Corruption and the Madison Avenue Expressway

Earlier, I had written about the Madison Avenue Expressway. That road, a widening of a major route through the south side of Indianapolis opened up the same south side which had been held back by narrow roads and other impediments for years. But while construction on the project was sputtering along, in the background, some not so, shall we say, legal things were going on. It led to investigations into the state highway department by both state and federal officials.

Indianapolis News – 12 April 1957: “Teverbaugh Search Starts; No OK on Madison Lot Deals.” The State Highway Commission purchased a few lots without reason or authorization. When asked by the employee recording it in Minute Books, the then Highway Commission Chairman, Virgil “Red” Smith responded “to forget it.” The lots were purchased in the 1100 and 1200 block of Madison Avenue, which original Madison Avenue plans didn’t include in the project. It was also announced, at the same time, that some 25% of 250 properties involved in the state purchase had changed hands at least once between announcement of the project and the purchase of the property by the state.

New ISHC Chairman John Peters announced that “there are other properties on Madison with a degree of suspicion, and we are investigating them.” Two specific properties were sold by the owners for $2,500 each, later to be sold to the state for $25,800. But the Madison Avenue project wasn’t the only one involved. Included were SR 62 in Vanderburgh County, Tri-State Expressway in Lake County, US 27 in Richmond and the South Bend Bypass.

Because the Federal Bureau of Public Roads was footing half the bill for the US 31 expansion, this would automatically, according to Peters, bring a Federal investigation…most likely by the FBI…into the whole mess.

Former Chairman Smith was also questioned about a house at 2523 Madison Avenue. He purchased said house, but, according to him, never lived there. Never even entered the house. He stated that he had utility service turned on for the house, but had them disconnected days later. Indianapolis Power and Light reports that “few days later” was from July to 6 October 1955. The house was bought by a Russell Maple, at least on paper. Mr. Maple reports to have never bought the house.

Indianapolis News – 15 April 1957: “Madison Avenue Lot Sold Twice.” On 22 March 1954, the state purchased, for $8,750, part of the lot at 2106 Madison Avenue from on Wilbert Tacke. The deal, according to Tacke, was made by Nile Teverbaugh, at the time the Chief of the State Right-of-Way Division. On 5 April 1954, that very same property was recorded by the Marion County Recorder as having been deeded to a Karl Vehling by entry of a warranty deed. That deed from 5 April 1954 was not officially recorded until 27 January 1955. The state then bought lots at 2102 and 2106 Madison Avenue from Vehling for $42,500…on 21 February 1955.

When all was said and done, when the Madison Avenue Expressway opened for business in September 1958, Former State Highway Commission Chairman Virgil W. Smith and Milan attorney Robert A. Peak were appealing sentences of two to 14 years in prison after being convicted of embezzlement to the tune of $25,800 in state funds. Another person involved with the project, and convicted for making a false claim. Austin housemover Marvin Preble’s one to ten year sentence was suspended. Preble did end up in jail for the charge, being paroled in 1962. Two top aides to former Governor George N. Craig were convicted of conspiring to bribe and bribing Chairman Smith in equipment purchases. Those two aides, Elmer W. Sherwood and William E. Sayer, were convicted with the help of another man that plead guilty to the same charges, equipment salesman Arthur J. Mogilner.

The charges didn’t stop there. The Lake County project involved some indictments of three top members of the International Carpenters Union. The trial for these three officials, and the former assistant chief of the right-of-way division hadn’t happened as of the opening of the Madison Avenue Expressway.

Other irregularities occurred during property acquisition for the project. “State examiners found five cases where property owners were paid a total of $117,350 for land not needed for the expressway. The property owners still have the money and apparently will also keep the land.” (Source: Terre Haute Tribune, 21 September 1958) “Five other property owners received $332,500 for land of which only one-third was needed and they also still have the money.”

The appeals were still going on a couple of years later. The Jasper Herald of 10 March 1960 reported that the Indiana Supreme Court refused to here the appeal of Robert Peak, and that he was planning to move the case to the United States Supreme Court. His appeal of his embezzlement conviction was still waiting before the Indiana Supreme Court at the time. The first case mentioned involved a conviction for false notarization of a property deed. In May 1960, that sentence was suspended. (Source: Greenfield Daily Reporter, 12 May 1960) Kinda. June 1960, another judge determined that the first judge had no authority to suspend the sentence, and put Robert Peak in prison. (Source: Indianapolis Star, 9 June 1960) Peak would ultimately end up in prison starting in March 1961, become eligible for parole in December 1962, and was refused a pardon by Governor Matthew Welsh in July 1961. (Source: Indianapolis Star, 28 July 1961) Peak would get paroled in January 1963.

Virgil Smith was convicted in November 1957 of defrauding the state of $25,800. Part of that conviction involved the false notarization mentioned against Robert Peak. Properties concerned with the fraud were sold to a “Dan Burton,” but the signatures on the deeds both were pened by the same person, believed to be Virgil Smith. As of December 1961, Smith was in the Indiana State Prison at Michigan City. He would be paroled in May 1963 after suffering a heart attack.

One of the outcomes of these controversies was the proposal of a law by State Senator Ruel W. Steele, of Bedford, that all right-of-way payments be published in local newspapers. This is the same State Senator Steele that is the current namesake of Indiana State Road 37 south of Indianapolis.

Ultimately, the Madison Avenue project was both good and bad for the south side of Indianapolis. It would find itself basically replaced within a few short years by the Interstate 65 project that was designed to follow US 31 through the state. Due to the signalized intersections at Terrace Avenue and Pleasant Run Parkway, the project would never be more than a blip in the highway radar in Indiana. It never did meet interstate standards for the time. And charges of corruption did not help the image of the project in the long run.

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