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JEFF TESTERMAN, GRAHAM BRINK and DAVID KARPThe former Tampa housing official, his wife and three others are named in a federal indictment. They face bribery, fraud charges.
TAMPA - For Steve LaBrake and Lynne McCarter, the big brick house at 3608 W Corona St. in South Tampa was meant to be the start of a new life together.
He was the city's housing director, and getting divorced. She was his top assistant, his girlfriend, and pregnant. They built a house, moved in, and married.
But today, that dream home is officially a nightmare.
The 4,200-square-foot brick structure, built for the couple at a bargain price of $120,000, is at the center of a 60-count federal indictment issued Thursday.
LaBrake and his new wife are accused of taking a series of bribes and gratuities to get the two-story home built and, in turn, steering millions of dollars in U.S. Housing and Urban development contracts to the non-profit Tampa-Hillsborough Action Plan and Ryan Construction Co., which built the house.
LaBrake, the long-time Tampa housing boss, and Mrs. LaBrake, his fast-rising former assistant, face conspiracy, bribery and wire fraud charges. Three former business associates who helped make the dream home a reality face similar federal charges.
The LaBrakes were arrested Thursday morning at the rental house where they now live. Their infant was handed to a relative. The couple entered federal court in shackles and handcuffs, facing charges that could result in lengthy prison terms.
Their plans had been unraveling for some time.
In 2001, they were frequently caught by TV cameras trying to make a comfortable home out of the spacious house on Corona Street.
At the time, LaBrake was warding off conflict-of-interest charges in his $105,000-a-year city job.
The couple seemed determined to make a go of it in their dream home.
But LaBrake, 52, and Mrs. LaBrake, 33, were forced to sell the house after losing their city jobs amid an ethics investigation.
Now, as they face a federal corruption trial, they say they owe $125,000 on their credit cards, face a possible foreclosure on rental property in Riverview they own and can't afford to pay defense attorneys.
They finally posted unsecured bonds of $100,000 apiece Thursday and were allowed to go home.
LaBrake faced a throng of reporters and said, "We don't have any comment other than we welcome the opportunity to address the issues."
Said Mrs. LaBrake: "We will prove our case in court, not in the media,"
Frank Louderback, a Pinellas County lawyer appointed to represent Mrs. LaBrake, said outside the courthouse that the LaBrakes would plead not guilty.
"I think they have seen this coming for a long time," Louderback said.
Also indicted Thursday:
- Chester M. Luney, 59, former executive director of THAP. Luney provided a number of favors for the LaBrakes, including authorizing a lucrative gift-basket contract and a $1,400-a-month lease. Luney is charged with conspiracy, bribery, wire fraud and theft of public money.
- Dean R. Ryan, 65, president of Ryan Construction, a Seffner firm that won millions in housing contracts from the city and built the dream home at West Corona for a bargain basement price. Ryan is charged with conspiracy, bribery and wire fraud.
- Lori A. Horne, 40, (formerly Lori Roberts) a loan officer at the University of South Florida Federal Credit Union who handled the $230,000 mortgage McCarter obtained to build the dream home. Horne previously had received favorable treatment from both the LaBrakes on city-backed loans she used to buy her Floriland home at 215 W Marham Ave. Horne is charged with conspiracy and wire fraud.
The three were released after posting bail ranging from $25,000 to $50,000.
Ryan's attorney, Ron Hanes, argued that Ryan had strong ties to the community and had showed up for every meeting with federal agents to discuss the case. "He probably knows the government (agents) better than he knows me at this point," Hanes said.
Mayor Pam Iorio said Thursday the indictments "close an unfortunate chapter for the City of Tampa." She promised to set new ethical standards with her administration.
Iorio said city officials are still working to repay the U.S. Department of Housing and Urban Development money misappropriated by the former administration. How high might the cost go? Iorio guessed it might be in the millions.
"I just know the actions were costly to the taxpayers," she said said.
The dream home began going up in early 2001, but Thursday's indictments say the criminal conspiracy began in February 1996.
That's when the LaBrakes and Horne met to discuss contract changes on a home Horne was buying at 215 W Marham Ave. Horne then was was a $21,000-a-year loan officer who had filed bankruptcy three years earlier.
After that meeting, LaBrake interceded in a dispute to replace one contractor doing renovations on the home with Ryan Construction. Horne was buying the Floriland home with the help of a city-backed Challenge Fund loan.
The city staffer who processed the loan was Lynne McCarter. With the new contractor, Horne ended up with a bargain, paying $70,000, even though more than $90,000 of work had been done on the property.
Two years later, LaBrake interceded again for Horne, violating city guidelines to have the city loan subordinated so Horne could get a new loan to build a pool and concrete deck. Then, in 2001, McCarter went to Horne for help.
She visited the loan officer at the USF Credit union to see about getting a $230,000 loan to build the dream home. McCarter, a $55,723-a-year city employee, had a financial statement that was marginal at best. A divorced mother of one, she was already legally responsible for mortgages totaling $275,000.
But McCarter got the new loan.
To do so, she needed to boost her income. That's where THAP's Chester Luney came in.
The boss of a non-profit that provides medical and housing services to the poor, Luney depended on big contracts from the city, many of them controlled by LaBrake. So, when McCarter sought some favors, he said he was obliged to help.
Luney agreed to pay McCarter's company, So, What's the Occasion?, $34,000 to provide gift baskets for new homeowners.
THAP then agreed to buy out McCarter's lease on a Toyota 4Runner for $24,969. Luney agreed to pay her $576 more for new tires McCarter had just put on the car, in effect paying for the tires twice.
Luney also signed a $1,400-a-month lease for McCarter's home at 10834 Peppersong Drive in Riverview without looking at the document. There is no evidence that he ever paid rent, and the indictment refers to it as a "sham lease."
McCarter and Steve LaBrake had to show "potential income" on her mortgage loan application, Luney told the St. Petersburg Times in September 2001.
"I never looked at it," Luney said. "They just said, "Sign it.' And I signed it."
Luney also admitted using THAP money to pay $22,000 to Atlas Structural Movers to relocate an old, concrete block home from the property at 3608 W Corona to make room for the dream home. Luney said he instructed workers to dig a hole for a pool and clean up debris on the lot.
All of the favors, Luney said, were not typical business transactions. It was all for "somebody we wanted to help out."
A federal grand jury decided the favors amounted to bribery. Each of Luney's favors is listed as a bribery count against him, LaBrake and McCarter.
With the lot prepped at 3608 W Corona and the USF mortgage in hand, Ryan Construction began building the dream home.
As Ryan was pouring the foundation, federally backed contracts were pouring into the company.
Thursday's indictments say LaBrake caused THAP Homes to award two city-backed housing contracts to Ryan on Feb. 21, 2001. On Feb. 22, LaBrake had THAP award eight more.
A month later, according to the indictments, Ryan wrote a check for $13,379.43 to pay off McCarter's Visa credit card. Ryan is also charged with bribery for building a pool at the Corona home.
Federal documents show LaBrake and Mrs. LaBrake signed a contract to sell the dream home for $480,000. After various costs, including construction items placed on their credit cards, their proceeds from the sale came to $54,358.
Luney was indicted on 24 charges Thursday despite previously cooperating with the grand jury. But Luney's problems don't end with the dream home indictments.
The FBI said Thursday that Luney's connection to a Department of Veterans Affairs scandal is the subject of an "ongoing investigation."
While working as a $80,279-a-year psychologist for the VA, Luney moonlighted as the part-time, $78,000 boss of THAP. Without the knowledge of the VA, Luney steered VA homeless shelter contracts to THAP and, according to homeless veterans interviewed by the Times, falsified VA paperwork to keep the VA money coming to the non-profit.
The VA pulled funding from THAP's Veterans Village last year. Luney resigned from THAP and from his VA job. THAP later kicked the veterans out of THAP's Veterans Village shelter. The VA's office of Inspector General is investigating.
Last year, the city severed its ties with THAP, paying nearly $1-million to buy back THAP-owned property for low-income housing.
The city now intends to cut all ties with Ryan Construction, Iorio said Thursday.
In June, she suspended the company from doing business, but Ryan appealed, and the city attorney's office said Iorio had to reinstate him. With the indictment, the city has legal grounds to bar Ryan Construction, City Attorney Fred Karl said Thursday.
"I had said early on that I did not want the city to do business with Ryan Construction," Iorio said Thursday.
Iorio said she also plans to restructure the city's housing department and end the practice of using non-profits to administer low-income housing programs.
"I have to believe there is a more straightforward way to do business," Iorio said.
- Staff writer Jay Cridlin and researcher Cathy Wos contributed to this story. Jeff Testerman can be reached at 813 226-3422 or by e-mail at testerman@sptimes.com