Corruption trial to begin for Steve Stockman, former GOP congressman

March 19, 2018 GMT

A year after he was charged with running a wide-ranging scheme to divert charitable donations to pay for campaign and personal expenses, former U.S. Rep. Steve Stockman is scheduled to begin a month-long trial Monday in a Houston federal courtroom.

Jurors could hear testimony in Chief U.S. District Judge Lee H. Rosenthal’s courtroom from about 75 witnesses and sift through thousands of pages of evidence in what prosecutors have characterized as a “white-collar crime spree,” according to court documents.

The former Republican congressman has insisted he is innocent, and his defense attorney said he intended to defraud anyone.

A joint team of prosecutors from Houston and the Justice Department’s Public Integrity Division contend that with the help of two aides, Stockman syphoned off $1.25 million in donations meant for three U.S. charitable groups and then laundered the money to fund his own campaigns and pay personal expenses without paying taxes on the money.

“The evidence at trial will show that over a four-year period (Stockman) used a series of sham nonprofit entities to raise over $1 million in fraudulent donations,” according to trial brief filed recently by Justice Department prosecutor Ryan Ellersick, who alleged the former congressman “funneled the fraud proceeds through a web of shell bank accounts before ultimately using the funds to pay for personal expenses and to illegally finance his campaign for federal office.”

Stockman, 61, a resident of Clear Lake, faces 28 criminal counts, including allegations of mail and wire fraud, conspiracy, making false statements to the Federal Election Commission, making excessive campaign contributions, money laundering and filing a false tax return.

Stockman’s lawyer, Sean Buckley, said he expects his client to be fully vindicated. He plans to argue that the upstart lawmaker, who opposed big government and failed to unseat Sen. John Cornyn in the 2014 Republican primary, did nothing intentionally wrong.

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“We are absolutely adamant that he didn’t intend to defraud donors or anyone else,” Buckley said. “There’s no allegation of an extravagant lifestyle. He was always one step away from the poverty line.”

Stockman is not currently employed, his lawyer said. His wife works at NASA, but he told a federal magistrate he couldn’t afford his own lawyer. Buckley’s legal fees are being covered by a friend of Stockman’s, whom Buckley declined to name.

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Two aides have entered guilty pleas to criminal conduct, and could be called to testify against the former congressman.

Thomas Dodd, a former special assistant in Stockman’s congressional office, pleaded guilty on March 20, 2017, to conspiracy to commit mail and wire fraud and make false statements and conspiracy to make conduit contributions. And Jason Posey, pleaded guilty Oct. 11 to mail and wire fraud and money laundering.

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Federal investigators allege that between from May 2010 and October 2014, Stockman solicited about $1.25 million in donations based on false pretenses. Stockman allegedly diverted nearly $285,000 donated to charitable causes to pay for his and Dodd’s personal expenses.

One example outlined in court documents was a pitch to the director of a charitable group by Stockman and Dodd to construct Freedom House, a project to remodel a house in Washington D.C. where congressional interns could live and be trained. A donor wrote a check for $350,000, and within 24 hours Stockman began using the funds to pay off campaign debts and $32,000 in credit card debt owed by Dodd.

Buckley said he expected the trial would hinge on the context in which the donations were solicited and the allocations were spent. The government will argue that Stockman solicited funds and used them in a self-serving manner, using it for his political campaign or to cover his day-to-day expenses.

The government is expected to present evidence to show that Stockman set out intentionally to commit fraud. Stockman’s lawyer said he will argue that the expenditures were legal and handled correctly.

“You have to have the specific intent to defraud (someone),” Buckley said. “Our position is he never acted with an intent to defraud.”

“If someone said he could have exercised better judgment about how to use resources or better judgment about how to allocate funds that’s different,” he said.