Corruption Evidence Piles Up Against Former Texas Congressman

HOUSTON (CN) — Federal prosecutors piled on the evidence Wednesday in the corruption case against former Texas Congressman Steve Stockman, whose defense team claimed that a conservative donor he’s accused of ripping off also violated campaign finance rules.

Stockman, 61, sat with a somber expression at the defense table Wednesday, the seventh day of his trial in the Houston federal courthouse, intermittently taking notes and resting his chin on his hand.

In a 28-count superseding indictment, a federal grand jury charged Stockman in March 2017 with mail and wire fraud, conspiracy, making false statements to the Federal Election Commission, money laundering and filing a false tax return.

The government claims he fraudulently solicited $1.2 million in charitable donations and diverted it to pay his own and two congressional staffers’ personal expenses and to finance his campaigns.

Stockman pointedly avoided looking up at the numerous emails, letters and checks that prosecutors projected on a screen Wednesday as they questioned a witness who told how Stockman and his aide got her former boss, the late Stanford Z. Rothschild Jr., to donate hundreds of thousands of dollars to Stockman’s charitable organizations, which the government claims were shell entities for his scam.

Stockman, a Republican, represented Texas’ 9th Congressional District, which at the time included Galveston, parts of Houston and Beaumont, from 1995 to 1997. From 2013 to 2015, he represented the state’s 36th Congressional District, which stretches from East Houston northeast to the Louisiana border.

Rothschild, a Baltimore money manager, philanthropist and supporter of Republican politicians, died in February 2017 at 91.

Jean Dellman, Rothschild’s secretary from June 2005 to July 2017, testified Wednesday that Stockman and his aide, Thomas Dodd, repeatedly solicited Rothschild from 2010 to 2012 and persuaded him to donate $450,000 from his own charities, the bulk of which went to Stockman’s tax-exempt charity The Ross Center. Stockman incorporated the nonprofit as a drug-treatment center.

Under federal law, political campaigns cannot receive money from charities.

Dellman said she always made sure the entities to which Rothschild donated were in fact tax-exempt charities by asking for documentation from them, and that Dodd sent her a form showing The Ross Center is a charitable foundation.

Dellman, her voice wavering in flashes of apparent grief as she recalled working with Rothschild, said that after Rothschild started cutting checks from his charities to The Ross Center in 2010, Dodd asked her if Rothschild had given her a list.

She said Rothschild had a list of members of Congress whom he wanted his donations to The Ross Center to support. “These are people that he liked,” Dellman said.

She said Rothschild wanted to help the politicians on his list by getting voter education material to people “who may be supporters of their policies and philosophies” and she sent Dodd the list in 2010.

Federal prosecutor Robert Heberle walked Dellman through numerous emails she exchanged with Dodd and Stockman, which the government displayed for the jury and six people in the gallery.

Dellman read a letter the government says Stockman sent to Rothschild in January 2012: “Stan, I really appreciate what you’ve done, not just for me but for all conservative causes across the nation. You have a true heart for the country and truth. … As you know, I’m in the hunt to take back my old seat with the districts redrawn in Texas. The new district looks a lot like my old district.

“I can’t raise millions but I do need a fighting chance. Stan, I’m asking for just five months of your help. … As a well-known conservative in Texas I don’t want to get mowed down by outside money without a response. I need a short commitment of funding for just five months.”

Dellman said Rothschild obliged Stockman and donated more than $100,000 to Stockman’s charitable foundations after he received this letter. Prosecutors showed several checks Rothschild wrote for Stockman’s foundations.

Stockman, who has an accounting degree, allegedly stepped up the charm offensive in a February 2012 letter to Rothschild. Heberle had Dellman read that letter too.

“Thank you so much for your help. … As an accountant I am frugal and watchful that every dollar you invest in your efforts to restore America is used to defeat the left. … My [Republican primary] election is currently for May 29, 2012. After that date we will no longer need your generous investment,” Stockman wrote.

Stockman won the primary runoff for Texas’ 36th Congressional District, drawn after the 2010 Census, and the November 2012 general election. He took office in January 2013.

On cross-examination, Stockman’s attorney Gary Tabakman asked Dellman about her former boss.

“My understanding is Mr. Rothschild was incredibly wealthy,” Tabakman said.

“Yes,” Dellman said.

“He was very smart, right? Very savvy?”

“Yes.”

“And my understanding is he not only donated to a lot of charitable causes, but also to a lot of political causes as well, correct?”

“Yes.”

Tabakman asked Dellman why Rothschild had sent Dodd a list of politicians he wanted his money to support, if the money was supposed to pay for voter education materials.

“Is it still your testimony that none of the funds that came out of the charitable foundations went toward political purposes?” Tabakman asked.

“Yes,” Dellman said.

The government called FBI forensic accountant Showlatha Johnson to the stand Wednesday afternoon.

Johnson said she traced how Stockman spent more than $150,000 that Rothschild’s charities donated in 2010 to Stockman’s various nonprofits.

“How were the charitable donations moved from different accounts?” a prosecutor asked Johnson.

“They were transferred to at least seven different accounts, with no pattern, transferred without any reason that I could see. Sometimes within days funds would be transferred, then moved back,” she said.

With the government displaying graphs, charts and bank records to back her testimony, Johnson said that Stockman paid for trips to Disneyland, credit card debts, purchases at electronics stores and Walmart, airline tickets, dental, medical and power bills, charges at a tattoo parlor in Venice, California and several purchases from SkyMall with the charitable donations.

The government has yet to call two key witnesses in its case: Dodd and Jason Posey, Stockman’s other top congressional aide.

Dodd pleaded guilty to mail and wire fraud and lying to the Federal Election Commission in March 2017. Posey, named as Stockman’s co-defendant in the March 2017 superseding indictment, pleaded guilty in October to mail and wire fraud and money laundering.

Asked if the government offered Stockman a plea deal, his attorney Sean Buckley, said, “No. We didn’t have any of those discussions.”

Among his other accomplishments, Stockman wrote an article for Guns & Ammo magazine in 1995 in which he claimed that President Bill Clinton’s administration had staged the February 1993 raid on the Branch Davidian Christian fundamentalist compound in Waco, to justify banning assault weapons.

 

Prosecutor Heberle said he could not comment on why there were no plea negotiations with Stockman.

U.S. District Judge Lee Rosenthal said she hopes to get the case to the jury around April 9.

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