Mayor George Pabey is accused of using city money and workers to remodel and renovate a home he owns in Gary, Indiana.
The four-count federal indictment also accuses Jose Camacho, an employee of the city's engineering department, of conspiring with Pabey.
Prosecutors say both men used city money to buy items such as a bathtub and a water heater.
Pabey and Camacho have both pleaded not guilty.
