FBI investigating Muncie city government

MUNCIE — The FBI is investigating city government in Muncie for possible wrongdoing.

Although the FBI offices in Muncie and Indianapolis would not acknowledge the investigation, people who have talked to agents have told The Star Press what they were questioned about and what they believe to be some elements of the probe.

And Mayor Dennis Tyler, although he noted he was advised by legal counsel against talking about the FBI investigation, said his administration has provided information and is cooperating with investigators.

"I have advised my department heads to tell the truth," Tyler said.

FBI probe shifted into high gear recently

The scope of the investigation is hard to define, but based on what has been conveyed to The Star Press, FBI agents from Muncie and Indianapolis have talked to local people about several issues that have made headlines in recent months, including:

• Building demolitions overseen by the city, some of them performed by a company founded by Craig Nichols, the building commissioner.
• The abrupt departure from Muncie City Hall this spring of Gretchen Cheesman, a longtime city employee who had overseen some demolition contracts for Muncie Community Development. Cheesman subsequently told officials she would talk to Tyler about what she knew about demolitions if her status was changed from fired to retired and her benefits were restored.
• The Muncie Sanitary District's purchase of a former flea market building for $395,000 in September, about a month after the previous owner sold it for $150,000.

"Unfortunately, the FBI doesn't confirm or deny investigations," FBI special agent and spokesman Wendy Osborne said Thursday. "I'm not in a position to provide further information."

In an interview with The Star Press, when asked about the FBI probe, Tyler said, "My attorneys have advised me not to talk. We cooperate fully with any kind of investigation."

Asked if his department heads were cooperating with the probe, Tyler replied, "I know my department heads have provided information to them. There isn't any reason for them to not cooperate."

Delaware County Prosecutor Jeffrey Arnold told The Star Press in mid-April his office was not investigating allegations of corruption or improprieties in local government, adding that such a probe would be conducted by an investigative agency and brought to his office for potential criminal charges.

Asked more recently about an FBI investigation, Arnold said, "I don't know anything officially. I have not been apprised of it."

The prosecuting attorney added that it would not be unusual for his office to receive no notification of an ongoing FBI investigation.

One person who told The Star Press he's talked to FBI investigators more than once this spring is Carl Barber, a local business owner who had owned the flea market building on East Jackson before selling it to businessman Jeff Burke in August for $150,000. Burke sold it in September to the Muncie Sanitary District for $395,000. District officials say they plan to demolish the building for improvements to the White River levee.

Barber in March filed a tort claim notice — the usual first step in suing government — against the city, alleging local officials "conspired" and used inside information to cheat him out of hundreds of thousands of dollars. Officials have denied the allegations. Barber said the city has not yet responded to his tort claim notice. Such a response often comes in the form of negotiation with government's insurance company.

Barber said FBI agents, who he specified by name, contacted him after The Star Press reported in mid-February about the sanitary district's purchase of his former building.

"They called me and I went in and talked to them," Barber said. "I talked to them twice on the phone and once in person."

Barber said that during one conversation with FBI agents, he was told that federal investigations aren't like local police investigations.

"They said, 'We don't work like local police departments,'" Barber said. "''We keep our stuff all together and jump on it all at once.' They keep it under their hat."

The Star Press contacted the Muncie Sanitary District's administrator and attorney on Thursday about Barber's claims he was questioned by the FBI.

"I am not aware of any investigation of the Muncie Sanitary District," attorney Tom Malapit said. "As such, the FBI has not asked the MSD to provide any documents or give any interviews."

Contact Keith Roysdon at 765-213-5828 and follow him on Facebook and Twitter.