Public Safety

Marion man convicted in $120K embezzlement scheme

Scheme to defraud homeowners association lasted five years

(File photo) Department of Justice seal in the US Attorneys office at the federal courthouse in Cedar Rapids on Friday, Dec. 23, 2016. (Liz Martin/The Gazette)
(File photo) Department of Justice seal in the US Attorneys office at the federal courthouse in Cedar Rapids on Friday, Dec. 23, 2016. (Liz Martin/The Gazette)

CEDAR RAPIDS — A Marion man pleaded guilty Tuesday in a scheme to defraud a homeowners association out of more than $120,000, which he used to pay personal credit cards and his own mortgage on a condo that was part of the neighborhood association.

Wayne P. Jones Jr., 55, pleaded guilty to one count of wire fraud in U.S. District Court. During the hearing, Jones as treasurer of the Pheasant Ridge Homeowners Association in Marion, admitted to funneling about $124,525 from the association into another account, which he controlled and used for personal expenses, starting about November 2011 through August 2016, according to federal and Linn County District Court records.

Jones, who owned a garden and landscape business in Marion — Dream Designs of Iowa and DDI LLC — admitted to setting up fraudulent treasurer reports each year in an attempt to conceal the fraud from the association.

Jones, as part of the plea agreement, also admitted to one wire transfer of $200 to make a personal credit card payment, which was included in the charging information.

Federal plea agreements don’t always include every fraud transaction because prosecutors aren’t required to include them, but a lawsuit filed in 2016 against Jones included the other embezzled funds, which showed thousands went to pay his personal credit cards, mortgage, utilities, cable, retail, equipment and cash back from withdrawals and deposits.

Of the total embezzled funds, about $19,285 was paid against Jones’ mortgage loans for his condo unit, according to state court documents.

Sixth Judicial District Judge Paul Miller, in a ruling Jan. 18, 2017, ordered Jones or his businesses to pay a default judgment of $274,665 to the association.

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The association sued Jones but he never appeared for the proceedings in the civil suit, which resulted in the default judgment.

Jones, who was a member of the association, actively sought the appointment as treasurer when another person resigned in November 2011, the judgment shows. As treasurer, his association dues were waived as a form of compensation.

As treasurer, he funneled the $124,525 from the association bank account into a fraudulent bank account he opened under the association’s name, according to the judgment.

“Jones’s conduct is reprehensible, purposeful, malicious, willful and wanton, representing an absolute disregard of the interest of the members of (the association) and the needs related to the maintenance of the condominium common areas to the benefit of all members and the association as a whole,” Miller said in awarding punitive damages to the Pheasant Ridge Homeowners Association.

Included in the damages are attorney fees and accounting services, investigation and expertise costs that the association had to pay as a result of the fraud, according to court documents.

U.S. District Magistrate Mark Roberts, during Tuesday’s hearing, said Jones faces up to 20 years in federal prison and up to three years of supervised release following his prison term. He also may be ordered to pay up to a $250,000 fine and restitution, which has yet to be determined.

Jones was released pending sentencing, which will be set after a presentencing report is completed.

l Comments: (319) 398-8318; trish.mehaffey@thegazette.com

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