- Associated Press - Wednesday, March 4, 2015

INDIANAPOLIS (AP) - A former Indianapolis city official accused of accepting bribes and kickbacks “cherry-picked” a city program that sells vacant and tax-delinquent properties and directed prime real estate to developers in exchange for payments, a prosecutor said Wednesday as the man’s trial got underway.

Deputy U.S. Attorney Brad Blackington said during his opening statement that Reggie Walton, who faces wire fraud, bribery and other charges, used his city post to enrich himself. Walton has pleaded not guilty. His attorney, Michael Donahoe, said his client is “guilty of poor judgment” and perhaps ethical lapses but that doesn’t mean he’s guilty of what prosecutors allege.

Walton is Indianapolis’ former assistant administrator of abandoned buildings. In that post, he supervised the Indianapolis Land Bank, which acquires abandoned and tax-delinquent properties and sells them to both nonprofits and private developers.

Federal prosecutors allege Walton used his post to facilitate the fraudulent sale of prime city-owned properties to nonprofits for as little as $1,000 apiece before they were later sold to for-profit developers.

“He cherry-picked the properties that the Land Bank owned,” Blackington told a federal jury that’s hearing the case.

The prosecutor said Walton traded on his insider information about the Land Bank program and directed the most appealing of the Land Bank’s roughly 1,200 properties to developers who then made payments to him after flipping and reselling those properties.

Under the Land Bank’s rules, private developers must meet or exceed a price assigned on individual lots or homes following a property appraisal. But nonprofit groups, because of their nonprofit status and missions to help the community, can purchase those properties for as little as $1,000 per parcel.

Prosecutors contend Walton used some of these nonprofit groups for “pass-through” transactions to the private developers who benefited by acquiring properties at dramatically lower prices than they would otherwise have paid directly for that land.

Donahoe noted that other city officials approved each of Walton’s actions in arranging for the sale of Land Bank properties and said the city was “happy” to get the idle properties off the city’s books and into the hands of others who could put them back into use.

Walton is being tried along with alleged co-conspirator David Johnson, the executive director of the nonprofit Indiana Minority AIDS Coalition. Johnson faces wire fraud and other charges in their joint trial, which is expected to last about three weeks. He also has pleaded not guilty.

Blackington said Johnson helped preserve “the secrecy of this fraud” by using the group’s nonprofit status to join in the scheme by reselling properties the Indiana Minority AIDS Coalition had acquired through the Land Bank to private developers.

Walton and Johnson were indicted in May 2013. Walton was fired by the city days after his indictment.

Three other individuals also indicted in the scheme entered guilty pleas before their cases went to trial.

Walton and Johnson’s trial is expected to last about three weeks and will include the jury hearing recordings that were made secretly of telephone conservations Walton had with an undercover FBI agent that include mentions of kickbacks, Blackington said.

Donahoe alluded to those recordings during his opening statement, and urged jurors to judge his client “on his actions, not his words.” Donahoe said Walton often stretched the truth during those calls because he believed he was speaking to a private developer.

“He embellished, he exaggerated, he was fast and loose with his words,” Donahoe said. “It was almost like a job interview. He was trying to impress people.”



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