,927.73 in CHF funds to purchase two cashier’s checks to purchase the North Palm Beach condominium. Hildenbrand and Stone used CHF funds to purchase a cashier’s check in the amount of $212,500 to purchase the Rybovich yacht. As part of his plea agreement, Stone agreed to forfeit to the United States his interests in the yacht and the condominium.

Hildenbrand and Stone had been charged in a 36-count indictment charging them defrauding HUD and other related charges. Hildenbrand was the president of Community Housing Fund (CHF), a non-profit organization located at 800 West Airport Freeway, Suite 925, in Irving, Texas. Stone operated Ranscott Construction, Inc. (RCI), from the same address.

Stone admitted that he and Hildenbrand conspired with each other to embezzle funds from the CHF and defraud HUD. The fraud occurred in relation to the HUD’s Single Family Affordable Housing Program, which was designed to help people who qualify as “low to moderate income borrowers” become home owners. Under this program HUD offers certain HUD-owned properties to non-profit companies at a discounted price, usually either 10% or 30% off the price, depending on the location of the property. In order to participate in the program, Hildenbrand certified that CHF was organized as a nonprofit, and that the company was acting on its own behalf and is not under the influence, control, or direction of any outside party seeking to derive a profit or gain from the proposed project, including a contractor or builder.

Through the Single Family Affordable Housing Program, Hildenbrand, operating through CHF, purchased a number of homes in Texas and Florida at a discount and used Stone’s company, RCI, to ostensibly coordinate the repair work to the homes. On some of the homes purchased by CHF under the HUD program, the defendants embezzled and stole money from CHF by withdrawing non-profit money for non-business related purchases and later falsely claiming that portions of the payments were made for legitimate work performed and expenses incurred by Stone operating through the business RCI. Hildenbrand admitted that she and Stone were defrauding HUD by driving up the costs associated with two specific houses through improper payments to RCI, and thereby increasing the ultimate price of th residence making it less affordable for the ultimate low income purchaser of the residence.

Stone admitted that the more than $450,000 he received to purchase the yacht and the condominium qualified as taxable income and that he failed to report that income, resulting in failure to pay an additional tax due of approximately $179,479 for the 2000 tax year.

U.S. Attorney Roper praised the investigative efforts of the U.S. Department of Housing and Urban Development - Office of Inspector General and the Internal Revenue Service, Criminal Investigation. The case was prosecuted by Assistant U.S. Attorneys Tammy Reno and Michael R Gill.

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