A second defendant in an alleged kickback scheme involving the Indy Land Bank has pleaded guilty, and a judge has moved a trial for three remaining defendants to early 2015.
Aaron Reed, a friend of former Land Bank Director Reginald T. Walton, in late June pleaded guilty to four counts of wire fraud. Federal prosecutors say Reed recruited investors to buy city-owned properties and paid kickbacks on the sales to Walton.
An indictment also says the friends were silent partners in Naptown Housing Group, a company that sought to exploit a loophole allowing low-priced sales without public bids to not-for-profit organizations.
Fellow defendant John Hawkins, a former senior project manager for the Department of Metropolitan Development, pleaded guilty to a single count of wire fraud earlier in June in a deal with prosecutors.
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.
The remaining defendants are Walton; David Johnson, executive director of the Indiana Minority AIDS Coalition; and Randall Sargent, owner and president of New Day Residential Development.
U.S. District Judge William T. Lawrence in mid-July set a trial date of March 3, after Sargent requested a public defender.
An updated grand jury indictment filed in October 2013 contained 11 counts of wire fraud, bribery and conspiracy spread over the five defendants.
The indictment also alleges Walton and Johnson secretly lined their pockets as they ostensibly helped the Marion County Prosecutor's Office provide restitution for more than a dozen victims of a separate 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, and pocketed the difference for themselves.
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.
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.