Defendant Pleads Guilty to Submitting False Claims to the Federal Government
Maple Rapids Resident James Ortman Admits to Fraud in Conjunction with Federal Grants for Buildings He Formerly Owned in St. Johns, Michigan

GRAND RAPIDS, MI—U.S. Attorney Patrick A. Miles, Jr. announced today that James Francis Ortman, 58, of Maple Rapids, Michigan, pled guilty to a felony information filed on January 8, 2014, that charged him with submitting false claims to the U.S. Department of Housing and Urban Development (HUD) in conjunction with grants awarded to him in 2008 and 2009. The grants were administered by the city of St. Johns and the Michigan State Housing Development Authority (MSHDA).

“When used appropriately, HUD grants encourage development and new job opportunities in our local communities,” said U.S. Attorney Miles. “This office will vigorously pursue those who seek to line their own pockets by diverting from their intended purpose scarce grant monies that are funded by the hard-working taxpayers of this district.”

Ortman admitted at his change of plea hearing before United States Magistrate Judge Ellen S. Carmody that in 2008, the cty of St. Johns awarded him a federal grant as part of a Downtown Façade Project for his building located at the corner of North Clinton and East Walker streets. In order to receive the grant, Ortman represented to the city that the façade improvements would cost $416,999 and that the project would ultimately create four permanent jobs for low and moderate-income persons. The grant provided that if the project truly cost that amount, and if Ortman invested $216,999 of his own funds into the project, HUD would fund the remaining cost of $200,000. Ortman admitted at the hearing that he did not invest his own funds as represented and that he submitted false documents to the federal government to make it appear as if his actual costs equaled the projected amount. As a result, he received the full amount of the grant ($200,000), when he should have received less than half of this amount.

Ortman further admitted that he committed fraud in conjunction with a Rental Rehabilitation Grant that the city awarded to him in 2009. The terms of that grant required Ortman to construct apartments for income-qualified individuals in various buildings that he owned in St. Johns. Ortman admitted that he submitted claims for grant payments to the federal government for work that he did not actually complete and that he diverted those grant payments to other business ventures that were in financial trouble. As a result, many of the income-based apartments were never completed. Ortman caused a combined loss of over $200,000 to the federal government in conjunction with the façade and rental rehabilitation grants.

“HUD’s Office of Inspector General, working with the U.S. Attorney’s Office, will relentlessly hunt for predators who, despite their best efforts to conceal their theft, have swindled the taxpayer and hurt Michigan’s neediest families,” said Barry McLaughlin, Special Agent in Charge, HUD-OIG Region V. “Theft of HUD grant funding amounts to stealing from hard-working taxpayers,” added Paul M. Abbate, Special Agent in Charge of the FBI Detroit Field Office. “The FBI, in concert with our law enforcement partners, remains dedicated to pursuing those who selfishly misappropriate public funds intended for the public good.”

Ortman is awaiting his sentencing hearing, at which time Ortman will face a maximum term of imprisonment of five years, a fine of up to $250,000, and will be ordered to pay restitution to HUD. The Detroit Office of the U.S. Department of Housing and Urban Development-Office of Inspector General, along with the Lansing Resident Agency of the FBI, investigated the case. The prosecution of the case is being handled by Assistant U.S. Attorney Ronald M. Stella.