Former manager charged with fraud

A former city project manager and two co-conspirators allegedly embezzled more than $800,000 from the City of Bloomington since May 2011.

U.S. Attorney Joseph Hogsett announced the possible embezzlement Wednesday at a press conference with representatives from the Bloomington Police Department and the FBI.

Justin Wykoff, 51, former city of Bloomington senior project manager, faced felony charges in district court today in Indianapolis with 24 counts of embezzlement and one count of conspiracy.

“While we expect some level of misbehavior in a small criminal sector of society that has little respect for the law, we certainly don’t expect it from our officials and government executives in whom we’ve placed our trust to uphold those laws and who reinforce the rules,” FBI Special Agent in Charge Bob Jones said.

Wykoff, Roger Hardin, 51, and his son Zachary Hardin, 25, were arrested Wednesday morning by federal agents in Bedford, Ind. All three will face charges of conspiracy to commit a federal crime.

On Feb. 20, a city employee told police that Reliable Concrete Construction did not perform any work for a contracted job with Milestone, a construction company, according to court documents.

Milestone performed all the construction for the work listed on the invoices in question at the time.

The U.S. Attorney office alleges Wykoff created fraudulent invoices for city project works never performed or work performed by other subcontractors.

Bloomington Chief Mike Diekhoff said additional charges at the state level might be filed.

Steven DeBrota, senior litigation counsel for the U.S. Attorney’s Office in the southern Indiana district, said the Hardins would receive payment for the projects and give Wykoff a one third refund of the payment.

Upon further investigation Hogsett said he expects the amount of money stolen to “go north” of $800,000.

On Feb. 25, a Milestone employee confirmed at least 11 different invoices related to work on Rogers Street. Milestone did all the work, with no contribution from RCC, according to court documents.

The co-conspirators, owners of RCC, sent the false invoices to the City for payment to RCC for projects on Rogers Street and College Avenue, as well as several other sites where curbing, sidewalks and drainage work was supposed to be completed.

“Public corruption, wherever it occurs, in whatever community throughout the southern district of Indiana, degrades all of us,” Hogsett said. “That is why the United States Attorney’s office, along with our federal partners at the Federal Bureau of Investigation, have prioritized the investigation and prosecution of public corruption cases for the last two years.”

DeBrota called Wykoff and Hardins’ double billing of the city a “classic fraud scheme.”

Wykoff approved fraudulent invoices at least 24 times throughout a two and half year period, with the Hardins giving him 33 percent of each invoice as payment for his approval.

DeBrota said Wykoff’s position of trust is why he was able to get away with it for so long.

Roger said RCC was set up after he went to prison in 2011, according to court documents. Zachary said when Roger went to prison he was to contact Wykoff for work. He said Wykoff took care of all the invoices, proposals and estimates for the jobs.

Zachary deposited the checks into RCC’s bank account and made cash withdraws of less than $10,000 to not draw attention to himself, according to court documents.

The city hired Wykoff in 1991 as a project inspector. He maintained this position until 1999 when he was promoted to deputy assistant city engineer.

In 2012 he was demoted to senior project manager with February 2014 marking the end of his employment.

Wykoff faces 10 years imprisonment for each count of embezzlement and the Hardins face five, DeBrota said.

“There is no acceptable level of corruption or the abuse of power here in Bloomington or anywhere else in the state,” Jones said. “This year the FBI created a new public corruption unit that will conduct more focused efforts on these violations, and today’s arrest is a product of this endeavor.”