Local Developer Sentenced on Fraud Charges

ST. LOUIS, MO—The United States Attorney's Office announced today that Clayton Hargrave was sentenced to eight months’ work release and ordered to pay restitution of $146,901 on fraud charges involving his Washington Avenue development.

According to court documents, Hargrave obtained financing from Great Southern Bank for this development, and agreed that disbursements to pay subcontractor invoices be paid through Commonwealth Land Title Insurance Company located in St. Louis. These disbursements were to be solely used for the renovation project.

One of the subcontractors for this project was K& B Galleries, Ltd. Chicago, Illinois,(KBG), which he contracted to provide kitchen and bath products for the residential condominiums. On September 8, 2006, Great Southern Bank paid $286,259 to KBG for plumbing fixtures. Hargrave then returned materials due to various problems with the project, and was owed a refund of $80,901. Without the knowledge of Great Southern Bank, Hargrave diverted this $80,901 into bank accounts that he controlled.

In December 2006, Hargrave submitted an invoice for $66,000 on behalf of SEJ Partnerships to Commonwealth to purchase and install flooring at 1511 Washington. The money was drawn from Great Southern Bank and sent to Commonwealth Title, who received it and sent it to SEJ in Milwauke, Wisconsin on December 27, 2006. The next day, at the direction of Hargrave, SEJ Partnership wired the $66,000 to his sister in Minnesota. The money was then used to pay other creditors and not for the purposes intended, which was the renovation of 1511 Washington.

Clayton Hargrave may not have started with the intention of committing fraud, but he crossed the line when the economy soured," said Maxwell D. Marker, Assistant Special Agent in Charge of the FBI St. Louis Division. "Tough times are no excuse to rob Peter to pay Paul because someone is always left holding the bag."

Hargrave, 53, Jacksonville, Florida, formerly of St. Louis, pleaded guilty in May to one felony count of wire fraud, and appeared today for sentencing before United States District Judge Charles A. Shaw.

This case was investigated by the Federal Bureau of Investigation. First Assistant United States Attorney Michael W. Reap and Assistant United States Attorney Rob Livergood handled the case for the U.S. Attorney's Office.