INDIANAPOLIS—United States Attorney Josh J. Minkler, announced this morning the conviction of two defendants who were involved in a fraud scheme at the Indianapolis Land Bank. Reginald T. Walton 31, and David Johnson 48, both of Indianapolis were found guilty of multiple fraud and bribery charges after a two-week jury trial before U.S. District Judge William T. Lawrence.

“Public servants must understand that they serve the public and not themselves,” said Minkler. “Mr. Walton tried to sell our local government in Indianapolis through a scheme involving power, secrecy and greed. Our local government is not for sale and this verdict sends that message.”

The purpose of the Indianapolis Land Bank is to acquire abandoned and tax delinquent properties in Indianapolis and return them to productive and economically viable use. Properties are made available for sale to non-profit and for-profit real estate developers. For-profit investors interested in purchasing real estate from the Land Bank must pay at least the appraised value of the property. Non-profit purchasers, however, may bypass the auction process, purchasing real estate for a price between $1,000 and $2,500 per parcel, regardless of the appraised value of the property.

Walton and Johnson accepted bribes and “kick-backs” to facilitate fraudulent property sales to non-profit entities that would then sell the property to for-profit businesses. After these “pass-through” transactions had taken place, Walton and Johnson would receive kickback payments from the non-profit organizations from the proceeds of the property sales. The investigation into the pair also included the use of an undercover agent, and Walton accepted $500 from that agent in return for his agreement to fraudulently transfer at least ten parcels of land to the agent for $1,000 each.

“This type of fraud poses a fundamental threat to our way of life,” said FBI Special Agent in Charge W. Jay Abbott. “It takes a significant toll on resources, wasting billions in tax dollars every year. Citizens are owed integrity at all levels of government. The FBI is committed to pursuing those individuals who violate the public’s trust.”

“When a public official violates the trust of the citizens they are charged to serve, as was the case with Reggie Walton, it disparages the service and sacrifice of all government employees,” said Indiana State Police Superintendent Doug Carter. “The four years of investigative work put forth by state police Det. Shank helps restore lost faith and clearly conveys that criminal acts by public servants will be vigorously investigated, vigorously prosecuted and the guilty will be appropriately punished.”

Three other defendants have pleaded guilty in this case and are awaiting sentencing. They include Aaron Reed, John Hawkins and Randall Sargent.

Today’s indictment comes as the U.S. Attorney’s Office has prioritized the investigation and prosecution of fraud, waste and abuse on the part of public officials and those in positions of trust. As part of this effort, in 2012 the Office created a Public Integrity Working Group to assist in the investigation and prosecution of cases involving public corruption and white collar crimes. This case is the result of an investigation by the Federal Bureau of Investigation and the Indiana State Police, both active members of the Working Group.

According to Special Litigation Counsel Bradley A. Blackington and Cynthia Ridgeway, who prosecuted this case for the government, wire fraud charges carry a maximum penalty of twenty years in prison, and the bribery-related charges carry a maximum penalty of ten years in prison.