The Seventh Circuit Court of Appeals issued a mixed ruling in the corruption case against two former Housing Authority of South Bend officials, affirming their wire fraud convictions while reversing bank fraud charges in a decision that highlights the complexities of federal fraud prosecutions.
Tonya Robinson and Albert Smith, who held leadership positions at the Housing Authority of South Bend, were convicted by a federal jury of orchestrating a kickback scheme that diverted funds meant for affordable housing maintenance into their own pockets. The scheme involved hiring contractors to perform fictional maintenance work on Housing Authority properties, then taking a portion of the payments for those fabricated projects.
The Housing Authority of South Bend served as a landlord for more than 800 homes rented to residents in the community, relying on federal funding from the U.S. Department of Housing and Urban Development to maintain these properties. While the authority used its own employees for small maintenance tasks, it contracted with outside companies for larger renovation projects, particularly when preparing properties for new tenants between occupancies.
According to the court opinion written by Circuit Judge David Scudder, Robinson and Smith exploited this contracting system for their personal enrichment rather than serving the tenants who depended on affordable housing. The defendants created fraudulent contracts for maintenance work that was never performed, then split the proceeds with complicit contractors.
The case arose from the Northern District of Indiana, where U.S. District Judge Jon DeGuilio presided over the original trial. After a jury found both defendants guilty of wire fraud and bank fraud charges, among other federal crimes, Robinson and Smith appealed their convictions to the Seventh Circuit.
The appeals court's decision, initially issued Dec. 15, 2025, and amended following a petition for rehearing on Jan. 28, 2026, demonstrates the different evidentiary standards required for various federal fraud charges. While the court found sufficient evidence to support the wire fraud convictions under federal law, it determined that the government failed to meet the specific requirements for bank fraud charges.
For bank fraud convictions under 18 U.S.C. § 1344(2), prosecutors must prove that defendants made false statements directly to financial institutions. The Seventh Circuit concluded that the government had not adequately identified such false statements in this case, leading to the reversal of those specific charges.
The wire fraud convictions, however, remained intact. Wire fraud prosecutions typically require proof that defendants used interstate communications—such as phone calls, emails, or electronic transfers—to further a fraudulent scheme. The evidence apparently satisfied this standard for the Housing Authority kickback operation.
This case reflects broader concerns about corruption in public housing administration, where officials entrusted with providing affordable housing for vulnerable populations instead exploit their positions for personal gain. The Housing Authority of South Bend managed hundreds of properties using federal HUD funding, making the alleged fraud a misuse of taxpayer dollars intended for housing assistance.
The decision also illustrates the technical distinctions between different federal fraud statutes. While both wire fraud and bank fraud charges can apply to complex financial schemes, each requires specific proof elements. Prosecutors must demonstrate not only that fraud occurred, but that it violated the particular requirements of each statute under which charges are brought.
The case involved multiple contractors who allegedly participated in the fictional maintenance scheme, though the court opinion does not detail the extent of their involvement or whether they faced separate charges. The scheme apparently operated over an extended period, generating substantial fraudulent payments that were then divided between the Housing Authority officials and their contractor accomplices.
For Robinson and Smith, the mixed appellate ruling means their wire fraud convictions stand, likely resulting in continued federal prison sentences, while their bank fraud convictions are overturned. The government could potentially seek to retry the bank fraud charges with additional evidence, though no such decision has been announced.
The Housing Authority of South Bend continues to operate under federal oversight, providing affordable housing to hundreds of residents who depend on these services. The corruption case has likely prompted enhanced internal controls and oversight procedures to prevent similar schemes from exploiting the public housing system.
The Seventh Circuit's decision underscores the importance of precise legal pleading and proof in federal fraud cases, where multiple statutes may apply to the same underlying conduct but require different evidentiary showings for successful prosecution.