Reggie Walton, assistant administrator of Department of Metropolitan Development, taken into custody

Feds probe bribery scheme

INDIANAPOLIS - Two city officials and three others have been indicted in connection with a federal probe into a bribery scheme involving a program to rebuild the city's most troubled neighborhoods.

Reggie Walton, 29, assistant administrator of Indianapolis' Department of Metropolitan Development, and John Hawkins, 27, senior project manager for the agency, were taken into custody Tuesday on multiple charges of wire fraud and bribery.

David Johnson, 47, executive director of the nonprofit Indianapolis Minority Aids Coalition, Randall K. Sergeant, 57, president of the nonprofit New Day Residential Development and Aaron Reid, 35, with the for-profit Naptown Housing Group face similar charges.

Prosecutors claim the men abused the Indianapolis Land Bank, a city program that acquires abandoned and tax-delinquent properties and makes them available for sale to nonprofit and for-profit real estate developers, turning it into a profit-making venture for themselves.

For-profit investors interested in purchasing real estate from the Land Bank must ask the city treasurer to include the property in a sealed-bid auction, and the auction price must meet or exceed a property appraisal, while nonprofit purchasers may bypass the auction process, purchasing real estate for a price between $1,000 and $2,500 per parcel, regardless of the appraised value of the property.

According to the indictment, Walton and Reed accepted bribes and kick-backs to to facilitate fraudulent property sales to nonprofit entities that would then sell the property to for-profit businesses.

FBI agent posing as someone looking to obtain land through the Land Bank paid a $500 bribe to Walton for favorable official action by his office, prosecutors said.

Walton, while working at the DMD, also was a silent partner in the Naptown Housing Group, concealing his involvement, but receiving a share of the corporation's profits, according to the indictment.

"These charges involve a conspiracy to defraud the taxpayers of Indianapolis and abuse a local housing program designed to help rebuild this city's most troubled neighborhoods," U.S. Attorney Joe Hogsett said. "For those in positions of public trust, both here in Indianapolis and across the state, I hope these developments have confirmed the message -- the era of corruption is over."

Department of Metropolitan Development Director Adam Thies told reporters that he was unaware of the investigation until he was presented with a search warrant Tuesday morning for records from the Land Bank.

Mayor Greg Ballard said Walton and Hawkins were suspended without pay.

"I take these allegations very seriously, and I will not tolerate abuse of the public trust. That’s why I initiated the toughest ethics and first whistleblower laws in the history of the city," Ballard said in a statement.

The Call 6 Investigators raised questions about the city's abandoned housing program in 2011 , specifically why the Indy Land Bank's website had out-of-date information and failed to list current properties.

Joyce Moore, co-founder of Urban Patch, said she's tried for years to purchase an abandoned house next door in hopes of turning it into a garden. She bid on the property twice, but she said she ran into roadblocks.

"I wasn't surprised (about the indictment)," she told Call 6 Investigator Kara Kenney on Tuesday. "If you go through and do everything you're supposed to do and follow all the rules and nothing works, then there has to be some issue."

Connie Zeigler, president of historic preservation company C. Resources, said in a statement to the Call 6 Investigators that she isn't surprised by Tuesday's action either.

"As advocates tried to worth with the Abandoned Housing Initiative/Indy Land Bank to get properties off of the demolition list because we had good reason to believe we had buyers for those properties, what I heard from Reggie Walton was, 'No one wants those properties,'" Zeigler said. "I knew that wasn't true. I sent more than one person who was seriously interested in and capable of purchasing a single property off the list to him and typically what I heard time and time again from those people was that they could not get a returned phone call or email back from him even after leaving several messages, or if they got a response, it was that it was too late to save the property." 

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