Ex-Lawmaker to Fight Fraud Charges at Trial

HOUSTON (CN) – Former Texas Congressman Steve Stockman pleaded not guilty Monday to federal charges he defrauded charities to fund his campaigns, and his attorney said he’s looking forward to being vindicated at trial.

A grand jury handed down a 28-count superseding indictment on March 28, charging Stockman and his former aide Jason Posey with fraudulently soliciting $1.2 million in charitable donations and diverting more than $500,000 to pay their personal expenses and to finance Stockman’s campaigns. The trial is scheduled for June 5.

Stockman, 60, pleaded not guilty to all the charges at a brief arraignment hearing before U.S. Magistrate Judge Nancy Johnson on Monday. He smiled and greeted reporters as he walked out of Johnson’s courtroom with his wife and his court-appointed attorney Richard Kuniansky.

“Mr. Stockman is looking forward to trial and being vindicated on this. There have been some articles in the Houston Chronicle that quite frankly have been a hatchet job and we’re looking forward to the truth coming out,” Kuniansky told reporters in front of the Houston federal courthouse. “It’s my understanding, although I haven’t looked at all the articles, there’s pretty much been a pattern of attack on the character of Mr. Stockman and we’re looking forward to the truth coming out.”

Stockman represented Texas’s 9th Congressional District from 1995 to 1997 and its 36th Congressional District from 2013 to 2015.

He also unsuccessfully ran against incumbent John Cornyn in the 2014 Republican primary for Cornyn’s U.S. Senate seat.

The indictment alleges that in 2010 and 2011, Stockman and his former congressional staffer Thomas Dodd persuaded a philanthropist in his 80s to donate $450,000 from his charitable organizations to Stockman’s nonprofit The Ross Center, incorporated as a drug-treatment center.

Dodd pleaded guilty to mail and wire fraud and lying to the Federal Election Commission in March and agreed to testify against Stockman.

Prosecutors claim in the indictment that Stockman said the funds would be used for legitimate charity and voter-education purposes.

“Stockman diverted tens of thousands of dollars of the donations to pay for a variety of expenditures for the personal and political benefit of Stockman, Dodd and their associates,” the 46-page indictment states.

The indictment doesn’t name the philanthropist, referring to them as “Person A.” But in an April 2 story, the Houston Chronicle identified him as Stanford Z. Rothschild Jr., a Baltimore investment manager who died in February.

Prosecutors say Stockman and Dodd got another foundation to donate $350,000 they said would be used to fund the Freedom House, a townhome in Washington, D.C., that would be a meeting place, dorm and training center for young Republicans.

Stockman and Dodd solicited the donation for Life Without Limits, an alleged shell company formed by Stockman as a nonprofit in April 2011 to help people get over traumatic events.

Prosecutors claim in the indictment that Stockman and Dodd didn’t use the money for the Freedom House.

They allegedly spent $50,000 of it on expenses for Stockman’s 2014 U.S. Senate campaign, $41,000 for surveillance on a person Stockman considered a possible challenger in an upcoming primary election, $20,000 to help Stockman’s brother’s book business, $11,000 for a 30-day alcohol-addiction treatment program for Stockman’s female associate and $2,200 on summer camp for Stockman’s nephew and the daughter of a family friend.

The charging document also doesn’t identify what foundation donated the $350,000 meant for the Freedom House, but the Chronicle’s profile of Stockman says it was the Ed Uihlein Family Foundation.

Run by Chicago businessman Richard Uihlein, the foundation donates millions of dollars to nonprofits that back conservative Republican politicians.

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