Sentencing memo recounts bribery saga, Neal's business dealings

MUNCIE, Ind. — Much of the focus of a 53-page "sentencing memorandum" filed last week by federal prosecutors is on how much money retired Muncie police officer Jess Neal should be ordered to repay as a result of his participation in a local bribery and bid-rigging scheme.

Assistant U.S. Attorney Tiffany Preston said Neal "paid bribes and kickbacks resulting in more than $1.1 million in intended loss to Muncie citizens resulting from fraudulent public service contracts."

She wrote that "subtracting the fair market value of the services that were rendered results in a final loss amount of $637,863.90."

Neal's lawyer, in response to a pre-sentence report, suggested his client was responsible for taxpayers losing a far smaller total — $30,560.

Neal — a Muncie police officer for more than 30 years before his retirement became official a year ago — is scheduled on Feb. 2 to plead guilty to conspiracy to commit wire fraud.

EARLIER COVERAGE:

►Prosecutor calls ex-Muncie police officer Neal 'hustler' whose crimes cost taxpayers $637K

He would be sentenced the same day, by U.S. District Court Judge James Sweeney II. According to Preston's memo, Neal faces a sentencing range of 27 to 33 months.

The sentencing memo also includes a detailed recap of the scheme — reportedly concocted by Phil Nichols, a former local Democratic Party chairman, with two Muncie Sanitary District officials, among others — to rig bids on MSD contracts in exchange for bribes.

Also recounted in the document are situations involving Neal, some not directly related to his case, that federal prosecutors nonetheless found curious.

According to that document:

• Neal, described as having a "close relationship" with then-Mayor Dennis Tyler, approached MSD administrator Nikki Grigsby in February 2013 and told her she needed to help him raise funds for Tyler and the local Democratic Party.

Grigsby later spoke to Nichols, who told her she needed to participate in the fund-raising activities "if she wanted to keep her job at MSD."

From that point on, Preston wrote, it was Grigsby's understanding "that if both she and her husband wanted to keep their government jobs, they had to answer to Mr. Nichols."

• The bribery conspiracy involving MSD contracts — known by some participants as "The Program" — began in March 2015 and continued until October 2018.

The first scheme, involving Nichols and then-Muncie Sanitary District Tracy Barton, involved contracts for mowing the river levee.

A contractor reportedly routinely paid Barton kickbacks, "typically between $1,600 and $1,700," which he then delivered to Nichols.

• "The Program" was later expanded to involve demolition projects related to planned improvements in the levee system.

In September 2015, Neal approached Grigsby and asked her to steer related projects to the company of his friend, Tony Franklin.

That month, Neal gave Grigsby a Victoria's Secret gift card, "one of many kickbacks she received from Mr. Neal and Mr. Franklin during the conspiracy period."

Franklin at first received contracts despite not having made contributions to "The Program."

Grigsby as a result was summoned to Democratic Headquarters and "scolded" by Nichols.

Neal, with Franklin present, later gave Grigsby an envelope "stuffed" with cash that she delivered to Nichols.

"Mr. Nichols then greenlighted Mr. Franklin," Preston wrote.

• In addition to receiving contracts for MSD demolition projects, Franklin billed the sanitary district for Dumpster-related expenses the district had already paid for.

• Neal later "paid Ms. Grigsby $1,000 in gift cards, directed Mr. Franklin to donate $500 to a fundraiser directly benefiting Mrs. Grigsby. and attempted to give her $2,000 in cash."

Grigsby by that point was "spooked" by knowledge of the federal investigation and declined to keep the cash. Neal instead then gave her "a gold necklace and several sports jerseys, which she kept."

• Between December 2015 and February 2017, Neal used a debit card provided by Franklin "to spend $5,635.36 on himself and to buy (a) $1,000 Saks gift card used as a kickback/bribe to Ms. Grigsby."

• Preston called such payments "the tip of the iceberg."

In February 2017, Neal purchased a vacant warehouse for $205,000, and leased space in it to Franklin for $2,500 a month.

• Federal investigators obtained a transcript of a September 2017 text exchange between Neal and Mark McKinney, an attorney for the sanitary district.

The exchange included this commentary: "Tony (Franklin) needs to be a little more careful who he tells what. He talked to Joe Evans (a sanitary district board member) this week, a little too much!"

Preston suggests that comment was made by Neal, but the transcript indicates it came from McKinney's cellphone.

• In February 2020, Neal "visited Hoosier Park Casino (in Anderson) for a night of gambling and did well."

After winning $7,675 in casino chips, Neal recruited a family member to cash in the chips for him "and gave her $100 for her trouble."

"Even though Mr. Neal knew his co-conspirators had been indicted, and his home had been searched by the FBI, he continued to break the law in an apparent attempt to hide his assets," Preston wrote.

• Neal and Grigsby "organized a scheme" that saw Muncie police officers "favored by Neal" paid by the sanitary district "to perform 'security' work" at lots, owned by the district, where demolitions were "planned or underway."

"Given the condition of the parcels of land, this service was dubious at best," Preston wrote.

• In December 2015, Neal sold a property in the 2200 block of West Godman Avenue to the Sanitary District for $52,000.

Neal had purchased the property in 2009 for $17,500.

"MSD generously added $2,500 for 'personal property' located inside the building," which Franklin was hired to demolish, Preston wrote.

While a MSD official purportedly had said the property was needed to store equipment for a nearby infrastructure project, investigators could find no one who acknowledged the land was needed for that use, or any other.

Like Neal, Grigsby, Barton and Franklin have negotiated deals with prosecutors, although they have not yet entered guilty pleas or been sentenced.

Nichols is scheduled to stand trial in June on counts of wire fraud, conspiracy to commit wire fraud, and witness tampering.

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Douglas Walker is a news reporter at The Star Press. Contact him at 765-213-5851 or at dwalker@muncie.gannett.com.

This article originally appeared on Muncie Star Press: Memo recounts retired officer's involvement in Muncie bribery scheme