Ex-Fairbanks mayor, wife indicted for embezzlement

Posted: Thursday, January 18, 2007

ANCHORAGE - Former Fairbanks Mayor Jim Hayes and his wife, Chris, were indicted by a federal grand jury Wednesday for allegedly funneling more than $450,000 in government grants to fund construction of a church where he is the pastor.

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The government funds meant for low-income youth also was used to buy a plasma TV for the couple's home, pay for a family wedding reception and cover personal bills, the indictment says.

The couple face multiple charges, including money laundering and illegal application of government grants.

The 92-count indictment alleges the couple diverted government funds awarded to a Fairbanks charitable organization run by Chris Hayes to pay for construction and furnishings for the church. The charges come a year after federal agents searched the Hayes' home, the Lily of the Valley Church of God in Christ and the LOVE Social Services Center. The church was founded by Chris Hayes' parents.

Calls to the couple Wednesday evening were not immediately returned.

Assistant U.S. Attorney Karen Loeffler said the Hayes' had not been arrested. Loeffler is seeking a court summons for the couple, saying they are not considered a flight risk.

"They're longtime residents of Fairbanks," she said. "They've known about the investigation."

Jim Hayes, 61, is a member of the University of Alaska Board of Regents and was city mayor from 1992 to 2001. He also has served on the Fairbanks City Council and the Fairbanks North Star Borough Board of Education.

LOVE Social Services Center received more than $2.7 million in federal grants between 2001 and 2005, according to the indictment. The tax-exempt organization was set up in 2000 to provide social and educational services to low income youth in the Fairbanks area. The grants came at the direction of U.S. Sen. Ted Stevens, R-Alaska, the Fairbanks Daily News-Miner reported last year.

Aaron Saunders, a spokes-man for Stevens, said the senator has known the Hayes family for a long time and "was saddened to hear the news of the indictments."

The indictment says the organization used the original grant money to buy the old Lily of the Valley Church building. A larger church was built across the street.

According to the indictment, when the construction cost for the new church exceeded its funding sources, the Hayes' diverted government grant funds. The indictment says the couple illegally used the funds to pay construction bills and provide furnishings as well as cover operating expenses for the new church.

According to the indictment, Chris Hayes, 56, had her organization write checks for cash that she then used to purchase money orders and cashier's checks.



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