INDIANAPOLIS (WISH) - An internal city report identifies nearly 50 additional properties that were potentially involved in a fraudulent scheme to get kickbacks from the sale of city owned properties.
It also shows city leaders were warned of serious concerns about the opportunity for fraud within the land bank program months before two city employees were indicted on federal wire fraud charges.
The 110-page report, released by Indianapolis Mayor Greg Ballard’s office Friday after requests from I-Team 8, outlines concerns first voiced by Metropolitan Development Commission members in October 2012 over so-called “bulk sales” of properties in the land bank. The land bank includes approximately 1,200 properties owned by the city.
- ONLINE EXTRA | Read the report
Department of Metropolitan Development employees Reggie Walton and John Hawkins were both charged with wire fraud following a May 21 raid of DMD offices . Federal prosecutors allege that they personally profited from the sale of some abandoned properties in the city’s land bank program. Both were fired the following day.
Three others have also been charged with bribery in connection with the case.
Mayor Ballard suspended the Indianapolis Land Bank program following the indictments.
The report released Friday shows DMD identified “a number of properties” not listed in the indictment, but associated with organizations named in it.
“Specifically, DMD identified 20 additional properties sold to IMAC…20 additional properties sold to New Day Residential, Inc., and 8 additional properties where Naptown Housing, Inc. was in the chain of title,” the report reads. Federal prosecutors allege that Walton was a silent partner in Naptown Housing Group, and benefited from the sales of those properties.
“Doing a title search and going through the chain of title, we found the names of the organizations and names of folks connected to the indictment in that chain of title,” said Ballard Spokesman Marc Lotter. “And, that's the only thing we know, is that their names were connected to that chain of title. Whether any alleged wrongdoing took place would have to be determined by federal investigators who have access to bank records and other things, which is where this would have taken place.”
The report goes on to say that a detailed listing of properties will be provided to federal prosecutors.
Near North Community Development Corporation President Michael Osborne said the potential of additional properties being involved in the scandal is disheartening.
“That the scale of that particular incident is perhaps 2-3 times larger than thought, that is disappointing,” he told 24-Hour News 8. “I think I’m more saddened that this would happen, really, because it puts the land bank program on hold, and it makes people, in some cases, confuse the actions of some individuals with land banking as a mechanism.”
Near North Development Corporation has bought 16 land bank properties during the last three years, Osborne said. Each one has been rehabilitated and is now home to a new family.
“The uncertainty about what's going to happen to the blighted or abandoned home next door makes a homeowner or a perspective buyer kind of question whether they want to buy or renovate when they don't know what's going to happen next door to them,” said Osborne, who also serves as Board President to the Indianapolis Coalition for Neighborhood Development. “So, in that way, this helps redevelop entire neighborhoods. It's not just access to the properties, but it's access to clear title at a very affordable cost.”
Some homeowners now living in former land bank homes had worried that access might be taken away from them. The city’s report now suggests that won’t happen.
“These folks who were in these homes are innocent as it relates to the other alleged actions,” Lotter said. “So, the city does not have any intention of doing anything with these properties or going back to get the title to these properties. As far as we're concerned, these people are living in these houses and have titles to these homes.”
“It would be a huge setback for the community if they were to revoke the titles,” said a relieved Spencer Elliott, who has lived in a former land bank home on the near North side for the last eight months. “I was freaking out, and I'm really happy now! I really have enjoyed moving here and getting to know the community, and I want that to continue.”
The internal report also includes a myriad of other documents, including a detailed timeline of city meetings held on the land bank, email exchanges between DMD management and MDC members, land bank presentations given to city leaders and dozens of photos of properties involved in the land bank program.
The contents of the report have now been given to the U.S. Attorney Joe Hogsett, who will review them in connection with the case . Hogsett said in a prepared statement that the criminal investigation is ongoing and he would "have no public comment as to factual assertions made by any party with regard to this matter."
Indianapolis attorney Forrest Bowman, Jr. was hired in early June as a consultant to help the city work with federal investigators as they seek records in the case. He will also prepare a detailed audit of the program that will be shared with federal prosecutors, Lotter said.
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