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The mayor of the Utah County town of Cedar Hills was involved with various alleged schemes that bilked victims out of at least $500,000 and took a home from an immigrant family, testimony and court records showed Tuesday.
Mayor Eric Richardson was named in a motion by the government in the case of Christopher D. Hales, 29, of Midvale, who was indicted by a grand jury last week on 10 counts of fraud and money laundering. Richardson's house also was raided last week by federal agents who were seeking evidence.
Hales has been under investigation for fraud for at least a year, and has admitted his guilt to federal agents in two mortgage fraud cases listed in last week's indictment. In September 2009, Hales told investigators he was no longer involved in fraud.
But in a motion filed by a federal prosecutor to keep Hales in jail pending trial, he is named in five alleged fraudulent schemes that occurred since September 2009. Richardson is named as a participant in four of those alleged schemes.
Richardson did not return a phone call or an e-mail seeking comment. But Jim Perry, the senior member of the Cedar Hills City Council, said the council does not plan to take any action against the mayor. Perry said Richardson told the council about the search of his home and his involvement in the Hales case.
"He called us and said here's what's going on: 'There's this other guy and this other guy has done some illegal things and I had a couple of business deals earlier with the guy, but I was not involved with anything wrong,'" said Perry.
According to the government's motion:
• Richardson is a "cohort" of Hales who participated in a "securities fraud scheme" that bilked a man named George Hansen out of $300,000 involving a nonexistent $25 million certificate of deposit.
• Hales, Richardson and another man scammed victims Carol Bee and Brian Bagley out of $244,000 supposedly invested in computer servers with a company called PMI that could predict stock market fluctuations.
• Hales and Richardson were allegedly involved in a "car loan scheme" in which vehicle prices were inflated and excess money from loans skimmed off.
• Hales, Richardson and two others bilked a Bosnian immigrant family who spoke little English out of their home in a scheme in which the family was loaned money to meet family financial emergencies but then, despite assurances to the contrary, their house was sold out from under them.
Bee and Bagley also are suing Hales, Richardson and others in state court over the lost investment.
Kasema Fulan testified Tuesday that her immigrant family sought loans after illnesses left them strapped for cash but that their family home, which was free of debt, was not supposed to be put in danger. Instead, the home was sold and they were foreclosed on for not making payments.
Assistant U.S. Attorney Trey Mayfield told U.S. Magistrate Brooke Wells that Hales should be held in jail as a danger to the community because he had participated in the five other alleged frauds since claiming he was no longer involved in crime. Mayfield's motion also said Hales faces possible indictment for the new alleged cases of fraud.
"He lives off fraud. That's all he knows," said Mayfield.
A search warrant at Hales' residence last week found $28,000 in cash hidden in flower pots.
Defense attorney Michael Langford argued that Hales had a 4-year-old daughter to care for and strong ties to the community and was not a flight risk.
Wells denied the government motion to keep Hales in jail and ordered him released on $15,000 bail and under strict supervision. But Mayfield sought to reverse that decision by an immediate appeal to U.S. District Judge Ted Stewart.
Stewart set a hearing for Wednesday morning.