Matt Kelty sued by campaign contributor

FORT WAYNE, Ind. (WANE) - A former adviser to Matt Kelty says the 2007 Fort Wayne mayoral candidate owes him $125,000 from a loan made back in 2006. 

Fred Rost has filed a lawsuit in Allen County Superior Court in an attempt to collect the money he claims has never been paid to him.

The loan was at the center of an investigation that ultimately resulted in Kelty pleading guilty to three counts of illegal campaign finance reporting.

Rost alleges Kelty has "refused" to pay back the money and he wants the $125,000 paid to him along with interest, late charges and attorney fees.

Rost executed a Promissory Note in the amount of $150,000 in December of 2006 with repayment expected by November 1, 2007.  Two amendments were made to that Promissory Note which pushed back the full payment date to May 1, 2008 and June 1, 2009 respectively.   According to the lawsuit, as of October 1, 2009, $125,000 of the loan had yet to be paid.

A call to Matt Kelty for comment on this story was not returned.

Meanwhile, another campaign contributor, Glenna Jehl says Kelty has reliably paid her back according to the payment plan of their agreement. Jehl, and her husband Steve prominently supported Kelty financially, and politically during his run for mayor. Glenna Jehl says her loan to Kelty was for $10-thousand. She said the payment plan was built so he could pay it back in small amounts.

Kelty has 23 days to file an answer to the Rost lawsuit against him.

Background of how Matt Kelty came to be charged:

In October of 2008, Matt Kelty pleaded guilty to three of  nine counts against him related to illegal campaign finance reporting.

As part of the plea agreement, Kelty would serve no jail time.

Kelty had faced facing nine charges, including seven felonies, for allegedly misreporting campaign finances during his mayoral campaign. Emails between Kelty, Fred Rost and Glenna Jehl would anchor the evidence against him reviewed by the grand jury.

In a plea agreement, Kelty admitted guilt to two felonies and one misdemeanor. His punishment was a $250 fine for each charge, 80 hours of community service and one year probation.

The Kelty saga started In October 2006, when he launched his campaign for Fort Wayne Mayor. He beat County Commissioner Nelson Peters on the Republican ticket with 49 percent of the vote in the May 2007 primary.

He would face Democrat Tom Henry in the November Election. But less than 20 days after the primary, questions arose about whether he broke campaign finance laws.

Kelty filed new reports with the Allen County Election Board. Those reports brought concern over campaign contributions, totaling $158,000. Original reports said all those came from Kelty, but the new reports said they were personal loans to him from his campaign manager, Glenna Jehl, and campaign adviser Fred Rost. Kelty then lent that money to his campaign, but didn't report the original sources of the money.

Kelty said he only came forward to keep his campaign transparent, and that transparency would launch months of investigations.

In June 2007, the Allen County Election Board ruled Kelty did not break the law, but the group Common Cause filed a complaint, and the case was forwarded to a special prosecutor.

In August 2007 his case went before a grand jury. Kelty was arrested when it indicted him on seven felony counts: two of perjury and five of fraudulently reporting election funds. He was also charged with two misdemeanors.

The case would go to trial, but it didn't happen before the November election and Democrat Tom Henry won the mayor's race.

In February 2008, Kelty's motion to drop the charges was denied, and a trial was set for August 18.

In March 2008 an appeal was denied and in April, the court pushed Kelty's trail back to October.

In August 2008, Kelty requested to push the trial back further, but that was denied.