Indictments name Lake County Sheriff John Buncich, Chief Deputy Tim Downs, Portage Mayor James Snyder and tow company owners William Szarmach of Chase Street Auto in Lake Station and John Cortina of Kustom Auto Body in Portage, U.S. Attorney David Capp said at a news conference.
Last week, state police assisted the FBI as they executed a search warrant at the Lake County Sheriff's office in Crown Point.
The indictment alleges that between February 2014 and October 2016, Buncich, Downs and Szarmach worked to enrich Buncich and his campaign committee, Buncich Boosters, through towing contracts.
Buncich received over $25,000 in cash and $7,000, often collected by Downs, in checks from Szarmach and an unnamed individual for towing contracts in Gary and Lake County, prosecutors said. The three men face wire fraud charges, and Buncich and Szarmach also are charged with bribery.
The alleged scheme unraveled when another owner of a tow truck business, known as Individual A, went to the feds.
"It's because of his efforts that we have been able to get into the inner workings of this illegal scheme," Capp said.
Individual A also helped the feds snag Portage Mayor James Snyder in a similar towing scheme, involving Kustom Auto Body in Portage. Snyder is also facing tax evasion charges.
Snyder, named in a separate indictment, is accused of receiving $12,000 from Cortina and the same unnamed individual for towing contracts in Portage, located in neighboring Porter County. He's also accused of accepting $13,000 for other city contracts or projects from 2013 to 2014. He's faces a charge of obstructing tax laws for impeding the government's collection of personal taxes he owed and payroll taxes owed by his mortgage business, First Financial Trust Mortgage LLC.
Buncich, Downs, Szarmach and Cortina were all arrested and taken into custody Friday morning, Capp said. Snyder was to surrender to federal authorities later, officials said.
"To those others out there in law enforcement or in elected positions who have been engaging in conduct similar to that announced today regarding towing contracts. You know who you are and we know currently who some of them are and we are coming after you," Capp said.
Buncich is the chairman of the Lake County Democratic Party and was elected to his fourth term as sheriff in 2015. Snyder, a Republican, was elected to his second term as mayor in 2015.
Snyder's attorney, Thomas Kirsch, issued a statement saying the mayor's indictment "comes as a complete surprise."
"Mayor Snyder looks forward to fighting these charges in a court of law and to complete vindication," the statement said.
Federal authorities said they expect more charges to follow. Anyone with information related to these public corruption charges is encouraged to call the FBI at 219-769-3719.
The Associated Press contributed to this report.