Former Indiana lawmakers, casino exec indicted in federal campaign finance scheme

Two former state lawmakers have been charged in federal court in Indianapolis with violations of campaign finance laws, the Indiana Southern District Attorney’s Office announced Tuesday.

Former State Sen. Brent Waltz, 47, and former State Rep. John Keeler, 71, were charged in a sealed indictment Thursday. The charges – which relate to Waltz’s unsuccessful 2016 Congressional bid – were unsealed and publicly announced Tuesday following news on Monday that the FBI had executed a search warrant and arrest at Waltz’s home.

Waltz is facing five counts alleging conspiracy, false statements, falsification of documents, obstruction of justice and receipt of illegal campaign contributions. Keeler, who is now vice president of Spectacle Entertainment, is facing four similar counts based on allegations of facilitating illegal campaign contributions.

A Republican, Waltz served in the Indiana Senate from 2004 until he retired in 2016. According to a resolution introduced to honor him, his tenure in the Statehouse was marked by his legislation to promote financial literacy and his advocacy to establish funding sources for newborn screenings and to support veterans courts. 

The former state senator ran for Congress in 2016 when Todd Young vacated the 9^th Congressional seat to successfully run for the U.S. Senate. Waltz told Indiana political journalist Brian Howey that he had spent three months planning before he announced his candidacy. Also, he hired consultant Mark Collins, who had helped him get to the Indiana Legislature by upsetting Sen. Larry Borst by just 36 votes.

In the crowded congressional primary that included former Indiana Attorney General Greg Zoeller, Waltz lost, finishing with nearly 14,000 votes.

Tuesday’s indictment traces the alleged misconduct back to 2015, when Keeler was vice president and general counsel of gaming company New Centaur LLC. According to the indictment, Keeler worked with political consultants Kelley Rogers and Charles “Chip” O’Neil to hatch a campaign finance scheme designed to skirt the prohibition on corporate contributions to congressional campaigns and the $2,700 contribution limit in place at the time.

The indictment says the formal scheme began in April 2015, when Rogers came to Indianapolis and met with a New Centaur executive. The two agreed Rogers would create fake invoices for services “provided” to New Centaur by Campaign Communications Inc. and Kelley Rogers Racing LLC, organizations affiliated with Rogers’ company, Strategic Campaign Group.

An agreement dated May 1, 2015, reflected $38,500 in services provided by CCI, while an agreement dated May 10, 2015, showed KRR providing $41,000 in services. Rogers and O’Neil emailed the two fake invoices to Keeler at New Centaur, and Keeler made payments from New Centaur funds to CCI and KRR in the amounts listed in the agreements, for a total of $79,500.

“Rogers and O’Neil never performed any of the services reflected in the two fake agreements, and neither Keeler nor any other New Centaur, LLC employee ever followed up to request the performance of these services,” according to the indictment.

The following September, Rogers and O’Neil recruited nine straw donors and asked each of them to contribute $2,700 to the Brent Waltz for Congress campaign. In return, the donors were fully reimbursed.

“Each Straw Donor contributed by check a donation of $2,700 to Brent Waltz for Congress, and Rogers and O’Neil reimbursed each Straw Donor using the money from New Centaur, LLC. Rogers and O’Neil also contributed $2,700 each to Brent Waltz for Congress, and reimbursed themselves with the money from New Centaur, LLC.”

Additionally, Rogers allegedly made payments directly to Waltz using a portion of the New Centaur money paid out by Keeler. In turn, Waltz recruited four additional straw donors and used the New Centaur funds to reimburse them for $2,700 each.

“In order to reimburse Straw Donors 11, 12, and 13, and in an effort to disguise and conceal those reimbursements, Waltz wrote a check to Company B in the amount of $8,100 … ,” the indictment says. Company B employed Waltz and Straw Donor 11, according to court documents.

“Waltz then caused Company B to issue checks in the amounts of $5,400 to pay Straw Donors 11 and 12 for their contributions, and $2,700 to pay Straw Donor 13 for his contribution, thereby routing the unlawful contribution reimbursements through the accounts of Company B. Waltz reimbursed Straw Donor 10 using cash.”

According to the indictment, Straw Donor 10 was Waltz’s relative, Straw Donor 11 was his business associate and was married to Straw Donor 12, and Straw Donor 13 was his friend and associate.

Rogers also allegedly kept back $33,300 of the New Centaur funds “as his fee for transferring the campaign contributions, and providing advice and consultation to Brent Waltz for Congress.”

As a result of the scheme, the indictment alleges authorized agents of Waltz’s campaign committee unwittingly filed false contribution reports with the Federal Election Commission.

The former state senator is also charged with lying to the FBI in connection with a 2018 investigation into the alleged conspiracy. Among his allegedly false statements is a claim that he sold more than $100,000 in art and other items for campaign cash, when that money actually came from two relatives identified as Person A and Person B.

All told, the indictment says Waltz’s campaign reported to the Federal Election Commission that it received about $152,078.49 from individual contributors and $113,700 in loans from the candidate.

Court documents indicate that both Waltz and Keeler could face up to 20 years if convicted of the falsification charges and up to five years on the additional charges, as well as fines up to $250,000 for each charge.

Already, O’Neil pleaded guilty to conspiracy in a Virginia federal court, admitting that he helped collect donations from small donors in the names of candidates who never received the money. He said he and his girlfriend were among a group used as conduits for illegal corporate donations that were later revealed to benefit Waltz’s congressional campaign, according to the Indianapolis Business Journal.

The alleged scheme also led to an Indiana Gaming Commission investigation into New Centaur. The commission also delayed approval of a casino license in Vigo County for Spectacle gaming, led by Keeler.

On Tuesday, the commission said it had suspended Keeler’s gaming license following his indictment and placement on administrative leave at Spectacle Entertainment.

The instant case, United States of America v. Darryl Brent Waltz and John S. Keeler, 1:20-cr-238, was originally assigned to Indiana Southern District Judge James P. Hanlon, who recused “(i)n accordance with the provisions of Title 28 U.S.C. § 455.” The case was reassigned to Judge James R. Sweeney.

Magistrate Judge Tim A. Baker on Tuesday issued an order requiring the parties to disclose evidence by Oct. 13. The order noted Keeler was released from the Marion County Jail on conditions that he surrender his passport, remove all firearms from his home and not possess a firearm.

The order did not reference Waltz, and online court records do not list an attorney for the former senator.

Keeler is represented by attorneys James Bell and Jonathan Bont of Paganelli Law in Indianapolis. In a statement to Indiana Lawyer, Bell said, “We are currently reviewing the Indictment and we will be making our responses in Court.”

The government’s case is being prosecuted by William Gullotta and John Taddei of the Department of Justice’s Criminal Division Public Integrity Section, and by Brad Shepard and MaryAnn Mindrum with the Indiana Southern District U.S. Attorney’s Office.

The Indianapolis Business Journal and IL senior reporter Marilyn Odendahl contributed to this report.