NEW CASTLE — Two New Castle police officers and the director of the Henry County Community Corrections program were arrested Wednesday after being accused of racketeering, ghost employment and other crimes.

Heffernan, a city police lieutenant with 15 years of experience, and Patterson, a patrolman and 12-year police veteran, hold part-time positions with HCCC, which monitors the activities of convicted criminals who have been placed on home detention.

The HCCC program has been overseen for several years by Sheets, a retired Indiana State Police detective.

All three men surrendered to authorities at the Henry County jail on Wednesday afternoon and were released after posting $1,000 bonds.

Sheets, of Centerville, is charged with one count of corrupt business influence, a Class C felony carrying a standard four-year prison term, and two counts each of official misconduct and ghost employment, all Class D felonies with standard 18-month sentences.

Heffernan, HCCC home detention manager, and Patterson, a field officer for the community corrections program, are both charged with corrupt business influence, official misconduct and three counts of ghost employment.

Contacted Wednesday night, New Castle Police Chief James Nicholson said both officers had been suspended without pay pending resolution of the criminal allegations.

“As police officers, we are held to higher standards,” Nicholson said. “We have zero tolerance for criminal activity.”

Nicholson noted all allegations against Heffernan and Patterson stemmed from their duties for HCCC, not their work as city police officers.

A special prosecutor — Julie Pottenger of Hamilton County — has been appointed to the case because Henry County Prosecutor Kit Crane serves on the HCCC advisory board, along with the county’s three judges.

Details of the events leading to the allegations were not available late Thursday.

An audit of HCCC’s operations for 2008, issued by the State Board of Accounts last month, noted discrepancies between hours listed on the program’s time cards and those submitted to the commissioners for payment.

“(HCCC officials) did not provide evidence nor could we determine the reason for those differences,” auditors wrote.

After county commissioners last spring requested the probe by state police and the State Board of Accounts, Sheets apparently placed on leave some New Castle police officers who had been working on a part-time basis for HCCC.

However, Heffernan and Patterson reportedly were not among the HCCC employees placed on leave by Sheets.