James W. Bond, 52, was with the Gary Police Department during the summer.
According to a federal indictment, the minor, who was not named, was working for the city under the Summer Youth Employment Program.
The minor was assigned to work with Gary police.
Bond allegedly enticed the minor to "engage in sexually explicit conduct" while being recorded from July 2 to July 9.
The summer program employs Gary residents between the ages of 14 and 22. It is unknown how old the victim in this case is.
The former officer is facing federal charges for sexual exploitation of a minor and receiving and possessing child pornography. He was arrested on Wednesday morning.
Bond virtually appeared in front of a federal judge for the first time via Zoom from the Hammond's City Jail.
He pleaded not guilty to all charges.
"Upon becoming aware of these allegations, swift action was taken to ensure the safety of our employees and the officer named was immediately removed from his authority," Gary Police Chief Derrick Cannon said.
Bond promoted to deputy chief in July 2023, however he was quickly demoted to comander after a new police chief came in. On July 12, after allegations surfaced, his police powers were removed.
He retired on August 19, according to Gary officials.
"Let me be clear: actions such as those alleged in the indictment will not be tolerated in our community, especially within our agency," Chief Cannon added.
Bond has been moved to Kankakee pending his detention hearing next week.
Gary Mayor Eddie Melton released the following statement:
"The alleged actions of this individual are reprehensible and do not represent the City of Gary's, nor my administration's core values at all."
Homeland Security is part of the investigation. They encouraged anyone believed to be a victim to call 1-877-4-HSI-TIP.