City employees arrested on bribery, fraud charges Tuesday

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INDIANAPOLIS, Ind.– Two city employees and three additional defendants were indicted by a federal grand jury in connection with a scheme to abuse the Indianapolis Land Bank program for their own benefit, announced officials Tuesday.

Reggie Walton, 29, assistant administrator of community economic development of the Department of Metropolitan Development (DMD) arrived in handcuffs to a federal magistrate courtroom, as he was charged with three counts of wire fraud and three counts of bribery.

Authorities said John Hawkins, 27, who was also charged in connection with the investigation, assisted Walton as senior project manager for the DMD.

Alleged co-conspirators Randall Sergeant, Aaron Reed and David Johnson were also charged with wire fraud. Additionally, Sergeant and Reed face bribery charges.

“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.”

Magistrate Denise K. LaRue ordered all five men to be released without bond.

FBI raid at CCB 2Tuesday morning, federal agents searched the offices of Walton, who oversaw Indy Land Bank, a city agency that acquires abandoned and tax delinquent properties in Indianapolis and makes them available for sale to non-profit and for-profit real estate developers.

The indictment alleges that Walton and Reed accepted bribes and “kick-backs” to facilitate fraudulent property sales to non-profit entities that would then sell the property to for-profit businesses. After these “pass-through” transactions had taken place, Walton and Hawkins would receive kickback payments from the non-profit organizations from the proceeds of the property sales. The investigation into the pair also included the use of an undercover agent, and Walton accepted $500 from that agent in return for his agreement to fraudulently transfer at least ten parcels of land to the agent for $1,000 each. It’s the first public corruption scandal to touch the administration of Indianapolis Mayor Greg Ballard.

Mayor Ballard released the following statement:

“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.  

Mr. Walton and Mr. Hawkins are suspended without pay effective immediately. 

I appreciate the work of federal officials in this matter and my team will continue to assist them in this investigation.  The alleged acts of these two individuals do not reflect the dedication of the thousands of employees who work hard to improve our city every day.”