After a yearlong FBI investigation, University of Alaska Board of Regents member and former Fairbanks mayor Jim Hayes and his wife are being indicted by a federal grand jury on charges of misappropriating more than $450,000 in government grant money.
Warrants authorized 30 government agents last January to search the Lily of the Valley Church where Hayes is a pastor, as well as his home and LOVE Social Services, a nonprofit organization headed by Hayes' wife.
The investigation yielded a 92-count indictment alleging that Jim and Chris Hayes used federal grant money earmarked to LOVE Social Services by Sen. Ted Stevens (R-Alaska) to pay for personal expenses like a plasma-screen television for their home, personal bills and a family wedding reception.
In a 2004 interview with the Fairbanks Daily News-Miner, Stevens said that he has known Hayes since before he was elected mayor of Fairbanks, and he was quoted as saying, "Our families have been very close."
Since its formation, Stevens provided LSS with $2.9 million in grants through the Department of Housing and Urban Development and the Department of Justice.
The Hayes now face charges of money laundering and illegal application of government grants.
UA Director of Public Affairs Kate Ripley said that UA officials are waiting for the final verdict before making any decisions regarding Hayes' future with the UA Board of Regents.
"These are indictments, they are in effect accusations; they haven't been proven yet," Ripley said.
If Hayes were to be found guilty, any decisions to remove him would have to be followed through by the Alaska State House and Senate.
"Removal can't be done by anybody here. That would have to be done by the legislature, the joint session of the house and senate," Ripley said. "It's not really a decision for us, of whether he stays or goes at this point."
Ripley said at this time it is too early to tell whether they would recommend Hayes' removal to the legislature if he is found guilty.
"We are in a wait-and-see mode and presume he is innocent until proven guilty, and if events unfold otherwise, at that point we will have to evaluate the situation," Ripley said.
A representative from Gov. Sarah Palin's office said they are concerned about the allegations and are monitoring the situation. "We want to see how it plays out," he said.
Palin said in her State of the State Address that she plans to sponsor an ethics reform bill, stating, "Ethics must be addressed for the legislative and executive branches."
LSS was established in 2000 as a center to offer tutoring and mentoring programs for children and to offer assistance in the state's youth jail, which focuses on delinquency prevention through education. However, suspicion arose when community members speculated that money appropriated to convert the former Lily of the Valley Church into the LSS building might have been used to help fund the construction of the new Lily of the Valley Church building being built across the street, which was valued at $2.1 million upon its completion.
Former Gov. Frank Murkowski appointed Hayes to the UA Board of Regents in 2003 to serve a term of eight years in the position. Regents are held accountable to a maintenance of good order that expects them to follow University of Alaska policies and regulations and the laws of the State of Alaska. Members of the board are also bound by the Legislative Ethics Act, which holds public servants in the legislative branch to high moral and ethical standards.
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