Russell Foundation Scandal Turning Heads

The Russell Foundation describes itself as "a Christian faith-based organization that recognizes that all people are made of one blood, and therefore should co-exist as one body of people upon the earth, living in various nations, yet emanating from the same instance of human origin." People knowledgeable with the grand jury investigation of the nonprofit organization in the wake of its recent bankruptcy filing describe a small group of individuals squeezing every last ounce of blood out of the organization for their own personal benefit. There are tales of a California clothier being flown into town to fit the men in charge with the finest in tailored suits. The women had to settle for the best that Nordstroms had to offer. A northside jeweler crafted gold rings with "RF" initials to distinguish the illustrious crew doing God's work. Exotic rugs were purchased and then disappeared without the bill ever being paid. And a high-ranking Indianapolis police department official pulled double-duty as "chief of security" for the group. An IMPD police cruiser couldnt' cut it. He had a Cadillac Escalade to make his important rounds.

As the Star's Jon Murray notes in his story yesterday, it is estimated that at least $1 million was misappropriated by key officials within the organization. All totalled, the foundation's filing lists more than $2.5 million in debts and assets of just $235,000. A grand jury investigation is focusing on three individuals, Rev. Michael Russell, Indianapolis City County Councilor Paul Bateman and Manuel Gonzalez. While one of the investigated is protesting his innocence, a source close to the investigation says the individual cannot account for nearly $500,000 in foundation expenditures. The foundation accumulated at one point about 17 cars, most of which are identified in the bankruptcy filing. The source says forged signatures allowed one of the individuals to get hold of nearly $100,000 using a financing scheme through a Connersville car dealer for cars already purchased.

The source suspects the individuals in charge of the foundation went on the spending spree in anticipation of an $11 million investment from an outside investment firm. There were big plans. Talks with some of the country's wealthiest businessmen in America were supposedly underway--hence the need for a "chief of security". The focus was no longer on helping inner-city poor with housing and other needs. There was big talk of a high speed monorail from Indianapolis to Chicago, tapping a closed down steel mill in Northwest Indiana that would help put many unemployed in Da Region to work. Ethanol production was planned. It all required lots of walking around money we're told. Cash-filled wallets were needed to work the halls at the State House and our nation's capitol to win support for the foundation's projects according to one tale.

The matter is now in the hands of a Marion County grand jury. The Star's Jon Murray writes, "Earlier this month, investigators seized computers, files and financial documents from the foundation's headquarters on Indianapolis' Far Southside, according to court records." "Another search of Gonzalez's home resulted in the seizure of a computer and records." Murray's article notes that a grand jury investigated another nonprofit run by Russell's former wife in 2004. "The center's board accused Russell's then-wife, Executive Director Florence Alexander, of financial malfeasance, spurring a search of the Near-Northside community center by Brizzi's grand jury investigators," Murray writes. "No charges resulted, but the center later went into receivership." Will this investigation end the same way? Who knows. I would feel more confident if the feds stepped in and took over this investigation, particularly since the allegations involve a federal tax-exempt organization.

UPDATE: The Star's Jon Murray reports on the resignation of Councilor Paul Bateman as a member of the Council's Ethics Committee following news of the investigation of the Russell Foundation. Marion Co. GOP Chairman Tom John called for Bateman's resignation from the panel at a press conference outside the City-County Building earlier today.

UPDATE II: An observant AI reader brought to my attention this story from the July 5, 2008 Gary Post-Tribune discussing the death of the planned monorail by the Russell Foundation. John Byrne wrote:

This time last year, Northwest Indiana was abuzz with the possibilities of a space age public transit system and hundreds of local jobs to support it.

Remember the monorail from East Chicago to Indianapolis? Well, it apparently has become yet another of the region's transportation pipe dreams.

Much ink was spilled over the plan, which investors first unveiled to state legislators in spring 2007.

A silent, ecologically sound train could carry people and freight between East Chicago and Indianapolis, a model for the rest of the nation.

Best of all, it wouldn't cost the public a dime to build.

The Westminster International Corp., a Montana investment group, would front all the money to build the transporter on existing railroad right-of-way, company spokesman Richard Shafsky told a group of local officials in Merrillville last year.

And better yet, Shafsky said the company would reopen a local steel mill to construct monorail infrastructure and sell it around the country.

On Wednesday, a spokeswoman for Shafsky said a lack of political support locally killed the monorail plan.

"It never got past the initial discussions," said a representative for Shafsky who declined to give her full name.

Area political consultant Joe Gomeztagle worked on behalf of the monorail investment group -- which included the faith-based Indianapolis non-profit the Russell Foundation -- to coordinate discussions with decision makers along the proposed route between Lake Michigan and the state capital.

Gomeztagle said he recently received word from Russell Foundation lawyers that the group had declared bankruptcy.

"I was worried as this went along that they would give people around here hope for this monorail proposal and then it wouldn't work out," Gomeztagle said.

Russell Foundation attorneys were not available this week to discuss the agency.

A telephone number listed on the Russell Foundation Web page has been disconnected.