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Todd Leary Arrested: Ex-Hoosier Charged With Massive Fraud

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INDIANAPOLIS — A former Indiana University basketball player accused in connection with an ex-business partner's multimillion-dollar fraud scheme threatened to disclose the partner's embezzlement to get money to hide his own activities, prosecutors say.

Todd Leary, 39, of Carmel, was arrested at Assembly Hall in Bloomington just minutes before he was scheduled to work as an announcer for Thursday's men's basketball game between in-state rivals Indiana and Purdue.

Leary was held overnight in the Monroe County jail before being moved Friday to Allen County, where he faces 17 felony charges, including conspiracy to commit misappropriation and theft. The most serious charge carries a possible sentence of four to 20 years in prison.

He was expected to have an initial hearing early next week. Leary's bond has been set at $60,000, according to a spokeswoman for the Allen County prosecutor.

Leary was still in jail Friday afternoon, and efforts to reach someone who could speak for him were unsuccessful. Prosecutors and jail officials had no record of an attorney, and a phone number in Leary's name had been disconnected.

Prosecutors say Leary conspired with a former business partner, Joseph A. Garretson of Fort Wayne, between March 2008 and February 2009 to divert more than $1 million from Fort Wayne Title, which Garretson ran.

Investigators searched Garretson's home and business in November and found records showing he had not paid off the sellers' mortgages in two refinancing transactions, court documents said.

Investigators have since found at least a dozen cases in which Garretson arranged to refinance mortgages for clients but didn't pay off the original loans, causing the homeowners to default, according to a probable cause affidavit.

The normal practice in real estate refinancings is for the escrow agent to immediately pay off the existing mortgage with proceeds from the refinancing process.

The state filed felony charges against Garretson in December alleging he diverted $2.7 million in escrow funds from the business. He pleaded guilty this week in Allen Superior Court and faces up to 12 years in prison when he is sentenced in April.

Court records say Garretson and Leary met through former Indiana player Brian Evans. In 2004, Leary went to work for Garretson at Mortgage Links, an Indianapolis-area mortgage company.

After leaving Mortgage Links in 2006, Leary asked Garretson for money to cover approximately $289,000 Leary had misappropriated from Legends Title, a mortgage company he co-owned, court documents said.

Leary called Evans after Garretson was charged in December and told him that he was "a big part" of Garretson's situation and that Garretson had helped Leary financially when Leary was in "big trouble," the affidavit says.

Leary told Evans that Garretson didn't have much choice because he had caught Garretson misappropriating money from Fort Wayne Title while they worked together, the affidavit says.

Evans later reported the call to Garretson, whose attorneys turned over the information to the state.

Investigators say that between March 2008 and February 2009, more than $1 million in wire transfers went from a Fort Wayne Title bank into an account Leary opened. Leary withdrew $690,000 from the account between March 2008 and March 2009, the affidavit says.

Garretson told investigators through his attorney that Leary pressured him on multiple occasions for money, threatening to disclose Garretson's own misdeeds, which he discovered while he worked for Garretson, according to court documents.

Leary played for Indiana University from 1989-94, including on its 1992 NCAA Final Four team. He averaged 5.0 points over his four seasons playing for Bob Knight, with his best year as a senior in 1993-94 when he averaged 8.3 points and started 12 games. He started doing IU's radio broadcasts in the 2001-02 season.

Indiana University Athletics and Learfield Sports, the Hoosiers' multimedia rights holder which oversees the Indiana University Radio Network, issued a statement expressing concern for Leary and his family and said it would move forward with the current broadcast team of Don Fischer and Joe Smith for the remainder of the season.

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