Former Indy Land Bank director Reggie Walton opted to take the stand in his own defense in federal court this week, and prosecutors took the opportunity to use his words against him.
The government ended a methodical cross-examination Tuesday by letting the jury hear a recording of an under-oath interview of Walton in August 2013 by an administrative judge charged with deciding whether he should get unemployment benefits.
Walton, who was fired from his city job in May 2013 after his arrest and federal indictment, gave answers in the unemployment hearing that appear to contradict his testimony in federal court. U.S. District Judge William T. Lawrence admitted the audio into evidence only after Walton insisted he could not recall the interview, even after listening to a snippet after the jury departed Monday evening.
The defense rested Tuesday morning after calling only Walton. Walton's attorney, Michael Donahoe, did not present any evidence. Neither did attorneys for co-defendant David Johnson, executive director of the Indiana Minority AIDS Coalition. Final arguments are scheduled for Tuesday afternoon.
Walton is facing nine felony counts of wire fraud, bribery and conspiracy to commit money laundering for allegedly using his government position for personal gain, and Johnson faces five felony counts of wire fraud and conspiracy to commit money laundering. Three other co-defendants reached deals with prosecutors, and two of those men testified last week.
Walton, a 31-year-old Purdue University engineering graduate who joined the city in 2008 after a layoff from Pepper Construction, presented on direct examination as a smart and effective city employee who managed to orchestrate a secret, profitable real estate business on the side.
He acknowledged that, in retrospect, the side business—conducted with cash and without using his name on any documents—looks bad. But he insisted his position managing the Land Bank did not give him an unfair edge buying and flipping Land Bank properties.
Walton said he had "no influence" on his boss, Jenny Fults, or the Metropolitan Development Commission, which had to sign off on property transfers Walton initiated—including ones in which Walton would secretly profit.
He admitted he never disclosed he would personally profit from those transfers.
Walton said he made a list of Land Bank properties available to anyone who asked because the properties were a "huge drain" on the Department of Metropolitan Development, which had to pay for boarding them up and mowing their lawns.
"We wanted to be as helpful as possible because DMD wanted to get rid of these properties," Walton said.
Under direct examination, Walton said he did not file a "statement of economic interest" about his side business because he didn't report to a director.
But on cross-examination, Assistant U.S. Attorney Bradley Blackington showed Walton a "statement of economic interest" he had filed in 2010.
Walton seemed puzzled by the document, but acknowledged it was his handwriting. He had checked the "no" boxes next to conflict-related questions, including whether he owned any interest in a business that does business or intends to do business with the city.
"Were you too good for the salary you got at City Hall?" Blackington asked.
"To an extent, yes," Walton replied.
Walton, who was paid a salary of about $50,000 as a city employee, said he was able to generate an extra $57,000 in one year, before expenses, from his real estate deals.
Walton also was asked why he insisted on using cash for the transactions, even though he did not think his deals were in violation of city ethics rules.
"I didn't want it to look like it does today," Walton said.
"It doesn't look good today?" Blackington shot back.
"No, it doesn't," Walton admitted.
Much of the federal government's case relied on Walton's own words as he discussed business moves with his partners in the alleged fraud in phone calls the government was secretly monitoring, and in conversations between Walton and an undercover FBI agent wearing a wire and posing as an out-of-state businessman.
But the real gotcha moment for the government's cross-examination of Walton came from words he knew were being recorded: Walton's unemployment hearing held by phone on Aug. 27, 2013.
"I have a hard time remembering that conversation," Walton insisted late Monday afternoon, before Judge Lawrence dismissed the jury and allowed Blackington to play the recording for Walton to "refresh" his memory.
On the recording, Walton makes statements that appear to contradict his testimony, including denying he was a partner in a real estate business.
"No, your honor, I was not a partner, silent partner or registered agent in any corporation that purchased property in the city," he told the administrative law judge.
After listening to a portion of the recording in court Monday, Walton grew antsy and admitted he had been standoffish during the hearing, explaining he was focused on securing unemployment benefits.
"I didn't want to admit to anything," he said. But Walton maintained he could not remember the specifics of the conversation.
Blackington played the recording for the jury Tuesday morning while Walton looked on.
When it finished, Blackington turned and headed to his chair. "No more questions."
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