Walton sentenced to 9 years for role in Indy 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.”

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.