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Feds charge 5 in Indy Land Bank kickback scheme

May 21, 2013

Federal prosecutors have charged two city employees in the Department of Metropolitan Development and three others in a scheme involving cash kickbacks on the sale of properties in the Indy Land Bank.

The indictment, which includes eight wire fraud and bribery counts, alleges city employees Reginald Walton, 29, the Land Bank's director, and John Hawkins, 27, a senior project manager for the DMD and a former special assistant to Mayor Greg Ballard, participated in the scheme.

Also charged: David Johnson, 46, executive director of the Indiana Minority AIDS Coalition; Randall Sargent, 57, owner and president of New Day Residential Development; and Aaron Reed, 35, a friend of Walton's.

The five defendants each face three wire fraud charges. Each charge carries a potential penalty of 20 years in prison and a $1 million fine.

Walton also is charged with three counts of bribery on an organization that receives federal funds, each of which could carry a maximum penalty of 10 years in prison and a $250,000 fine. Sargent and Reed are facing one count each of bribery.

The suspects made their first appearance in federal court midday Tuesday, where U.S. Magistrate Judge Denise K. LaRue read them the charges and explained their rights. The defendants were released pending trial.

U.S. Attorney Joe Hogsett is scheduled to discuss the charges at a 1:30 p.m. press conference.

FBI agents arrested the men and raided the City-County Building on Tuesday morning, as IBJ first reported. The moves were the culmination of a months-long federal investigation into alleged corrupt practices at the Indy Land Bank, a municipal agency that handles the disposition of vacant and tax-delinquent homes that fall into city hands.

State sales-disclosure records show Sargent's company bought at least 23 properties from the Land Bank since May 2012. The disclosures show a price of $1,000 apiece for 15 properties and $2,500 each for eight more.

New Day Residential lists its headquarters address as 238 S. Meridian St., Suite 201, above the Claddagh Irish Pub.

Walton was prominently featured in an IBJ investigative story in November 2012 that raised questions about the city's sale of taxpayer-owned properties to not-for-profit groups eager to exploit a loophole allowing low-priced sales without public bids.

Marc Lotter, a spokesman for Mayor Greg Ballard, declined to comment before the afternoon announcement.

An FBI tactical vehicle pulled up to the north entrance of the City-County Building shortly after 8 a.m. It remained there late Tuesday morning, as agents carried out boxes of documents from the Land Bank.

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