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Defendant in Land Bank fraud case pleads guilty

June 20, 2014

One of five defendants in an alleged kickback scheme involving the Indy Land Bank has pleaded guilty in a deal with federal prosecutors.

John Hawkins, a former senior project manager for the Department of Metropolitan Development, pleaded guilty to a single count of wire fraud on Wednesday.

The government alleges Hawkins and Reginald T. Walton, who led the Land Bank, profited from a fraud scheme involving the sale of city-owned residential properties, exploiting a loophole allowing low-priced sales without public bids to not-for-profit organizations.

Hawkins is accused of using his official position to orchestrate the transfer of city-owned real estate to not-for-profit entities at the direction of Walton. The not-for-profits allegedly flipped the properties to private investors, splitting profits with the two city employees.

Hawkins was released on his own recognizance and will be sentenced at a date to be determined, said U.S. Attorney's Office spokesman Tim Horty.

An updated grand jury indictment filed in October 2013 contained 11 counts of wire fraud, bribery and conspiracy spread over five defendants. The other defendants are David Johnson, executive director of the Indiana Minority AIDS Coalition; Randall Sargent, owner and president of New Day Residential Development; and Aaron Reed, a friend of Walton.

The indictment alleges Walton and Johnson also 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.

No trial date has been set.

In a separate case, Walton is facing a wire fraud charge for allegedly soliciting financial kickbacks in exchange for a city contract to mow lawns of properties owned by the land bank. Mowing contractor Mark Harsley also is charged with wire fraud.

A trial date in that case has been set for Sept. 22.

The cases were 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.

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