A Grand Beach police officer got a call before 7 a.m. that a private security guard for Daley was holding convicted killer Charles Smith at gunpoint in a home's driveway near the mayor's vacation house in the town about eight miles from the prison, said Grand Beach Police Chief Dan Schroeder.

Schroeder said another inmate had been spotted in Grand Beach, but he didn't know which one or who saw him.

Authorities were still searching for convicted murderer Mark Booher, 46, of New Castle, and convicted rapist Lance Battreal, 45, of Rockport.

It was not immediately clear whether Daley was at the house when Smith taken into custody and Schroeder did not have any more information about Smith's capture.

The Associated Press left a message at the house where Smith was captured in the driveway.

Indiana Department of Correction officials said the men were discovered missing about 10 a.m. Sunday. The three escaped by getting past bars in the tunnels and pipe chases under the grounds of the maximum-security prison in Michigan City, Ind., said Department spokesman Doug Garrison.

Two of the inmates did maintenance work in the prison's tunnel system as part of supervised work crews. Garrison said he wasn't sure which two had done the work.

The three men were in the same housing unit but it's unclear how they knew each other, Garrison said. Prison officials were talking to people who knew the inmates, including people on their visitation or e-mail lists and family and friends.

Smith, Booher and Battreal started serving time in the late 1990s and all faced at least 30 more years behind bars.