United States v. Reginald Walton
874 F.3d 990
| 7th Cir. | 2017Background
- Reginald Walton, manager of the Indianapolis Land Bank (a City office that acquires and conveys tax-delinquent properties), steered desirable Land Bank properties to select nonprofit purchasers who then transferred them to private buyers; Walton and co-conspirators pocketed the profits.
- Walton recruited and received cash kickbacks from partners (Aaron Reed, John Hawkins, Randall Sargent, and an undercover agent). Walton drafted resolutions and oversaw property transfers with little scrutiny.
- David Johnson, operator of IMAC (a qualifying nonprofit), participated as the middleman: IMAC bought properties at nonprofit prices, sold them to private buyers, and funneled proceeds (including cash kickbacks) to Walton and others; Johnson also mischaracterized payments in IMAC records.
- Walton and Johnson arranged sales that overcharged vulnerable victims (Amos victims — low-income, limited English) for homes intended to be rescued after prior fraud, pocketing the difference.
- A federal grand jury indicted Walton and Johnson on counts including honest services wire fraud, wire fraud, bribery under 18 U.S.C. § 666, and conspiracy to commit money laundering; a jury convicted both and the Seventh Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Sufficiency of evidence for honest services and wire fraud (intent) | Government: evidence of kickbacks, false records, cash payments, false statements supported specific intent to defraud. | Walton/Johnson: actions were routine or benefitted City; lacked specific intent; Walton was constrained by supervision; Johnson acted to help nonprofit mission. | Affirmed — substantial evidence permitted a reasonable jury to infer specific intent from kickbacks, concealment, false entries, and admissions. |
| Sufficiency of evidence for money laundering convictions | Government: money flow and concealment tied to proceeds of fraud supported laundering counts. | Defendants: laundering convictions should fall if fraud convictions vacated. | Affirmed — because fraud convictions stand, related money laundering convictions are supported. |
| Jury instructions (§ 666 bribery vs. gratuity; good-faith instruction) | Government: instructions correctly stated law and required corrupt intent to influence official acts. | Walton: instruction allowed conviction for mere gratuity (impermissible); both: entitled to good-faith instruction. | Affirmed — § 666 instruction consistent with Seventh Circuit precedent (criminalizes bribes/gratuities under controlling law) and the instruction required corrupt intent; good-faith instruction unnecessary because mens rea was already required. |
| Sentencing enhancements (sensitive public position; vulnerable victims) | Government: Walton held a sensitive position warranting a Guidelines enhancement; Amos victims were vulnerable. | Defendants: Walton not high-level; enhancement inappropriate; victims not vulnerable due to prosecutorial assistance and adequate pricing. | Affirmed — Walton exercised substantial influence over Land Bank decisions (sensitive position); Amos victims were vulnerable (limited English, low-income, prior victimization, risk of homelessness). |
Key Cases Cited
- Weimert v. United States, 819 F.3d 351 (7th Cir.) (specific intent and honest-services fraud analysis)
- Skilling v. United States, 561 U.S. 358 (Supreme Court) (honest-services fraud requires bribery or kickbacks)
- United States v. Hawkins, 777 F.3d 880 (7th Cir.) (§ 666 covers gratuities and bribes under circuit precedent)
- Jackson v. Virginia, 443 U.S. 307 (Supreme Court) (standard for sufficiency review: whether any rational trier of fact could have found guilt)
- United States v. Hill, 645 F.3d 900 (7th Cir.) (sensitive-position enhancement supports applying Guidelines increase despite supervisory structure)
- United States v. Natale, 719 F.3d 719 (7th Cir.) (waiver/forfeiture principles for jury-instruction objections)
- United States v. Dingle, 862 F.3d 607 (7th Cir.) (difficulty of reversing sufficiency-of-evidence verdicts on appeal)