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Federal investigation convicts eight people in Muncie government corruption investigation

muncie
Posted at 4:23 PM, Jan 03, 2023
and last updated 2023-01-04 13:12:02-05

MUNCIE — The U.S. Attorney’s Office and FBI are talking about the results of their investigation into "systemic public corruption" by Muncie City Government Officials.

Four former Muncie public officials, a former police officer, a private citizen, and two contractors have all now been convicted and sentenced, the U.S. Attorney's Office and FBI announced Tuesday.

The FBI investigation began in 2015.

The following people were all convicted of federal crimes and sentenced:

  • Former Muncie Mayor, Dennis Tyler
  • Former Building Commissioner Craig Nichols
  • Tracy Barton, former Superintendent of Sewer Maintenance and Engineering
  • Debra Nicole Grigsby, former District Administrator of Muncie Sanitary District
  • Jess Neal, former Muncie police officer
  • Jeff Burke, owner, Burke Rentals 1 and McGalliard Guns & More
  • Rodney Barber, owner, Barber Contracting
  • Tony Franklin, owner, Franklin Building and Design

PREVIOUS: Ex-Muncie Mayor released from federal prison less than halfway through sentence | Ex-Muncie Building Commissioner to serve 2 years in Federal prison for money laundering, wire fraud

Court documents say between 2014-2019, the City of Muncie worked on several public works projects that were intended to benefit residents. By law, public officials were required to solicit bids and engage in a competitive bidding process.

Federal authorities say Tyler, Nichols, Barton and Grigsby, under the "corrupt influence" of Phil Nichols, engaged in bid-rigging and kickback schemes. Phil Nichols was charged and entered into an agreement to plead guilty, but died before his case was resolved.

"These violations of the public trust are a special category of wrong because if the powerful in the government can't be held accountable, the public lose faith in the government itself," Zachary A. Myers, U.S. Attorney for the Southern District of Indiana, said.

Of the eight people convicted, six were sent to federal prison. Their sentences total 7.5 years.

Franklin, the last person to be convicted, was sentenced Tuesday.

Franklin was sentenced to 1 year in prison for Conspiracy to Commit Wire Fraud and ordered to pay $279,806 in restitution.

"The FBI is extremely grateful to those members of the public who were willing to stand up for what's right and provide information that brought these abuses of power to light. Without information from the public, this case might never have gotten off the ground," FBI Special Agent in Charge Herbert J. Stapleton said.

This public corruption probe is completely separate from the U.S. Attorney's Office case against current and former Muncie Police Officers for police brutality and writing false reports.

"Cases like this one are the reason public corruption is a top investigative priority of the FBI," said Stapleton. "We encourage the public to bring these types of abuses of public office to light and report them to the FBI. "

Former Muncie Mayor Dennis Tyler served less than a year in prison in West Virginia for theft of government funds, and was released in June 2022.

Tyler was also ordered to pay $15,250 in restitution to the city of Muncie.

Former Muncie Building Commissioner Craig Nichols served nearly two years in federal prison for money laundering and fraud.

Nichols was ordered to pay $217,892 in restitution to the City of Muncie, Muncie Sanitary District and developer Dannar Construction.

WRTV asked at the news conference whether the restitution has been paid, and the U.S. Attorney did not know the answer and later referred WRTV to the clerk's office.

The clerk’s office told us it can’t provide information on restitution because of judiciary policy.

WRTV also asked if he was aware of any changes the City of Muncie has made as a result of this public corruption investigation.

"I would hope that seeing what happens when you do choose to cross the line and break the law will encourage folks who are engaged in the government and trying to do the right thing to set up processes and controls so they don't end up on our desks," Myers told WRTV.

DEFENDANTOFFENSESSENTENCE

Dennis Tyler, 78, of Muncie, Former Mayor of Muncie

Theft of Government Funds

1 year and a day imprisonment

3 years’ supervised release

$15,250 in restitution

Craig Nichols, 40, of Muncie,

Former Muncie Building Commissioner.

Owner, Advanced Walls & Ceilings and Capitol Consulting and Property Management


Wire Fraud and Money Laundering

2 years’ imprisonment3 years’ supervised release $217,892 in restitution

Tracy Barton, 52, of Muncie, Former Superintendent of Sewer Maintenance and Engineering

Conspiracy to Commit Wire Fraud

1 year of probation

Debra Nicole Grigsby, 46, of Muncie,

Former District Administrator of Muncie Sanitary District


Conspiracy to Commit Wire Fraud

1 year and a day imprisonment

2 years’ supervised release

$370,556.99 in restitution


Jess Neal, 54, of Muncie, Former Muncie police officer

Conspiracy to Commit Wire Fraud

2 years’ imprisonment

2 years’ supervised release

$55,650 in restitution

Jeff Burke, 55, of Muncie,

Owner, Burke Rentals 1, and

McGalliard Guns & More


Bank Fraud

6 months imprisonment, and 6 months’ home confinement

2 and a half years’ supervised release.

$245,000 in restitution.


Rodney Barber, 53, of Muncie, Owner, Barber Contracting

Conspiracy to Commit Wire Fraud

2 years of probation

$104,250 in restitution


Tony Franklin, 62, of Muncie, Owner, Franklin Building and Design

Conspiracy to Commit Wire Fraud

1 year and 1 day

$279,806.99 in restitution

2 years supervised release

You can watch the full news conference below.

Summary of Cases

United States v. Dennis Tyler: Former Mayor Tyler admitted to accepting a $5,000 gratuity in exchange for official acts, namely, steering work to a paying contractor who charged more than an honest competitor. The gratuity arose from a public works project for Walnut Commons, which was an approximately $8.3 million housing development that was intended to house Veterans who were experiencing homelessness. On December 15, 2015, Mr. Tyler accepted $5,000 from Tracy Barton, the head of Muncie Sanitary Maintenance and Engineering, who acted as a middleman between the Mayor and Person A, a local contractor. Person A’s bid for the Walnut Common’s job was not the lowest, most qualified, responsive bid, but Mr. Tyler agreed to steer the contract to him as a favor. He later accepted the $5,000 payment as a thank you. The Walnut Commons contract was for $218,489. Mr. Tyler was convicted of Theft of Government Funds.

United States v. Craig Nichols: Mr. Nichols was the son of Phil Nichols and served as Muncie’s Building Commissioner. Craig Nichols also owned Advanced Walls and Ceilings, a company that contracted with the City of Muncie. Craig Nichols used false documents to steal $81,500 from the city for demolition work that AWC never performed and used additional false documents in an attempt to cover up his crimes. Mr. Nichols also fraudulently concealed his ownership of Capitol Consulting and Property Management, a company that billed the City for asbestos inspection and abatement work that he either never performed, double billed, or performed at inflated prices. Mr. Nichols pled guilty to Wire Fraud and Money Laundering and admitted that he billed Muncie $454,400 in contracts for work he did not perform or obtained through fraud. His crimes resulted in a loss of $270,392 in taxpayer money.

United States v. Tracy Barton: Mr. Barton was the Superintendent of Sewer Maintenance and Engineering at the Muncie Sanitary District. He admitted to accepting bribes and kickbacks in exchange for steering work to a contractor, who was a close friend. He further admitted to participating in a scheme to defraud the Muncie Sanitary District, in which public works projects were steered, at Phil Nichols’ direction, toward paying contractors through public officials who collected bribes and kickbacks. In total, Mr. Barton admitted to participating in a conspiracy in which $2,053,873 in contracts were steered, at Phil Nichols’ direction, toward paying contractors through public officials. The scheme resulted in $2,053,873 in fraudulent contracts and a loss of $1,032,682.

United States v. Debra Nicole Grigsby, Jess Neal, and Tony Franklin: Ms. Grigsby was the District Administrator for Muncie Sanitary District. As the District Administrator for MSD, Ms. Grigsby was responsible for approving the selection of contractors to perform work on MSD Infrastructure Projects. She also signed maintenance contracts on MSD’s behalf. Ms. Grigsby admitted to accepting kickbacks from Jess Neal and Tony Franklin in exchange for steering Muncie Sanitary District work to Tony Franklin. She further admitted to knowing that her subordinate, Tracy Barton, was also steering work toward paying contractors and was accepting kickbacks. Ms. Grigsby was convicted of Conspiracy to Commit Wire Fraud.

Mr. Neal was a Sergeant for the Muncie Police Department and the owner of Red Carpet, Inc. and Express Properties, LLC. Mr. Neal admitted to arranging for Mr. Franklin to pay kickbacks to Phil Nichols and Debra Nicole Grigsby so that Mr. Nichols would greenlight Mr. Franklin. Ms. Grigsby then also agreed to steer work arising out of the Muncie Sanitary District’s infrastructure projects associated with levee recertification to Mr. Franklin. Mr. Neal was convicted of Conspiracy to Commit Wire Fraud.

Mr. Franklin was the owner of Franklin Building and Design, LLC. Mr. Franklin admitted to paying Phil Nichols and Debra Nicole Grigsby kickbacks in exchange for receiving $1,170,667 in fraudulently steered contracts. Mr. Franklin received $1,170,667 in fraudulently steered contracts, and Muncie Sanitary District overpaid Mr. Franklin more than $600,000. As a result, MSD overpaid Franklin more than $600,000. He was convicted of Conspiracy to Commit Wire Fraud.

United States v. Jeff Burke: Mr. Burke was the owner of Burke Rentals 1 and McGalliard Guns & More. He admitted to receiving an inside tip from former police officer Jess Neal that the Muncie Sanitary District had to purchase a property known as the Flea Market in order to recertify the levee. Acting on that insider tip, Mr. Burke defrauded a bank to receive a quick loan, quickly purchased the Flea Market property for $150,000 without disclosing it’s true value, and then sold it 41 days later to the City for an inflated cost of $395,000. Mr. Burke did so knowing that the City had no choice but to pay the exorbitant cost. Mr. Burke was convicted of Bank Fraud and making False Statements to FBI agents. His scheme resulted in a loss of $245,000 in taxpayer funds.

United States v. Rodney Barber: Mr. Barber was the owner of Barber Contracting, Inc. He admitted to paying kickbacks to Phil Nichols and Tracy Barton in exchange for receiving nearly $300,000 in public works projects associated with the Muncie Sanitary District recertification of the levee. He was convicted of Conspiracy to Commit Wire Fraud, Wire Fraud, and making False Statements. In total, Mr. Barber received nearly $300,000 in contracts, resulting in a loss of $104,250 to Muncie Sanitary District.

United States v. Phil Nichols: Prior to his death, Mr. Nichols admitted in his plea agreement to Conspiracy to Commit Wire Fraud. Mr. Nichols was a former chairman of a political party in Delaware County and was regularly involved in raising money and advising political candidates running for local office in Delaware County. According to his co-conspirators and other paying contractors, though he had no official role in Muncie City Government or Muncie Sanitary District, Mr. Nichols maintained a powerful political control over Muncie officials, including Mrs. Grigsby and Mr. Barton. During the conspiracy period, contractors who wished to do work for Muncie Sanitary District had to be “greenlighted” by Mr. Nichols. Only contractors who had agreed to pay bribes or kickbacks to public officials, or make contributions to certain political campaigns or parties were greenlighted. As set forth in their plea agreements, Tracy Barton and Debra Nicole Grigsby admitted that Mr. Nichols directed them to steer public works projects arising out of the Muncie Sanitary District infrastructure projects associated with levee recertification to contractors who were willing to pay bribes and kickbacks.