A former Indiana State Senator and Johnson County Council member has been sentenced to 10 months in prison for violating federal campaign finance laws and making false statements to federal investigators in a case he says was politically motivated.
Darryl Brent Waltz, 48, of Greenwood, was sentenced on Wednesday to 10 months in federal prison for felony counts of making and receiving conduit contributions and making false statements to the FBI. Judge James R. Sweeney II, U.S. District Court for the Southern District of Indiana also ordered him to pay $40,050 in restitution. He pled guilty in April to making and receiving conduit contributions and making false statements to the FBI and three other charges against him being dropped.
Waltz and John S. Keeler, a 72-year-old New Centaur gaming executive and former Indiana State Representative, were indicted in September 2020 on charges of violating federal campaign finance laws, false statements and falsification of records, making illegal corporate contributions, and conduit contributions to Waltz’s unsuccessful 2016 congressional campaign. Waltz, a long-time Johnson County resident, served on the Johnson County Council from 2000 to 2004 and represented District 36 in the Indiana State Senate from 2004 to 2016. He left to run for U.S. Congress in the Ninth District but was defeated in the 2020 Republican primary by Rep. Trey Hollingsworth.
Keeler was also sentenced Wednesday to two months in federal prison on one count of causing the filing of a fake tax return and was ordered to pay a $55,000 fine. Formerly the general counsel and vice president for Indiana-based gaming company New Centaur, LLC, Keeler pleaded guilty in April to causing the filing of a fake tax return and had five other charges dropped as part of his plea agreement.
The straw donor plan
Federal officials say the plan was to transfer thousands of dollars from the accounts of New Centaur to Kelley Rogers, a Maryland-based political consultant, who would then contribute that money to Waltz’s 2016 congressional campaign, was hatched at a meeting between Rogers and an unnamed New Centaur executive in April 2015 at the Indianapolis International Airport.
Rogers allegedly created fake invoices and agreements to make it appear like he was providing services for New Centaur, and recruited straw donors to each contribute $2,700 to Waltz’s campaign, the federal maximum contribution limit at the time, the indictment says. Straw donors are people who contribute to a campaign in their name despite receiving advance payment or reimbursement of all or part of the contribution.
A total of 15 straw donors were involved, including three of Waltz’s relatives and one of his business associates. Rogers and Chip O’Neil, a Republican strategist who pled guilty in a separate campaign finance violation and fraud case, were responsible for recruiting nine of the straw donors, according to the indictment.
The straw donors were reimbursed by Rogers using money from New Centaur. He also transferred money from New Centaur to Waltz, who also recruited straw donors and either reimbursed them or paid them in advance, according to the U.S. Attorney’s Office.
New Centaur transferred a total of $79,500 to entities controlled by Rogers for the scheme, according to the indictment, but Rogers allegedly kept $33,300 of that to pay for his consulting fees for his services to Waltz’s campaign. Waltz also donated $10,800 of his own money to the campaign through straw donors, according to the indictment.
Attorneys disagreed about sentences
Federal prosecutors had asked Sweeney to sentence Waltz to 10 months in prison, followed by three years of supervised release, and for Keeler to serve five months in prison followed by a term of supervised release to be determined by the judge. Keeler’s sentence was recommended to be lower due to the nature of his crime, his age, lack of criminal history and previous public service, according to court documents.
In the filings, prosecutors described Waltz as “a successful businessman” who has millions of dollars in assets. For Keeler, they referenced his past as a state legislator and his role as a former executive at a casino company worth more than $1.5 billion.
“None of this was enough for either defendant. They wanted more, and they chose to commit crimes of opportunity — not economic necessity — to get what they wanted,” federal prosecutors wrote in a sentencing memorandum.
Prosecutors wrote that a sentence less than what they were asking for would be “inappropriately lenient and unjustified.” Both Waltz and Keeler had used their positions of immense power to violate the law, documents say.
Waltz’s attorneys argued in their sentencing memorandum that Waltz’s role was not as large as prosecutors made it out to be, saying Rogers told the FBI he intentionally hid the source of the illegal contributions from Waltz, documents say. However, prosecutors have said Waltz and Rogers worked together to find the straw donors.
Waltz’s attorneys also went over mitigating circumstances such as his public service to Johnson County and the state. They also noted his family history of service including grandfathers who were city councilmen and an uncle who is a former Greenwood mayor. Waltz’s attorneys said that imprisonment would be a punishment that was “greater than necessary,” and asked the court to sentence him to one year of probation with time served, with 640 hours of community service as a condition of his probation, documents say.
Keeler’s attorneys asked for no prison time for Keeler and sent the court letters of support from more than 80 people testifying to his character. The “collateral consequences” of the conviction were punishment enough for him, including the loss of his gaming license and the suspension of his law license, his attorneys said.
Waltz says investigation was politicized
After his sentencing on Wednesday, Waltz alleged that the entire investigation that led to his indictment was politically motivated, and vowed that he would speak out about the FBI’s actions during the investigation.
Waltz said his case stems from an alleged attempt by the FBI to investigate Rod Ratcliff, a gaming executive who has not been charged in connection with the scheme. Once the investigation did not turn up enough evidence to indict him, pressure was then put on Keeler, Waltz said in an interview with the Daily Journal Wednesday afternoon.
Keeler was investigated, and agents found a discrepancy in the taxes for New Centaur. He was then indicted as part of an effort Waltz claims was designed to put pressure on him to give information about Ratcliff. When he didn’t do so, the government then focused efforts on Waltz, he alleges.
Agents reviewed Waltz’s business dealings, taxes and other related documents and discovered two transactions that were considered by investigators as illegal campaign conduit contributions, something Waltz disagrees with. He believes the government ultimately indicted him because he could provide information that “they could not control,” and because of how common it is for cases to be resolved through plea deals, he said.
“They knew very likely that this evidence and their activities would never be seen in court or called out by anybody,” Waltz said. “They were not expecting that I would publicize what happened.”
Waltz believes Ratcliff’s ties to former President Donald Trump are the reason why the investigation was conducted.
“I view myself largely as collateral damage,” Waltz said.
Waltz alleges that the FBI’s investigation into the straw donor scheme was consistent with other investigations federal law enforcement are conducting into Trump and people associated with him, including last week’s search of Trump’s Mar-a-Lago home and the investigations into Roger Stone and Michael Cohen. Ratcliff has ties to Trump and was a major donor to his campaign.
“It’s fascinating to me that the FBI seems to have all this interest in people associated with Trump,” Waltz said.
When asked why he thought that was, Waltz said he wouldn’t “presume to know why they are doing it,” but knows it’s being done. People can have disagreements as to why, but Waltz believes that there’s an element in the FBI, mostly in Washington, D.C, that is working to “demolish” conservatives and Trump. This is something that he thinks people will be able to recognize, he said.
Waltz believes more details will come out in the months ahead.
“I ask the people of Johnson County to look at the story, look at the evidence and decide for themselves,” he said.
