Lake Station mayor, wife charged with stealing from city - MyFoxAustin.com | KTBC Fox 7 | News, Weather, Sports

Lake Station mayor, wife charged with stealing from city

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CHICAGO (FOX 32 News) -

Lake Station Mayor Keith Soderquist and his wife proclaimed their innocence in federal court Thursday morning, pleading not guilty in two separate criminal cases, including one claiming they illegally used money from the Lake Station Food Pantry and the mayor's campaign fund to pay for numerous gambling trips.

The mayor's stepdaughter, Miranda Brakley, 33, also pleaded not guilty to stealing money from the city and then not reporting it as income when she filed for bankruptcy in August 2012, the Post-Tribune is reporting.

All three were released on a $20,000 bond.

All three also surrendered to law enforcement Thursday morning at the U.S. District Court in Hammond and then entered Magistrate John Martin's courtroom in handcuffs.

Soderquist, wearing a suit and tie, spoke little during the hearing other than to answer yes and no questions from Martin about his understanding of the case and his rights.

"Not guilty," he answered when asked by Martin how he plead to all 13 counts.

Soderquist did not comment on the case after the hearing. Scott King, the Soderquists' attorney, said his clients are innocent in both cases.

"Our analysis of what they're basing this on is they're wrong," he said.

The mayor and his wife, Deborah, 55, who works for the city as the mayor's assistant, were charged in two federal indictments Wednesday evening.

The first one claimed that from 2010 to 2012, the couple improperly took money that had either been donated to the mayor's campaign fund or given to the food pantry—which Deborah Soderquist oversees­—on gambling trips to the Four Winds Casino in New Buffalo, Mich.

That case charges them with one count of conspiracy to commit wire fraud, seven counts of wire fraud and three counts of filing false on tax returns, in connection with not reporting the money on their federal income tax returns.

He said that money paid to the couple from the campaign fund was reimbursement for money they had spent on behalf of the campaign and because the money was a reimbursement, it is not considered new income that has to be reported on tax returns.

The indictment claimed that the Soderquists failed to report the money paid from their campaign to them. King said that campaign finance reports might have been improperly filled out but that it was not illegal.

He denied that the couple took money from the food pantry for their own use, saying that all money can be accounted for.

"Categorically, we are denying any impropriety," King said.

He added that numbers cited in the indictment for the Soderquists' gambling losses - a total of $104,000 over the three-year period - are deceiving because it factors in all the losses incurred, even if those losses came after winning money. He argued the actual loss was much less.

He also dismissed the statement in the indictment that said the couple traveled to the Four Winds Casino within three hours of taking $300 from the food pantry's account.

"Quite candidly, so what?" King said. "What does that prove?"

The second indictment charges Brakley, who worked as a court clerk for the city until Judge Chris Anderson fired her in June 2012, with stealing at least $5,000 from the city from 2011 to June 2012. The Soderquists are charged with helping her avoid prosecution in December 2012 and with wire fraud that same month. The indictment says someone in Kentucky gave them $15,000, which the couple instructed should be written in three separate checks. It says they then deposited the checks at Chase Banks in Kentucky, Munster and Merrillville.

An Indiana State Board of Accounts audit found that more than $16,000 in bond money was missing from the city court's account and noted that Brakley was the main employee who oversaw the money. She returned almost all of the money in December 2012, saying she had accidentally taken it when she was clearing out her office and that the money had sat untouched with the rest of her belongings in her vehicle until she discovered it that month.

King said the Soderquists were just trying to help their daughter and that the money came as a loan from Deborah Soderquist's uncle.

If convicted, the Soderquists face a maximum of 20 years in prison on the wire fraud counts, five years on both the abetting and money structuring counts and three years on the false tax returns counts. Brakley would face a maximum of 10 years on the theft count and five years on the bankruptcy count.

Assistant U.S. Attorney Joshua Kolar said that the government expects the case dealing with campaign and food pantry money to take about two and a half to three weeks if it goes to trial. The case involving Brakley is expected to last about a week and a half.

A date for the trials was not set at the arraignment hearing.

King said that Keith Soderquist plans to continue serving the city as mayor and said Soderquist had actually improved the food pantry to better serve the city.

"He's been a very effective mayor," King said.

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