IBJNews

FBI searches City-County Building, makes multiple arrests in Land Bank probe

Back to TopCommentsE-mailPrintBookmark and Share

FBI agents on Tuesday morning conducted a warrant search at the Department of Metropolitan Development in the City-County Building, shortly after agents arrested multiple people, including city employees at their homes.

The moves are 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, sources told IBJ.

A grand jury indictment is expected to describe evidence of secret kickbacks to city officials who orchestrated the sale of city-owned properties to at least one not-for-profit organization. Those arrested were scheduled to make initial appearances in federal court Tuesday afternoon. U.S. Attorney Joe Hogsett is expected to announce the charges at a press conference at 1:30 p.m.

An FBI tactical vehicle was parked outside the north entrance to the City-County Building as of 9 a.m.

One of those arrested Tuesday was Reggie Walton, the Land Bank director. It was not yet clear what charges Walton is facing. The identity of the other suspects also was unclear. The FBI search warrant centered on Walton's office on the 20th floor of the City-County Building.

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.

The IBJ story focused on the sale of 154 vacant homes and apartment buildings for a total of just $154,000—a fraction of their estimated $2 million value at auction—to a group called Homeless & ReEntry Helpers Inc. The not-for-profit acted as a straw buyer for local investors who cherry-picked the properties from more than 6,000 tax-delinquent Marion County parcels.

The Homeless & ReEntry Helpers group and its executive director, Don E. Hawkins, are not targets of the investigation, the sources said. Neither are the group's private investor partners.

The November story led with a reference to Walton, who said he realized he had just "made someone a millionaire" after signing off on the deal in late 2011.

Walton seemed to acknowledge the deal was bad for taxpayers, but he placed the blame on the shoulders of his bosses, including former Department of Metropolitan Development Director Maury Plambeck.

“I wasn’t a fan of the whole transaction, but I wasn’t the signature on how it happened,” Walton said at the time. “I can guarantee you won’t see a distribution of property on that scale in this city again.”

Usually, for-profit investors interested in a county-owned house must ask the county treasurer to include it in an upcoming auction, where they run the risk of losing out to a higher bid. Investors who want a property from the city’s land bank must compete in a sealed-bid auction and meet a minimum bid set by an appraisal.

But state law allows not-for-profits to purchase county-owned properties without an auction. The law was designed for community development corporations, though other tax-exempt groups including churches also have bought properties.

Homeless & ReEntry Helpers was the first to take advantage of the loophole on a large scale, before copycats made their move. Several property investors sought to partner with not-for-profits to snag properties, and some even formed their own not-for-profits with the sole mission of buying cheap houses.

As of late 2012, the Indy Land Bank had 1,200 parcels in its inventory, roughly 500 homes and 700 empty lots.

Check back at IBJ.com for updates to this breaking story.

ADVERTISEMENT

  • fraud
    bank fraud
  • proof of financial fraud in walton county
    wqalton county
  • Safeguard Properties getting taxpayers property NO BIDS
    Cuyahoga County is MUCH worse. http://realneo.us/content/safeguard-properties-forest-city-slavic-village-recovery-llc-first-house-donated-county-land
    • Cuyahoga County Land Bank Scam
      Next stop for the FBI should be the Cuyahoga County Land Bank. We have serious issues with our land bank. http://realneo.us/content/cuyahoga-county-land-bank-meeting-june-28-2013-disrupt-it-demand-immediate-removal-gus-frang
    • Had the same issue
      John Moore, I too have had the same issue recently. A property next to my house was on the Land Bank and I was interested in purchasing. When I tried to contact Reggie, I got back emails that had nothing to do with what I asked about. Actually my latest response from him was on this past Friday. I had asked about how to buy the property and if it was still available. His response to me was to contact the mayor's office to get the schedule of his appearances. (???) Hopefully the city is able to do something to fix what this guy has done, it would be nice if they would take the properties back and sell them properly so land owners like me and you mother would have a fair chance.
    • Unrelated Business Income
      Interesting how these not for profits haven't reported their unrelated business income
    • I with you
      I have been targeted several times by the Code Enforcement but yet you can drive through the same neighborhood and find 25 other homes that had none of the permits pulled. Once again it must help to line the right pockets. (Reggie guess you tried to line the wrong pocket) FBI, Indianapolis Welcomes you and your crew. Stay for awhile because we have a ton of clean that needs to happen.
    • Out of Marion County
      We have had significant, unexplained, issues with Code Enforcement and their inability to accurately and consistently permit and inspect projects. Enough so that our company has moved projects out of Marion County to surrounding donut counties.
      • Assessment Office Next
        I'm possitive that if they review the Assessors office more arrest will be made. I have no trust in the governmet!! I pay twice the taxes as my neighbor but the assessor sees nothing wrong with it. If I only had the power to sweep through all local government offices we would need a much larger prison.
      • Code Enforcement is next
        It is sad to see Indy move into this category. But, Metro Development is not the only department acting as if it has autonomy. Department of Code Enforcement does the same thing. When the most alarming problems are brought to the Mayor himself, he turns a blind eye. It is hard to tell if the added bureaucracy in our City government has truly been added for efficiently sake (as the Mayor claims), or for the cover of corruption.
        • This isnt Chicago
          As much as I hate Chicago but like having Chicagoans move down to Indy I agree this kind of Chicago style politics needs to just stop. Let Chicago have the infamous corruption capital of the US title. Not Indy
        • HRH's Role?
          From the article above “The Homeless & ReEntry Helpers group and its executive director, Don E. Hawkins, are not targets of the investigation, the sources said. Neither are the group's private investor partners.” It does not appear that ‘HOMELESS & REENTRY HELPERS INC’. (HRH) a 501 (c)(3), has filed a tax return since 2009. This will cause the IRS to automatically revoke their tax-exempt status as early as this year, if the IRS hasn’t already done so and not yet published the revocation notice. Their earlier returns (2008, 2009) are missing most information except for board member names. The $154,000 purchase transaction, as well as the revenue from the home/lot sales proceeds, would need to be on their 2011 or 2012 return. There are other problems but that’s enough for now. HRH’s website is full of disclosure and appears to be a legitimate charity. Let’s hope this investigation doesn’t reveal that one or more third-parties outside of HRH took advantage of them, and the U.S. taxpayers.
          • King Ballard
            It is such a shame that King Ballard has made Indianapolis into Chicago south with all of the rampant corruption.
          • something was up
            When a an arrogant young guy with essentially no experience and no qualifications for the job, was dropped into an Administrator position out of nowhere by his "mentor" in the Mayor's office things seemed fishy. Sometimes things are what they seem.
          • Corruption
            ConcernCitizen777, The only way we will ever get rid of corruption or at least reduce it is to force everyone who sells property on the open market to keep the bids for a minimum time. Banks/ Real Estate Brokers should have to prove that their offer is the highest and keep on file all other offers for two years. This would give the honest person a chance to see what other people bid and if the winner is truly the high bid. Timothy Farnsworth: I pretty sure Reggie Walton was is a "Democratic"!!! No matter what your political views, we shouldn't have to worry about this kind of corruption in the city government. Enjoy Prison Reggie.......:)
            • Corruption
              Closed bids are a waste of time too. Like HUD homes, they cater to investors and get kick backs for giving the investors the winning bid. Indianapolis is full of corruption.
              • Clean House
                Time to clean house. DMD has long been ineffective and incompetent, but the responsibility starts at the top with Mayor and Olgen.
              • Corruption
                How dare Joe Hogsett target these Republicans just because they are crooks.
              • Land Bank
                Reggie sounds a lot like Lincoln Plowman.
              • Indiana Public Corruption Hotline
                Anyone with information relating to criminal activity to contact the U.S. Attorney’s Office public corruption hotline at (317)229-2443 VIDEO:Indiana Public Corruption Working Group http://www.wthitv.com/dpp/news/local/Working-Group-forms-to-end-corruption#.UZuFsoK0Ixc Press Release: http://www.justice.gov/usao/ins/press_releases/Pressrelease12/PCWG.20120423.pdf
              • WE HAVE PROOF!
                Contact Joyce L. Moore. She has proof that Reginald Walton is corrupt. She told officials and NO ONE believed her. She was talking about this 2 years ago. She was barred from buying land next to her house. Reginald Walton gave the land to someone who gave him a kickback. My mother would not hive him a kickback so she (abutting landowner who BID the highest!) did not get the property. Reginald gave the land to someone else (who paid a kickback) instead of Joyce (abutting land owner and 30 year resident. The Indy Land Bank is VERY corrupt, my Mother has proof of one deal that was totally corrupt. The house in question sat vacant of over 30 years and my parents BY RIGHT should have gotten that HOUSE! They bid MORE for it than the convicted felon (who and paid Reginald Walton a kickback and bid lower) got GOT the house. To make matters WORSE, they are going to make the house--A HALFWAY HOUSE! Not cool! I'm her son and a few times I saw guys in new white pickup trucks looking over the landbank property next to my Mom's house. They looked "tactical." This happened about 3 or 4 times. I knew they were not city or state officials. They must had been FBI. LOL, they could have just asked us, (and saved taxpayers money) we KNEW Reginald Walton was corrupt, and have proof. WE TRIED TO TELL CITY OFFICIALS!!!!!! My mother should be made whole and should get that property!
                • City Corruption
                  Who do we contact to bring more facts forward? I had a couple situations happen to me where Reggie Walton told me he had the power to sell land to whomever he wanted and that was the final decision. Sadly his boss Jennifer Fults and other senior officals allowed him to act this way. It is common practice for them to pick favorites and allow buddies to buy property over someone who is willing to pay market price. Everyone in the land bank need to be investigated for fraud!!
                • Great work IBJ
                  The culture of corruption needs to end. Betraying the public's trust needs to be punished.
                • crows have come
                  I think Ballard's only foible here was hiring Olgen Williams as Deputy Mayor for Neighborhoods. Reggie was an Olgen 'appointee' to that position in February 2010, even though he really didn't (doesn't) have the background and experience to run the Indy Land Bank effectively. In this particular case, I bet investigators will find that the directive to do the deal came from outside DMD.
                  • Ballards pooping his pants
                    Im betting that Ballard and the rest of the Turkish mafia are pooping their pants about now..
                  • Corruption
                    Looks like we really are trying to be more like Chicago lately. I hate all of this corruption.
                    • Yet again
                      Yet again, the IBJ runs a story and six months later the FBI is conducting a raid. This is why I read the journal.
                    • Excellent work, Cory!
                      Excellent work by Cory Schouten and the IBJ to bring this story to light.

                    Post a comment to this story

                    COMMENTS POLICY
                    We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
                     
                    You are legally responsible for what you post and your anonymity is not guaranteed.
                     
                    Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
                     
                    No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
                     
                    We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
                     

                    Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

                    Sponsored by
                    ADVERTISEMENT

                    facebook - twitter on Facebook & Twitter

                    Follow on TwitterFollow IBJ on Facebook:
                    Follow on TwitterFollow IBJ's Tweets on these topics:
                     
                    Subscribe to IBJ
                    ADVERTISEMENT