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Feds charge 5 in Indy Land Bank kickback scheme

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Federal prosecutors have charged two Indianapolis city employees in the Department of Metropolitan Development and three others in a scheme involving cash kickbacks on the sale of properties in the Indy Land Bank.

The indictment, which includes eight wire fraud and bribery counts, alleges city employees Reginald Walton, 29, the Land Bank's director, and John Hawkins, 27, a senior project manager for the DMD and a former special assistant to Mayor Greg Ballard, participated in the scheme.

Also charged: David Johnson, 46, executive director of the Indiana Minority AIDS Coalition; Randall Sargent, 57, owner and president of New Day Residential Development; and Aaron Reed, 35, a friend of Walton's.

The five defendants each face three wire fraud charges. Each charge carries a potential penalty of 20 years in prison and a $1 million fine.

Walton also is charged with three counts of bribery on an organization that receives federal funds, each of which could carry a maximum penalty of 10 years in prison and a $250,000 fine. Sargent and Reed are facing one count each of bribery.

The suspects made their first appearance in federal court midday Tuesday, where U.S. Magistrate Judge Denise K. LaRue read them the charges and explained their rights. The defendants were released pending trial.

U.S. Attorney Joe Hogsett is scheduled to discuss the charges at a 1:30 p.m. press conference.

FBI agents arrested the men and raided the City-County Building on Tuesday morning, as IBJ first reported. The IBJ is a sister publication of Indiana Lawyer. The moves were the culmination of a months-long federal investigation into alleged corrupt practices at the Indy Land Bank, a municipal agency that handles the disposition of vacant and tax-delinquent homes that fall into city hands.

State sales-disclosure records show Sargent's company bought at least 23 properties from the Land Bank since May 2012. The disclosures show a price of $1,000 apiece for 15 properties and $2,500 each for eight more.

New Day Residential lists its headquarters address as 238 S. Meridian St., Suite 201, above the Claddagh Irish Pub.

Walton was prominently featured in an IBJ investigative story in November 2012 that raised questions about the city's sale of taxpayer-owned properties to not-for-profit groups eager to exploit a loophole allowing low-priced sales without public bids.

Marc Lotter, a spokesman for Mayor Greg Ballard, declined to comment before the afternoon announcement.

An FBI tactical vehicle pulled up to the north entrance of the City-County Building shortly after 8 a.m. It remained there late Tuesday morning, as agents carried out boxes of documents from the Land Bank.

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  1. So that none are misinformed by my posting wihtout a non de plume here, please allow me to state that I am NOT an Indiana licensed attorney, although I am an Indiana resident approved to practice law and represent clients in Indiana's fed court of Nth Dist and before the 7th circuit. I remain licensed in KS, since 1996, no discipline. This must be clarified since the IN court records will reveal that I did sit for and pass the Indiana bar last February. Yet be not confused by the fact that I was so allowed to be tested .... I am not, to be clear in the service of my duty to be absolutely candid about this, I AM NOT a member of the Indiana bar, and might never be so licensed given my unrepented from errors of thought documented in this opinion, at fn2, which likely supports Mr Smith's initial post in this thread: http://caselaw.findlaw.com/us-7th-circuit/1592921.html

  2. When I served the State of Kansas as Deputy AG over Consumer Protection & Antitrust for four years, supervising 20 special agents and assistant attorneys general (back before the IBLE denied me the right to practice law in Indiana for not having the right stuff and pretty much crushed my legal career) we had a saying around the office: Resist the lure of the ring!!! It was a take off on Tolkiem, the idea that absolute power (I signed investigative subpoenas as a judge would in many other contexts, no need to show probable cause)could corrupt absolutely. We feared that we would overreach constitutional limits if not reminded, over and over, to be mindful to not do so. Our approach in so challenging one another was Madisonian, as the following quotes from the Father of our Constitution reveal: The essence of Government is power; and power, lodged as it must be in human hands, will ever be liable to abuse. We are right to take alarm at the first experiment upon our liberties. I believe there are more instances of the abridgement of freedom of the people by gradual and silent encroachments by those in power than by violent and sudden usurpations. Liberty may be endangered by the abuse of liberty, but also by the abuse of power. All men having power ought to be mistrusted. -- James Madison, Federalist Papers and other sources: http://www.constitution.org/jm/jm_quotes.htm RESIST THE LURE OF THE RING ALL YE WITH POLITICAL OR JUDICIAL POWER!

  3. My dear Mr Smith, I respect your opinions and much enjoy your posts here. We do differ on our view of the benefits and viability of the American Experiment in Ordered Liberty. While I do agree that it could be better, and that your points in criticism are well taken, Utopia does indeed mean nowhere. I think Madison, Jefferson, Adams and company got it about as good as it gets in a fallen post-Enlightenment social order. That said, a constitution only protects the citizens if it is followed. We currently have a bevy of public officials and judicial agents who believe that their subjectivism, their personal ideology, their elitist fears and concerns and cause celebs trump the constitutions of our forefathers. This is most troubling. More to follow in the next post on that subject.

  4. Yep I am not Bryan Brown. Bryan you appear to be a bigger believer in the Constitution than I am. Were I still a big believer then I might be using my real name like you. Personally, I am no longer a fan of secularism. I favor the confessional state. In religious mattes, it seems to me that social diversity is chaos and conflict, while uniformity is order and peace.... secularism has been imposed by America on other nations now by force and that has not exactly worked out very well.... I think the American historical experiment with disestablishmentarianism is withering on the vine before our eyes..... Since I do not know if that is OK for an officially licensed lawyer to say, I keep the nom de plume.

  5. I am compelled to announce that I am not posting under any Smith monikers here. That said, the post below does have a certain ring to it that sounds familiar to me: http://www.catholicnewworld.com/cnwonline/2014/0907/cardinal.aspx

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