Reggie Walton Sentenced To 9 years For Role In Land Bank Scheme
Reggie Walton, the former director of the Indy Land Bank, was sentenced Monday to nine years in federal prison for his role in a scheme in which he received kickbacks for fraudulently directing the sale of abandoned or tax-delinquent properties.
U.S. District Judge William Lawrence also imposed a $250,000 fine on Walton, 32, who was found guilty by a jury last year on eight felony charges including wire fraud and bribery.
“The citizens of Indianapolis deserve better from their public officials,†said U.S. Attorney Josh Minkler in a statement. “Betraying the public’s trust and wasting tax dollars is a crime we take very seriously.â€
The sentencing comes after a federal corruption probe involving the city’s land bank, which managed the disposition of tax-delinquent, abandoned properties. Federal prosecutors charged five men, including two city employees, who used their government positions to transfer promising properties in exchange for cash.
David Johnson, executive director of the Indiana Minority AIDS Coalition, was also found guilty on five counts of wire fraud and conspiracy to commit money laundering during last year’s trial. He was sentenced in December to five years in prison. Three other co-defendants agreed to plea deals before trial.
Much of the federal government’s case relied on Walton’s own words as he discussed business moves with his partners in phone calls the government was secretly monitoring. The government also taped conversations between Walton and an undercover FBI agent wearing a wire and posing as an out-of-state businessman.
The purpose of the Indy Land Bank was to acquire abandoned and tax delinquent properties and return them to an economically viable use. The agency sold properties to not-for-profit and for-profit real estate developers. For-profit investors were required to pay at least the appraised value of the property. Not-for-profit purchasers, however, could bypass the auction process and buy real estate for a price between $1,000 and $2,500 per parcel, regardless of the appraised value of the property.
Prosecutors said Walton accepted bribes to arrange sales to not-for-profit organizations that would then sell the properties to for-profit businesses. After these “pass-through†transactions had taken place, Walton and Johnson would receive kickback payments from the not-for-profit organizations from the proceeds of the property sales.
Walton, a Purdue University engineering graduate who joined the city in 2008 after a layoff from Pepper Construction, had said on the stand during his trial that in retrospect, his side business—conducted with cash and without using his name on any documents—looked bad. But he had insisted his position managing the Land Bank did not give him an unfair edge buying and flipping Land Bank properties because the Metropolitan Development Commission eventually had to sign off on the land transfers.
Walton admitted, however, that he never disclosed he would personally profit from those transfers. The not-for-profit Renew Indianapolis now handles the former Indy Land Bank’s duties.
“The government also taped conversations between Walton and an undercover FBI agent wearing a wire and posing as an out-of-state businessman.” Couldn’t be the FBI. Must have read the card wrong.
…..makes no difference, you know Indiana Enoch.
Federal Investigation of Evansville DMD (by the US Treasury Department Inspector General’s Office) over the “serious” issue of possible misuse of Federal funds clearing land for the D-Patrick car dealership – it’s a big deal.
(Those funds are designed to deal with “blight issues,” not clearing land for car dealers.)
Glad to see the CCO post this article today.
Wake up people. THIS issue is significant.
I know.
If anybody has to go to the Civic Center today, be extra careful. I expect that a lot of folks there are sweating bullets.
Editor,
I read this in the Indy Star before I encountered it here, so it is totally refreshing to see the City County Observer, in same-time, have a link to this news on the CCO site.
So….to connect a few dots:
A. The use of nonprofit Land Banks (controlled by city administrators and officials) CAN be leveraged to useful effect clearing thousands of blighted properties in a City. Take possession, clear the land, RE-SELL them.
B. But…..as this Indy Star article indicates….LAND BANKS ARE RIFE WITH THE POTENTIAL FOR CORRUPTION BY THOSE (PAST) AND PRESENT CITY OFFICIALS.
C. How? Remember, there are TWO THOUSAND of these in Evansville, and Pressanykey indicates he thinks that number is way too low, the real number is much bigger.
D. So…You are talking about enormous LEGAL (attorney’s fees) invested in pedestrian law clerk tasks: lien work, title work, sales contracts, side agreements, representing Buyers, representing Sellers, legal issues on remediation….on and on and on….
– But really? The real money is ON THE REAL ESTATE DEALS. Attorneys sometimes get their clients favorable deals on these properties. Sometimes they participate themselves. Sometimes someone sends them a “referral fee” or a “consultant fee” for getting early access to information.
– Those same Attorneys often have access to information well in advance of the general public because they have close relationships with City Officials, they know Council Members involved in those Land Banks…and they have close access to “insider information” that allows them to charge “fees and referrals” or “the ability to get in on deals in an off the record manner.”
D. The Banks who have lent money on these “blighted properties” in the past? THEY need to close out bad investments…..and GREATLY appreciate guidance and inside information on properties when they come up for purchase by the Land Bank, come up for disposition by the Land Bank, or even the right to “buy the property back” at preferred prices.
E. ATTORNEYS and REAL ESTATE COMPANIES and all of the relationships between City Officials, former City Officials, Council Members, former City Council Members……..ALL OF THESE PEOPLE have much to win by being involved in this. It is about power, influence and money.
City County Observer…..you would do a great public service if you demanded absolute transparency of all of the activities of two entities:
1. The Evansville Brownfields Corp
2. The Mayor and City Council are seeking to establish a new (Evansville City) Land Bank
Who are the Executive Board Members of these two organizations?
Are there any City Officials and City Council Members involved?
WHO is involved in trying to promote and establish the NEW Evansville Land Bank?
Do any PAST city officials do business with these two organizations?
Do any PAST Council Members do business with these two organizations?
Do any PAST Council Members or City Officials invest in properties assembled by these Land Banks?
Do they get fees, or referrals, or are they allowed to manage the assembly of those properties as consultants to local REAL ESTATE COMPANIES and BROKERS?
Transparency. I think you will find……EVERYONE is involved.
Corruption in the BUSINESS OF LAND BANKS is not rare.
The Indy Star article….shows it is going on close to home.
That’s a pretty stiff sentence. I’m sure Walton thought it’d ‘be handled’ if something went awry when he started down that dark road. It will take a few more of those sentences to get folks attention — that they work for the public and if they profit in untoward ways from privileged information or public position they do so at their own peril.
White collar criminals usually get off with a slap on the wrist. Its good to see a judge that takes stealing taxpayers money seriously. I wonder what the investigators here are going to say when they find out that two councilmen, the president of Brownfields, and the mayor’s wife all work at the same real estate company. The mayor’s wife is sort of the queen bee of FC Tucker. I wonder how many sales they were involved in with Brownfields.
http://www.courierpress.com/topstories/Evansville-City-Council-Meeting—February-8-2016-368096441.html
This could be a real can of worms that was unanimously opened by City Council last night. It appears the door is open to abuses to go through the “pass through.”
……the idea that the Evansville Brownfield nonprofit is simply “a pass through” is preposterous…there are Transactions, Fees, Overhead, Maintenance, Rights of First Refusal, Right to Approve, Management Fees, Administrative Fees….Let’s be clear: Money, Power and Influence.
And it appears that conducting city business leveraging “nonprofit entities” that don’t have to comply with the transparency rules of official government….is the order of the day.
“Nonprofit” conjures up images of “boys and girls clubs” and “coats for kids” and others.
This is NO ORDINARY NONPROFIT.
The Executive Board Members of this “nonprofit” Evansville Brownfields Corp……….says everything you want to know.
One thing I learned working for the SBOA is that if there is something fishy going on in one part of the state you can find it in others. State officials always told me – “WE CANT PROSECUTE IF EVERYONE HAS BEEN DOING IT”. Glad to see the FEDs stepping in and getting results.
If you get the transcripts of this trial, and that should not be that hard, it will make it much easier to disect just exactly what has gone on here in Evansville. It appears the other shoe is about to drop locally, and to that I say: about time!
Press……I have noticed the lack of comments/commentary from several regular CCO posters….who normally fly through the roof and demand transparency and investigations at the very HINT of possible collusion or corruption in City affairs. (..anything mentioning “mosby,” or “weaver”….it ERUPTS)
But on this EBC/Land Bank miscue?
They are silent. Why is that?
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