Bankruptcy Fraud
Justice City Mayor Convicted

Melvin VanAllen resigned as mayor when convicted on charges of bankruptcy fraud, citing he hid assets and lied about his business.

Convicted to serve four years, VanAllen says he is a victim of an overzellous bankruptcy trustee and prosecutors, so, he is appealing his conviction.

Suburb's ex-mayor gets prison in fraud case

By Matthew Walberg
Chicago Tribune staff reporter
January 10, 2007

Former Justic city mayor Melvin VanAllen was sentenced Wednesday to serve three years in federal prison for bankruptcy fraud and illegal transactions connected to his auto parts business.

Prosecutors sought a prison term of at least four years, but U.S. District Judge David H. Coar "gave a sentence below the range based in part [on] that he had served in the U.S. Army and had what the judge found was an extraordinary record of service to the community," said Assistant U.S. Atty. Brian Havey.

"We're satisfied with the sentence." A jury found VanAllen, 59, of the 8000 block of West 85th Place in Justice guilty Oct. 27, 2006, of 28 counts of illegal cash structuring and four counts of bankruptcy fraud.

Van Allen, who had served as mayor for nine years, resigned that same day. The case involved his personal financial dealings, not his use of public funds.

"I thought it would be less than that," VanAllen said after the sentencing. "We had 57 letters from family and friends and associates explaining the good that I've done in my life. I thought it would go better than it did, but it didn't."

Coar recommended to the Federal Bureau of Prisons that VanAllen serve his time in Oxford, Wis.

"I don't know much about prisons, but from what I understand, it doesn't even have fences," VanAllen said.

Authorities said VanAllen filed for bankruptcy in 2004 to avoid $80,000 in credit-card debt. In the process, he lied to his bankruptcy attorney and a bankruptcy trustee by saying he did not own the home in which he and his family lived since 1986, and he falsified or left out available cash assets.

The jury also found that he illegally structured $500,000 in cash transactions related to his auto-parts business, Treyzack Trailers. In an effort to avoid transactions of $10,000 or more in a single day—which would generate an automatic report to the Internal Revenue Service—VanAllen split large amounts by either cashing smaller checks at different currency exchanges or depositing smaller cash amounts at different bank branches.

In closing arguments in October, defense attorney James Tunick said VanAllen was rushed through the bankruptcy process, and was not allowed to fully explain his financial situation to the bankruptcy trustee.

As for the structuring charges, Tunick argued that VanAllen needed large amounts of cash to operate the auto parts business and never intended to hide his transactions from the government. VanAllen was scheduled to report to prison on March 5. He said he plans to appeal his conviction.

mwalberg@tribune.com Copyright © 2007, Chicago Tribune

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