Hogsett Announces Admission of Guilt by Former Indianapolis City-County Councilman
Defendant Admits He Used Elected Position to Help Defraud Investor of $1.7 Million

INDIANAPOLIS—Joseph H. Hogsett, the United States Attorney, announced this afternoon that Paul Bateman, age 58, has pleaded guilty to charges of wire fraud and money laundering, admitting that he defrauded an Indianapolis investor out of $1.7 million over the course of six months in 2007. Bateman had been charged in late 2011 with his role in the operation of The Russell Foundation, along with Michael Russell and alleged co-conspirator Manuel Gonzalez, age 53. Russell entered a plea of guilty late last week.

“It is easy in today’s fractured public discourse to lose sight of those important things which bind those in public service together,” Hogsett said. “Chief among those is trust, both between the community and its government, and between public servants and those they serve.”

“These are not partisan principles, and they are not values that belong to one political party or another. They are American values. They are Hoosier values,” Hogsett added. “In a courtroom just an hour ago, Mr. Bateman admitted to violating that trust.”

The Russell Foundation, an Indianapolis-based organization founded in 2003 by Michael Russell, was ostensibly a religiously-affiliated nonprofit intended to provide community leadership and poverty relief. Both Bateman and Russell have now admitted that it instead served as the vehicle for roughly $1.7 million in fraudulent activity.

In admitting his guilt, the Bateman acknowledged that in early 2007, he assisted in the solicitation of $702,000 in investment money from an Indianapolis victim. The victim was told by Russell that he planned to fund the foundation by investing in ethanol production through a company called Indiana Ethanol Capital Investments. Paul Bateman was listed as president of this company, held a number of other titles related to its operation, and attended “pitch” meetings with Russell in which he urged the victim to support the ethanol investment.

Bateman allegedly accepted five checks from the victim totaling $702,000 between February and April 2007, almost all of which was deposited in Bateman’s personal bank account and spent on expenses other than the production and distribution of ethanol over the next 45 days. During this period of time, Bateman has admitted that he became aware that almost no ethanol-related activities were being undertaken by The Russell Foundation.

Bateman has also admitted that in 2007, he and his alleged co-conspirators again solicited money from the victim, successfully urging him to invest $1 million in a corporate bond for the Russell Foundation. Bateman acknowledged in court this morning that this money was spent over the course of 33 days after it was received by he and his co-defendants.

The indictment filed in December 2011 lists a number of purchases made using the investor’s money. Bateman today admitted to a number of these purchases, including: entertainment; more than $25,000 in clothing; jewelry; travel; six vehicles with a combined purchase price of $138,000 that included a Jeep Liberty for Bateman; the payment of Bateman’s personal income tax liability; and various personal checks.

The third defendant, Gonzalez, held a number of titles for the foundation, including “chief financial advisor” and “chief of Latino affairs,” and was charged with three counts of wire fraud and three counts of money laundering. Gonzalez is currently scheduled to go to trial on these charges in early February.

This prosecution was the result of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation Division, with significant assistance from the United States Trustee Office and the U.S. Bankruptcy Court. An indictment or charge is an allegation only, and the defendant is presumed innocent unless and until proven guilty at trial or by guilty plea.