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Ex-councilor Bateman sentenced to 27 months in prison

May 20, 2013

Paul C. Bateman Jr., a former Democratic city-county councilor, was sentenced on Monday to 27 months in prison for his part in defrauding an Indianapolis physician of $1.7 million.

Bateman, 58, pleaded guilty in Jan. to 13 counts of money laundering and fraud related to the scheme. On Monday, U.S. District Judge Tanya Walton Pratt also ordered Bateman to serve supervised release when he leaves prison.

Partner Michael Russell pleaded guilty to fraud charges and was sentenced on May 14 to more than four years in prison. Manuel Gonzales, a third man indicted in the fraud scheme, was acquitted by a federal jury in February of three counts of wire fraud and three counts of money laundering.

Bateman, along with Russell, has also agreed to pay back the $1.7 million they obtained from Dr. Arthur Summral.

According to the federal indictment, Russell—also known as Rev. Michael L. Russell—co-founded The Russell Foundation in 2003 and proposed that the foundation fund itself through the production and distribution of ethanol. Bateman served as chief administrative officer and chief corporate officer of the foundation.

According to prosecutors, Russell approached the physician in January 2007 during a medical appointment about making an investment in an entity later established as Indiana Ethanol Capital Investments LLC. Russell and Bateman attended several meetings with the doctor at a Denny's restaurant to further sell him on the investment.

Russell told the physician that the ethanol operation could reap an $18.5 million return on a $600,000 investment, and that he would be the last of 12 people to invest in it. In fact, the doctor was the only investor.

From February to April 2007, according to court documents, Bateman picked up five checks from the victim for the ethanol investment totaling $702,000, most of which was deposited into Bateman’s personal account.

Later in 2007, Russell and Bateman again solicited money from the victim, successfully urging him to invest $1 million in a corporate bond for the Russell Foundation, according to U.S. attorneys.

A large portion of the investor's money was spent on cars, custom clothing, home furnishings, entertainment and “elaborate security details” that included members of the Indianapolis Metropolitan Police Department, the indictment said.

Bateman also used $22,187.60 to pay his income taxes, according to the indictment.

Prosecutors said Bateman used his public position to lend credibility to the foundation. Bateman was a city-county councilor for six years, leaving office when his term ended in 2011.

“The U.S. Attorney’s Office cares about one thing, and one thing only: the truth,” U.S. Attorney Joe Hogsett said Monday in announcing the sentence. “That is what the citizens expect and deserve from their public servants, and together with our law enforcement partners, we’re working to bring this culture of corruption to
an end in Indianapolis and across the state.”

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