Local Developer, Contractor Charged in Federal Wire Fraud Case

DES MOINES, Iowa --  According to the Department of Justice, a local developer and a contractor he worked with are facing federal fraud charges.

U.S. Attorney Marc Krickbaum announced the charges against the developer Jeffrey Voorhees and Brian Pittman, a contractor. Krickbaum says the two worked together to defraud lenders and the USDA.

The two men are each charged with five counts of wire fraud, each punishable by up to 30 years in prison with Voorhees facing three other felony charges. The charges stem from several low-income housing projects across central Iowa, and prosecutors say the alleged fraud left tenants paying a higher rent than they should have.

Both Voorhees and Pittman have pleaded innocent to all charges.

According to court documents, Voorhees created Candleridge LLC. to purchase several low-income housing projects with locations in Waukee, Perry, Bondurant, and other communities collectively known as Candleridge VII. Documents allege that Voorhees applied for a USDA loan for just over $5.2 million to rehabilitate the buildings, however the prosecution says both Voorhees and Pittman knew that was more money than they needed.

The documents go on to allege that Voorhees started a “pass-through” company called Rural Construction Services, and, with Pittman, billed the general contractor at a markup of as much as 100% of the actual costs of the building materials, which in turn allowed them to ask for a larger loan.

According to the Department of Justice, together through Rural Construction Services, Pittman and Voorhees allegedly obtained about $359,000 in artificially inflated loan costs. They go on to say Voorhees inflated other costs in the loan to obtain an additional $318,000.

With the loan proceeds to be repaid by USDA subsidized tenant rents, prosecutors claim that by artificially inflating construction costs and having a bigger loan to repay, tenant rents were higher than they otherwise would have been. One resident who lives at the Candleridge complex in Perry says she's not taken aback with the charges.

“It doesn't surprise me because they're just out there for the money, they're not out to help the senior citizens, she runs out of hot water, it's been a month, and they just raised her rent $40,” said Judy Nelson.

Attempts to reach Voorhees and his lawyer went unanswered, and Pittman declined comment.