U.s. Attorney Announces New Fraud Charges In Connection With Indianapolis Land Bank
INDIANAPOLIS – United States Attorney Joseph H. Hogsett announced this afternoon the return of an indictment charging Reginald Walton, age 30, and Mark Harsley, age ##, with conspiring to defraud Indianapolis taxpayers with a wire fraud scheme involving a city mowing contract. This follows the indictment of Walton and four others connected with the Indianapolis Land Bank program on charges that they engaged in wire fraud and bribery in order to facilitate a number of fraudulent land purchases.
“It is time we began calling the waste and abuse of tax dollars exactly what it is – theft,” Hogsett said. “It steals teachers from our classrooms, officers from our streets, and federal law enforcement has had enough. If you violate the public trust, we will find you, we will investigate you, and we will hold you fully accountable in a court of law.”
According to a grand jury indictment unsealed this afternoon, the two defendants began their alleged scheme in February 2013. At the time, Walton was the Assistant Administrator of the Indianapolis Department of Metropolitan Development (DMD), and oversaw the operation of the Indianapolis Land Bank program. The indictment alleges that Walton solicited from Harsley gifts, payments, and other things of value, in exchange for favorable official action by the DMD.
As a result, the charging document alleges that Walton used his position to influence the DMD to award Harsley a contract to mow the lawns of DMD-held properties across the city. It is also alleged that Walton had accepted offers from Harsley to receive future kickbacks on the city contract. Harsley began submitting invoices and collecting payment for this corruptly obtained contract in the summer of 2013.
“Public corruption is the number one priority of our criminal program and the focus of the FBI’s Public Corruption Task Force,” said FBI Special Agent in Charge Robert A. Jones. “This case is the result of the tireless work of FBI Agents and an Indiana State Police Task Force Officer working with dedicated prosecutors from the United States Attorney’s Office.”
These new allegations follow the May 2013 indictment 0.of Walton and four others on charges that they engaged in wire fraud and bribery in an effort to defraud Indianapolis taxpayers. These defendants included John Hawkins, age 27, who was the Senior Project Manager for the DMD during the alleged conspiracy.
The purpose of the Indianapolis Land Bank is to acquire abandoned and tax delinquent properties in Indianapolis and make them available for sale to non-profit and for-profit real estate developers. For-profit investors interested in purchasing real estate from the Land Bank must meet or exceed a property appraisal in their purchase price. Non-profit purchasers, however, may bypass the auction process, purchasing real estate for a price between $1,000 and $2,500 per parcel, regardless of the appraised value of the property.
The May indictment alleges that Walton and Reed accepted bribes and “kick-backs” to facilitate fraudulent property sales to non-profit entities that would then sell the property to for-profit businesses. After these “pass-through” transactions had taken place, Walton and Hawkins would receive kickback payments from the non-profit organizations from the proceeds of the property sales. The investigation into the pair also included the use of an undercover agent, and Walton accepted $500 from that agent in return for his agreement to fraudulently transfer at least ten parcels of land to the agent for $1,000 each.
The May indictment charges David Johnson, age 47, Executive Director of the Indianapolis Minority AIDS Coalition, as well as Randall K. Sargent, age 57, president of New Day Residential Development, with participating in the scheme.
Prior indictments have also charged Aaron Reed, age 35, with wire fraud and bribery. Reed is the registered agent for the Naptown Housing Group, a for-profit real estate corporation. It is alleged that Reed would solicit for-profit investors to obtain real estate currently held by the Land Bank. After the investors obtained the property from one of the “pass-through” non-profit organizations, Reed would obtain profits, which he would share with Walton through payments and kickbacks. The indictment further alleges that Reggie Walton, while working at the DMD and heading up the Land Bank program, became a silent partner in the Naptown Housing Group.
These indictments come as the U.S. Attorney’s Office has prioritized the investigation and prosecution of fraud, waste and abuse on the part of public officials and those in positions of trust. As part of this effort, in 2012 the Office created its first Public Integrity Working Group to assist in the investigation and prosecution of cases involving public corruption and white collar crimes. This case is the result of an investigation by the Federal Bureau of Investigation and the Indiana State Police, both active members of the Working Group.
According to Special Litigation Counsel Bradley A. Blackington, today’s new wire fraud charges carry a maximum penalty of twenty years in prison. An indictment is only a charge and is not evidence of guilt. Defendants are presumed innocent and is entitled to a fair trial at which the government must prove guilt beyond a reasonable doubt.