A federal grand jury has returned new charges in a fraud scheme involving the Indy Land Bank, including a wire fraud count against two defendants for allegedly fleecing the victims of a previous real estate scam.
The updated indictment alleges Reginald T. Walton, who led the Land Bank, and David Johnson, executive director of the Indiana Minority AIDS Coalition, secretly lined their own pockets as they ostensibly helped the Marion County Prosecutor's Office provide restitution for more than a dozen victims of a fraud orchestrated by Shela Amos.
Amos sold vacant homes she did not own to unsuspecting victims, most of them Hispanic, who paid in cash, moved in and made improvements to the properties without legal title. Amos was convicted of multiple felony counts in April and sentenced to 34 years in prison.
Walton was called on by the city to facilitate a transfer of properties to the Amos victims, using the AIDS Coalition as a pass-through entity. Under a deal worked out with the Prosecutor's Office and Department of Metropolitan Development, the fraud victims were to pay $1,000 apiece for a home they occupied or another similar property.
But Walton and Johnson allegedly required the victims pay $4,000 for each property in cash, pocketing the difference for themselves.
In sales disclosures, Walton listed the purchase price as $1,000 per home.
The indictment notes that Walton and Johnson accepted a check for at least one of the homes they sold to an Amos victim, which appears to provide the basis for the government's new wire fraud charge.
The updated indictment, filed Wednesday afternoon in U.S. District Court for the Southern District of Indiana, contains 11 counts of wire fraud, bribery and conspiracy, spread over five defendants. That's up from eight in the original indictment filed in May.
The case was developed by a public corruption task force that includes representatives from the FBI, Indiana State Police and U.S. Attorney's Office. The probe, which included the use of a wire tap and an undercover FBI agent, led to a May raid of the City-County Building offices of the Indy Land Bank, a municipal agency that handles the disposition of vacant and tax-delinquent homes that fall into city hands.
City employees Walton and John Hawkins, a senior project manager for the DMD and a former special assistant to Mayor Greg Ballard, are charged in the scheme. The other three defendants are Johnson; Randall Sargent, owner and president of New Day Residential Development; and Aaron Reed, a friend of Walton.
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.
In June, IBJ reported on an Amos victim who said he made cash payments on his house over and above the sales-disclosure price.