Both defendants were indicted for two counts of mail fraud in violation of Title 18, United States Code, Section 1341 in connection with a fraudulent scheme to bilk the City of Hercules out of $390,494.  The Indictment alleges that the scheme involved Mr. Chavis's misuse of his position as a city employee of Hercules and manager of its Redevelopment/Affordable Housing Program.  The Affordable Housing Program provided grants of up to $15,000 to persons of low and moderate incomes in order to make certain repairs on their residences. Mr. Chavis is alleged to have generated and then approved false applications for grants in the names of Hercules residents who, in fact, were unaware that their names were being used. 

Mr. Chavis is also alleged to have caused City of Hercules financial staff to issue checks to Lamark Lassiter ostensibly to pay Mr. Lassiter for construction/contracting work that he had performed on residences pursuant to the grants even though the work paid for was never performed.  Mr. Lassiter is alleged to have received  checks totaling $390,494, to have converted most of it to cash, and to have kicked back large amounts of the cash to Mr. Chavis. 

In the Indictment, Mr. Chavis is also charged with money laundering in violation of 18 U.S.C. § 1957 in that he allegedly used the cash kicked back to him by Mr. Lassiter to purchase a Toyota Sequoia automobile for about $42,000 in cash, to invest in two pieces of real estate, and to establish two stock brokerage accounts with deposits totaling $30,000.  The indictment seeks forfeiture of these items.

Mr. Lassiter is also alleged to have violated 31 U.S.C. § 5324 by repeatedly structuring his cash withdrawals from his account at the Bank of the West so as to avoid having the bank fill out Cash Transaction Reports that are required for all cash transactions over $10,000.

In addition, both men face tax counts. Mr. Chavis is charged with filing false tax returns for the years 2001 and 2002 when he obtained the fraudulent income from his scheme with Mr. Lassiter.  The Indictment alleges that Mr. Chavis failed to declare on his returns over $200,000 in income received from his scheme to defraud during those two years.

Mr. Lassiter is also charged with failing to file tax returns for the years 2001 and 2002 despite the fact that he had gross income of $175,942 during those two years.

The maximum statutory penalty for each count of the indictment is as follows:

a.  Mail Fraud (18 U.S.C. § 1341) - Counts One and Two
            - 5 years in prison and a $250,000 fine;

b.  Money Laundering (18 U.S.C. § 1957) - Counts Three through Seven
            - 10 years in prison and a $250,000 fine;

c.  Money Structuring (31 U.S.C. § 5324) - Counts Eight through Sixteen
            - 10 years and a $500,000 fine;

d.  False Tax Returns (26 U.S.C. § 7206) - Counts Seventeen and Eighteen
            -3 years in prison and a $100,000 fine; and

e.  Failure to File Tax Returns (26 U.S.C. § 7203) - Counts Nineteen and
     Twenty
            - 1 year in prison and a $100,000 fine.

However, any sentence following conviction would be dictated by the Federal Sentencing Guidelines, which take into account a number of factors, and would be imposed in the discretion of the Court.  An indictment simply contains allegations against an individual and, as with all defendants, these defendants must be presumed innocent unless and until convicted.

The prosecution is the result of a lengthy investigation by Agents of the Federal Bureau of Investigation and Internal Revenue Service with the assistance of the City of Hercules Police Department and officials of the city government of Hercules.  Ben Burch is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Legal Assistant Noble Hughes.

Both defendants made their initial appearances in federal court on Friday afternoon and were released on bond.  Their next appearances are on Tuesday, November 4, 2003 at 10 a.m. before Magistrate Judge Wayne D. Brazil in Oakland federal court for identification of counsel. 

FBI Special Agent in Charge Mark Mershon said, "Through continued cooperative efforts, the FBI will actively pursue individuals who violate the public's trust.  Local citizens must help law enforcement identify areas where corruption exists.  Call the FBI at (415) 553-7400, and ask to speak directly with an agent who is assigned to investigate allegations of corruption."

According to IRS-CI Special Agent in Charge Victor S. O. Song, "CI's mission in public corruption cases is to identify and seek prosecution of public officials and others who engage in illegal activities that lead to violations of tax law or money laundering statutes."

All press inquiries to the U.S. Attorney's Office should be directed to Assistant U.S. Attorney Matthew J. Jacobs at (415) 436-7181.