RELATED: Indictments prompt city of Dayton to strengthen anti-fraud efforts
Each is charged with one count of conspiracy to commit mail fraud and six counts of mail fraud, each count punishable by up to 20 years in prison. They were indicted by a grand jury on the charges, all related to fraudulently obtaining demolition contracts from governments, including the city of Dayton.
“These charges represent a second step in an FBI-led, long running investigation called ‘Operation Demolished Integrity,’” Glassman said at an afternoon news conference. “The point of this investigation is to identify, investigate and root out fraud and corruption in the greater Dayton area.”
RELATED: Corruption probe linked to demolition contracts
Dayton City Manager Shelley Dickstein said in a Tuesday news conference that she is disappointed that the three defendants allegedly purposefully and knowingly took advantage of the city for personal gain.
Credit: HANDOUT
Credit: HANDOUT
Dickstein said there are many victims when people fraudulently line their pockets with taxpayer dollars, including the disadvantaged businesses in the community that were rightfully entitled to benefit from these programs.
Rauch made an initial appearance in federal court Tuesday, entered not guilty pleas to all counts and was released on his own recognizance. His attorney, Ralph W. Kohnen, had no comment.
The Camerons did not appear in court Tuesday, and Glassman said the feds are in discussions with their attorney.
‘Warning sign of a larger problem’
The first four Dayton corruption indictments were announced in April, and Glassman said the “investigation remains open and ongoing.” He said the companies and individuals involved in the indictment announced Tuesday were not involved in the specific allegations made in the four earlier indictments. But, Glassman said they are connected because all are part of the long-running investigation into what the FBI’s Joe Deters in April called “a culture of corruption in Dayton area politics.”
“I stand by those comments,” said Deters, acting special agent in charge of the FBI’s Cincinnati division, on Tuesday. “Having a significant number of business people and government officials in one city alleged to be engaged in corruption criminally charged should serve as a warning sign of a larger problem. That problem should not be brushed aside or ignored.”
RELATED: Ex-Dayton commissioner, state lawmaker arrested; more arrests coming, feds say
Deters said the problem should be “addressed by the community, its leaders and, when necessary, law enforcement” and that the FBI and U.S. attorney’s office “will continue to work together to root out corruption in Dayton and beyond.”
The indictment alleges Rauch, along with the Camerons, fraudulently sought and obtained “hundreds of thousands of dollars in demolition contracts,” from government entities, including the city of Dayton between 2012 and 2014, a period during which Joyce Cameron was Trotwood mayor.
Green Star was certified under programs for disadvantaged and minority businesses, and Rauch claimed he subcontracted with them so he would win government contracts that required participation by those kinds of firms, according to Glassman.
But Rauch did the work himself, Glassman said, and used Joyce Cameron “as his straw or his front.”
“Together with her husband, James, Joyce and Green Star signed paperwork giving the appearance that a disadvantaged business was performing work for contracts,” Glassman said. “For this Rauch paid them a fee, which was either few thousand dollars or forgiving a debt that they owed him.”
Glassman would not specify how much total money allegedly was involved, nor would he say what other government entities may have awarded contracts to Rauch.
Dickstein said Tuesday’s indictment does not accuse the city of doing anything wrong in its contracting process.
“When bad individuals intend to break the law, no amount of checks and balances can be put in place to prevent the unethical behavior,” she said.
RELATED: City investigating after corruption charges allege contracting fraud in Dayton
The city is awaiting a final report from Green & Green, a local law firm hired to do an independent review the city’s contracting processes in the wake of the April indictments, and is in the midst of an internal procurement process review as well.
April indictments
The men whose indictments were unsealed in April are former Dayton City Commissioner Joey D. Williams, now-fired Dayton city employee RoShawn Winburn, former State Rep. Clayton Luckie and businessman Brian Higgins.
RELATED: Ex-Dayton commissioner, state lawmaker arrested; more arrests coming, feds say
Winburn, 45, pleaded not guilty to three counts of honest services wire fraud, two counts of corruptly soliciting a bribe and one count of making a false statement to the FBI. Winburn is a former Huber Heights council member and was business and technical assistance administrator for the city of Dayton's Human Relations Council until he was fired after the indictment was announced. Winburn's trial is scheduled for Feb. 24.
RELATED: Dayton explains why fired worker’s business was linked to city office
Higgins, 48, pleaded not guilty to three counts of mail fraud and one of wire fraud for allegedly defrauding an insurance company in 2014 and 2015 with a claim involving a leaking fish tank that damaged his home. His trial is scheduled for Feb. 18.
Higgins formerly owned the defunct Sidebar 410 in the Oregon District and a livery service that hauled bodies for the Montgomery County coroner.
On Sept. 27, Williams, a former local bank executive, pleaded guilty and was convicted of corruptly soliciting a bribe. He will be sentenced Jan. 29.
RELATED: Ex-city commissioner Joey Williams pleads guilty, apologizes to ‘citizens of Dayton’
In July, Luckie, 56, pleaded guilty to one count of mail fraud related to defrauding the city’s minority business set-aside program, and faces sentencing on Nov. 15.
RELATED: Feds get guilty plea from former State Rep. Clayton Luckie, D-Dayton, in corruption investigation
Who are Steve Rauch and the Camerons?
Steve Rauch owns demolition, trucking and landfill companies that have received millions of dollars in public contracts.
Rauch was in Montgomery County Common Pleas Court earlier this month on state charges accusing him of illegal dumping on several properties. Rauch and his trucking company were acquitted, but his company SRI Inc. was convicted of a felony and a misdemeanor. Sentencing is set for Nov. 18.
RELATED: Rauch firm faces fines while boss not guilty in EPA illegal dumping trial
In addition to his work for the city of Dayton, Rauch said he does work for cities such as Springfield and Middletown and has federal contracts, including with the Dayton Veteran Affairs Medical Center.
Rauch said in an exclusive interview with this news organization earlier this month that he still uses Green Star and was not aware of any misuse of the city’s minority set-aside program.
Asked how he picks minority sub-contractors, he said: “We get bids from a lot of different minorities — and it could be trucking, it could be materials, it could be a lot of differing things — and we look for the best company that can execute and do the job.”
Rauch said he had no idea what federal investigators were looking into when they were involved in a raid of his property in December 2016 and a November 2017 subpoena of city records pertaining to his work with Green Star.
RELATED: Prominent businessman Rauch denies wrongdoing in investigations
Joyce Cameron has owned Green Star Trucking since 1988, according to city documents. Secretary of State filings show she incorporated the business in 1992.
Green Star is a trucking company certified by the city of Dayton’s Human Relations Council as a Disadvantaged Business Enterprise, a Minority Business Enterprise, a Women Business Enterprise and a Disadvantaged Small Business Enterprise.
Green Star had $559,035 in annual sales in 2016 and $403,621 in 2015, according to records the company filed with the city in 2018. The filing said the company had seven employees, including the Camerons.
In April 2013, the city of Dayton awarded Steve R. Rauch Inc. a contract worth about $434,200 to demolish and remove about 75 residential buildings.
Rauch, the lowest bidder, was hired to handle demolition, excavation, backfill, site grading, landscaping and seeding. Half the funding came from the Moving Ohio Forward program, and the rest came from a city of Dayton general fund capital grant match, city documents show.
RELATED: Federal subpoenas show extensive reach of FBI case in Dayton
The diversity participation goals for the project were 15 percent for a minority-owned business and 5 percent for a woman business enterprise. Rauch indicated that Green Star Trucking would be used as a subcontractor to meet the 20 percent participation goal.
In September 2016, Joyce Cameron sent an email to a city of Dayton employee that said Green Star did work for local entities including Dayton, Montgomery County, the Dayton Airport, Miami University, the Greene County Airport, Fairborn and Middletown.
She wrote that the company had five trucks with plans to upgrade. She said some of the company’s customers included Steve Rauch Inc., Complete General, O’Rourke, Barrett Paving, B&B Wrecking, Performance Site Development, Double Jay Construction, Kokosing, Tall View Palladium, Kelchner, Charles F. Jergens Construction and many more.
Staff writer Laura A. Bischoff contributed to this report.
Critics say township should spend money on roads, not salaries
“Do something” demand after Dayton shooting fuels support for Ohio gun law change
Local cities are fighting blight, putting more homes on the market
MAP: What homes are selling for in your community
STAYING WITH THE STORY
The Dayton Daily News first broke the news about a federal investigation into corruption in Dayton. The newspaper will continue to dig into this important story to find out what’s really going on. If you have tips or any information on this investigation, please call or email Josh Sweigart at 937-328-0374 or josh.sweigart@coxinc.com.
