Politically connected not-for-profit leader sentenced to probation for misappropriating state grants

The politically connected former leader of a Chicago not-for-profit escaped prison time Tuesday when a judge sentenced him to two years of probation for misappropriating more than a quarter-million dollars in state grants intended to develop south suburban commercial properties and fund a job training program.

Yesse Yehudah, 73, pleaded guilty earlier this year to wire fraud, admitting in a plea agreement with prosecutors that he misappropriated a total of $261,000 over a four-year period through his foundation, FORUM, also known as Fulfilling Our Responsibilities Unto Mankind.

Prosecutors had asked for a year and a half behind bars, arguing in a sentencing filing that probation would be “grossly inadequate” and that the public “has a strong moral interest in sternly punishing such conduct.”

But defense lawyer Mary Judge requested probation, citing Yehuda’s advanced age and health issues, including a recent bout with liver cancer.

U.S. District Judge Andrea Wood said that while Yehudah’s conduct would have warranted prison time in many circumstances, his lack of criminal history and other factors cited by his attorney trumped the need for general deterrence.

Wood ordered Yehudah to serve the first six months of his probation on home detention, with travel allowed for only essential medical appointments. He as also ordered to repay about $107,000 in outstanding restitution to the government.

According to prosecutors, Yehuda’s organization received three state grants totaling $575,000 from 2013 to 2016 from the Illinois Department of Commerce and Economic Opportunity. Two of the grants were intended to develop commercial properties in cash-strapped Dolton, while the third was meant for FORUM to operate a weatherization jobs training program.

In one instance, Yehudah claimed that FORUM had spent a $100,000 grant on construction work to develop a vacant property in Dolton, when, in fact, no actual work had begun, the indictment alleged.

In 2015, he allegedly misused $20,000 in grant money to buy a condominium for the relative of an associate, the indictment alleged. He disguised the fraud by having FORUM cut a cashier’s check to the associate, who then endorsed it over to Yehudah, according to the charges.

The indictment also alleged Yehudah inflated the amount that subcontractors had billed FORUM and kept the extra money for himself.

Yehudah also defrauded a bank used by FORUM by forging the signatures of subcontractors to endorse checks over to himself, the indictment alleged.

In a lengthy letter to the court, Yehudah acknowledged he took “shortcuts” with the grant money, but insisted he did so not to enrich himself, but skirt expensive union contractors and get the money more directly to those in need.

“I misreported how the money was being spent and made misrepresentations to continue getting the grant money,” Yehuda wrote. “I am extremely remorseful for this. I thought the end justified the means because I was working so hard and was doing so to help the community.”

As the leader of FORUM, Yehudah has long had ties to South Side politicians and legislators in Springfield, using his connections to win taxpayer-funded grants for everything from youth violence prevention to computer-literacy programs.

In 2002, then-Illinois Attorney General Jim Ryan sued Yehudah and another charity operator, David Noffs, for allegedly bilking hundreds of thousands of dollars from similar initiatives, the Tribune reported.

At the time, Noffs was an Elmhurst city councilman and good friend of then-first lady Lura Lynn Ryan. Yehudah was also a frequent donor to political funds controlled by then-Gov. George Ryan.

The suit accused Yehudah and Noffs of washing money between their two charities and diverting funds for personal travel, health club memberships, auto repairs, dental work, phone bills and college tuition costs.

Yehudah later settled the litigation by agreeing to donate $10,000 to a charity.

Yehudah’s connections to then-state Sen. Barack Obama were also widely reported at the time.

In 1998, he mounted an unsuccessful challenge for Obama’s seat in Springfield. Two years later, Obama awarded a $75,000 grant to FORUM to help churches and community groups get internet access, the Tribune reported.

The Tribune reported that five FORUM employees, including one who had declared bankruptcy, had donated $1,000 apiece to Obama’s state Senate campaign.

Though Obama was not accused of wrongdoing, he quietly returned the $5,000 in donations after the lawsuit against Yehudah was filed.

“I didn’t want to be associated with money that potentially might have been tainted,” Obama said then.

jmeisner@chicagotribune.com