Major Texas Engineering Firm Admits to Hundreds of Thousands in Illegal Campaign Contributions
A dominant Texas engineering company led by a former University of Texas regent has agreed to a $1.6 million fine because top-level staffers facilitated hundreds of thousands of dollars of illegal campaign contributions.
Dannenbaum Engineering — the name behind the infamous “Bridge to Nowhere” in Brownsville and other major airport and highway projects — acknowledged the criminal conduct Friday in the wake of an election fraud charge from the public integrity division of the Justice Department.
The company and its longtime CEO, James Dannenbaum, were charged this month with circumventing election law by making donations in their employees’ names to three congressional candidates, following FBI raids at the company’s corporate offices in Houston, San Antonio, McAllen and Laredo.
However, the company admitted Friday to a broader scheme. According to the signed agreement, the 80-year-old former CEO and another former executive at the firm recruited 31 people to contribute more than $323,300 to two dozen federal political campaigns between 2015 and 2017 and used corporate money to reimburse the contributions. There is no indication candidates knew the company was the source of the contributions, according to the document.
The Dannenbaum firm has entered into a three-year deferred prosecution agreement, promising to pay the fine, restructure its board, halt “all politically related payments to its employees” and terminate “any and all relationships with corrupt and questionable third parties.”
James Dannenbaum entered a routine “not guilty” plea Friday, but his lawyers said he plans to enter into a plea agreement in the coming weeks limited to the allegations involving contributions to three candidates mentioned in the federal charge.
Assistant Attorney General Brian A. Benczkowski said in a statement that the company’s scheme “undermined the fairness and transparency of our nation’s campaign finance laws in a misguided effort to increase its own power and prestige.”
Special Agent in Charge Perrye K. Turner of the FBI’s Houston Field Office added: “Our system of representative government works only when honest contributions are not diluted by fraud.”
The ex-chairman and CEO remains on the board but stepped down from executive duties after admitting to his role in making fraudulent campaign donations to multiple re-election campaigns.
“Jim has previously expressed his profound regret for his actions and he understands the process has begun whereby he will be making his amends,” spokesman Bill Miller said.
Dannenbaum, who was tapped to serve as a UT regent under Gov. Rick Perry, has been a major donor to Sens. John Cornyn and Ted Cruz, as well as Gov. Greg Abbott, Attorney General Ken Paxton and Mayor Sylvester Turner.
Michel Maksoud, now CEO of Dannenbaum, said the deal with prosecutors includes improved compliance policies and continued cooperation with the government. The company also agreed to hire a compliance officer, install a whistleblower reporting system and train employees about the rules for making political donations.
“This ensures the company can continue to provide the same high-quality engineering services it has provided to the people of Texas for over 70 years,” said Maksoud, a 20-year veteran of the company who previously served as a manager in its transportation division.
Funneled money
The FBI probe became public after agents executed raids in April 2017 on Laredo City Hall, on the Webb County Courthouse and at Dannenbaum’s home and corporate offices in Houston, San Antonio, McAllen and Laredo.
Jaime Alberto Canales, 52, a former Webb County commissioner, pleaded guilty last year in Houston federal court to accepting bribes — including checks disguised as campaign contributions and an offer to use a company executive’s Padre Island getaway — in exchange for helping the engineering firm secure its bid for a city-county road project. Former Laredo City Councilman John “Johnny” Amaya, 71, pleaded guilty to acting as the middleman for the deals. They both face up to five years in prison at their sentencing on Feb. 13.
Dannenbaum routinely funneled corporate money to his own bank account to reimburse himself for political contributions, according to the court document.
The donations named in the original charge occurred in February 2017 and went to two candidates for the U.S. House of Representatives and one candidate for the U.S. Senate.
During that time period, Dannenbaum employees made donations that match the amounts named in the court record to Cornyn, a Republican; U.S. Rep. Kevin Brady, R-The Woodlands; and U.S. Rep Filemon Vela, D-Brownsville. Court records identify the co-conspirator as a person in McAllen who directed most of the company’s South Texas work. The company’s website from this time period shows Louis H. Jones Jr. as principal and director of the South Texas office.
And the co-conspirator’s 2017 donations to Cornyn, Brady and Vela, as outlined in the court records, match only one individual — Louis H. Jones Jr., who died by suicide last October after stating in a deposition that he was under investigation by the FBI. Court documents quote Dannenbaum telling Jones how to conduct the scheme.
“For the federal, you know you’ll have to split it up,” Dannenbaum told Jones, according to documents.
“Yeah, I was going to make sure I get it split up right,” Jones replied.
“Yeah, I normally have all the checks together and then staple, you know, my business card … to the checks so that there’s no confusion about...where they came from,” Dannenbaum said.
Four employees’ donations to a U.S. senator’s campaign amounted to $10,000 and were reimbursed using funds from the corporate bank account, according to court documents
Dannenbaum employees Richard Seitz, Eric Davila, David Garza and Jones gave a combined $10,000 to Cornyn’s campaign on Feb. 25, 2017, according to Federal Election Commission filings.
Cornyn to cooperate
Cornyn acknowledged the contributions in early November and vowed to cooperate with prosecutors and return the donation money to the U.S. Treasury, as mandated by law, a spokesperson said.
Investigators also allege that four employees were reimbursed for donations totaling $10,000 to a candidate for the U.S. House. The same four Dannenbaum employees who gave money to Cornyn also gave a combined $10,000 to Brady’s re-election campaign on Feb. 22, 2017, FEC filings show.
Brady did not respond to a request for comment.
The executive who was a co-conspirator was allegedly instructed to donate $2,500 to a second candidate for the U.S. House. According to FEC filings, Jones gave $2,500 to Filemon Vela for Congress on Feb. 27, 2017.
Vela’s campaign denied knowing about Dannenbaum’s scheme.
“The congressman assumed at the time that the contribution was from Louis Jones himself,” said Chris Koob, a spokesperson for Vela’s campaign. “He will donate those funds to charity unless directed to do otherwise by the government.”
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