FBI agents make 2 more arrests in connection with Muncie corruption investigation

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UPDATE (March 27, 2020): Nikki Grigsby will plead guilty to conspiracy to commit wire fraud. The other 16 counts against her will be dismissed.

MUNCIE, Ind. — FBI agents executed arrest warrants at two homes Thursday morning as part of the agency’s wide-ranging investigation into public corruption in Muncie.

"We did tell the FBI we are an open book and will give them any information they need or that they request. We will give them whatever information they need because we want this book to close on Muncie," said Mayor Dan Ridenour.

Another chapter began, after the FBI confirmed that Phil Nichols,73, and Jess Neal,53, were taken into federal custody. A 16-page unsealed indictment reveals the two are facing charges of conspiracy to commit wire fraud, wire fraud, and witness tampering.

“Public servants need to serve the public instead of serving themselves,” said U.S. Attorney Josh Minkler. “When someone betrays the public’s trust by stealing tax dollars for personal enrichment, my office will identify, investigate and, if the evidence supports a charge, prosecute the individual who violates that sacred trust," said Minkler.

Nichols has served as a former Democratic Party chairman and city councilman. He is the father of Craig Nichols, former building commissioner who was at the forefront when the FBI launched this investigation in 2016. In 2019, Craig Nichols was sentenced to two years in federal prison after pleading guilty to wire fraud and money laundering.

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"It's a small group of people and those who are found guilty will pay the price," said Ridenour.

Nichols was accused of overcharging customers and charging the city for projects that were not completed.

Neal served as an officer with the Muncie Police Department. Federal agents raided his home in September 2018 as part of the federal investigation. The FBI did not reveal what they found or exactly why his home was raided. Sources tell us Neal is often behind the curtains.

"I find it embarrassing because not only were some of them city employees but because the name Muncie is attached to them. That's what's embarrassing to me," said Ridenour.

Mayor Dan Ridenour says he appreciates the consistency from the FBI during this investigation. In the meantime, he's continuing to take additional steps to protect the work he's done to turn over a new leaf in City Hall.

"Essentially what we've done is we have people based on what we know, we're in the process of terminating. Those are the types of steps that we are taking to help the city of Muncie move forward," said Ridenour.

Nichols and Neal join seven others involved in this investigation, some have been arrested and charged, others serving their sentences. This includes the November arrest of Muncie Mayor Dennis Tyler on a public corruption charge.

In July 2019, Nicole Grigsby the former District Administrator for the Muncie Sanitary District, and Tony Franklin, the owner of Franklin Building, and Design, LLC, were indicted on charges of conspiracy to commit wire fraud, wire fraud, making false statements, and falsification of documents in a federal investigation.

The U.S. Attorney's Office says if Neal and Nichols are convicted of all charges the two could face up to 20 years.

“Public corruption is a significant priority for the FBI. Crimes of this nature are something we take very seriously, because those who exploit their official position for personal gain undermine public trust and confidence,” said Acting Special Agent in Charge Robert Middleton, FBI Indianapolis. “Today’s indictment and arrest of Phil Nichols and Jess Neal is just one more step in seeking to bring to justice those who have victimized the hard-working, tax paying residents of Muncie.”

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