UPDATE: In a press conference held by the U.S. Attorney’s office, the IRS, and the FBI, it was revealed that Dallas Mayor Pro Tem Dwaine Caraway has pleaded guilty this morning to tax evasion and conspiracy to commit honest services/wire fraud.
The councilman, who had been term limited out of office and then ran again against Carolyn King Arnold last year, also said in court this morning that he had resigned his seat, effective immediately.
U.S. Attorney Erin Nealy Cox told reporters that Force Multiplier Solutions’ Robert Leonard provided kickbacks, bribes, and other benefits to the tune of $450,000 to Caraway, all related to easing the way for Dallas County Schools’ school bus camera program.
— Scott Friedman (@ScottNBC5) August 9, 2018
“Caraway asked for and received money from Leonard numerous times,” Cox said in a prepared statement. Leonard paid in checks that would be cashed at local liquor stores, and also paid for things like security cameras at Caraway’s home, a campaign bus, casino chips, and money for gambling at the horse track, as well as various trips.
In return, Cox said, Caraway “took action benefiting Force Multiplier Solutions,” including favorable votes, pressuring the city attorney’s office, and a speech and vote for renewing the stop arm camera program in 2005.
During that time, Caraway “never disclosed the money or benefits,” on his tax returns, Cox said, adding that Caraway admitted in court that he did not report the income from 2012 to 2014, and admitted knowingly filing a false income tax return.
The second charge – crime of honest service fraud, is used especially when a public official “uses deciept to deprive the public of their right to honest representation,” Cox said.
Leonard, Caraway, and others involved took great pains to hide the payments made, she said, which explained the length of the investigation, which she said is ongoing. Caraway and others opened shell companies to receive payments made from another shell company — ELF Investments, she said, and also created sham consultancy contracts and fake loan documents to explain the payments. ELF Investments was helmed by Slater Swartwood, who used the company to funnel bribes and kickbacks to various officials, the U.S. Attorney’s office said.
“There were some direct payments, and even those were made out to cash, and negotiated at liquor stores,” Cox said.
“Today is a day of reckoning and reconciliation and a day of victory in fight against public corruption,” Cox said.
Eric Jackson, the Special Agent in Charge of the Federal Bureau of Investigation’s Dallas field office, said the “sensitive and complex investigation” began after a local media story brought serious allegations to light. He said the pleadings this morning by Caraway and Leonard (who pleaded guilty to one count of conspiracy) were part of an effort by the local office to “work diligently and quietly to ferret out those individuals who would abuse their positions of trust.”
Tamera Cantu, the Special Agent in Charge of the IRS Dallas field office said that Caraway used his position of public trust to defraud citizens. “They used an elaborate scheme to disguise kickback payments,” she said, adding that Caraway failed to report a substantial portion of his income when he hid the $450,000 in bribes and kickbacks.
Cox said that Leonard could get up to 10 years for his one count. Caraway’s two counts carry a maximum of five years, or a combined 10 years, but her office was recommending no more than seven years.
Leonard and Caraway waived their right to be indicted by Grand Jury, Cox said, and instead pleaded guilty to the information presented in court.
“We had a very thorough investigation,” she said. “We give the defendants the opportunity to cooperate and admit their guilt, and that’s what they did.”
Cox said the judge set sentencing hearings to begin on Dec. 14. Caraway is not being detained until that date.
Although the story is developing, it was announced this morning that Dallas Mayor Pro Tem Dwaine Caraway has been charged with corruption by the U.S. District Attorney’s office, and will plead guilty to those charges.
The charges stem from the Dallas County Schools scandal, which saw Robert Leonard of Force Multiplier Solutions charged and jailed for conspiracy and wire fraud after months of investigations into the purchasing of stop-arm cameras for DCS buses.
Caraway is charged with criminal conspiracy, wire fraud and tax evasion. As for sentencing, the U.S. Attorney’s office said it is asking for up to seven years in a federal prison.
Caraway did tell NBC-DFW that he took money from the company. Other council members received campaign donations but pledged to return that money or donate it.
A press release is slated for 10 a.m., and we will update this story throughout the day.