Feds outline alleged fraud
Stockman accused of heading complex criminal conspiracy
Steve Stockman was soon to board a plane for the United Arab Emirates this month when his unorthodox life took a sudden detour. The outspoken twotime former congressman from Houston was met at the airport by federal agents holding an arrest warrant.
In his own colorful campaign literature, Stockman, 60, has portrayed himself as a gun-loving, abortion-hating activist and philanthropist who has used frequent travels abroad to deliver Christian charity and medical supplies to developing nations.
But a 28-count federal indictment handed up Wednesday describes Stockman as the head of a complex criminal conspiracy. It alleges that he and two aides collected $1.2 million from three U.S.-based foundations and individuals, laundered and misspent most of that money, spied on an unnamed opponent, accepted illegal campaign contributions, funneled money through bogus bank accounts and businesses, and failed to pay taxes on his illgotten gains.
Some of that money went for trips to try to “secure millions of dollars from African countries and companies operating” in Af-
rica, the indictment says.
Stockman has said he’s innocent and predicts he’ll be vindicated. He described the prosecution as stemming from a “deep state” conspiracy inspired by his own criticism of the IRS while in Congress. His lawyer, Dane Ball, said it was premature to provide a point-by-point defense to all of the allegations outlined in the 46-page indictment.
“Steve intends to enter a not guilty plea next Wednesday, and then turn to mounting a defense in Court,” he said. A paper empire
Stockman represented Houston and a swath of East Texas in the U.S. House of Representatives from 1995-97, and again from 2013-2015, and served on the House Foreign Affairs Committee.
Prosecutors claim that both as a candidate and as a congressman, Stockman was involved in a web of fraud and scams that spanned from 2010 to 2014 and included a paper empire of shell companies. His two ex-congressional aides and campaign workers also were indicted.
Jason Posey, 46, has been described as Stockman’s primary accomplice in the scheme to divert donations through companies linked by federal investigators to suburban Houston post office boxes and an array of bank accounts. He has not been arrested. Thomas Dodd, the other former staffer, pleaded guilty earlier this month to two charges related to the same conspiracy and agreed to testify as part of his plea deal.
The purpose of their conspiracy was “to unlawfully enrich themselves and to fund their political activities by fraudulently soliciting and receiving hundreds of thousands of dollars,” the indictment says.
Prosecutors say Stockman used hundreds of thousands of pilfered funds to pay campaign and credit card debts, to cover personal expenses — and to politically attack Sen. John Cornyn (R-Texas). Money for mailings
Stockman’s long-shot Republican primary against Cornyn was the subject of one the scams outlined in the indictment.
In February 2014, Posey solicited and received a $450,000 charitable contribution from an Illinoisbased donor that was supposed to finance 800,000 mailings to Texas voters of a campaign publication resembling a “newspaper.” The mass mailings for the Senate primary were part of what Posey later swore in an affidavit was an entirely “independent election expenditure” that was handled entirely by Posey and not by Stockman, one of the candidates.
Those mailings, made to look like real newspapers, championed Stockman’s candidacy and opposed Cornyn. Paid campaign debts
Posey received the donation through a company he controlled called the Center for the American Future, but he coordinated the mass mailings directly with Stockman in violation of federal campaign finance laws, the indictment says. Stockman and Posey also sought a partial refund of the mailing costs — $214,718.51 — without the donor’s knowledge and split the money, the indictment says.
Prosecutors allege Posey used the money to pay Stockman’s Senate campaign debts and his own personal expenses, including “airfare on a flight departing the United States.” On-again, off-again
During his on-again, off-again political career, Stockman has pulled off more than one improbable comeback. He rose from a formerly homeless community-college dropout to earn an accounting degree at the University of Houston. He unseated a popular Beaumont incumbent to obtain his first Congressional seat in 1995. He filed for voluntary bankruptcy when his father got sick and his business failed in 2002 and then bounced back to return to Congress as a Tea Party candidate in 2012.
But Stockman already was embroiled in a web of fundraising scams, prosecutors say, when a newlyformed 36th congressional district created an opportunity for his comeback campaign. The district stretched east from the Houston sprawl and deep into the Piney Woods. It offered such solidly conservative demographics that it attracted Stockman to a crowded field.
There was no incumbent in the race, but Stockman, a dapper born-again Christian with thinning black hair and sparkling eyes, soon posted blueand-white signs that read: Re-Elect Congressman Steve Stockman. Some voters got letters on what looked like official congressional stationary. And his campaign mass mailings were made to look like real newspapers with names like the Times Free Press.
These fake newspapers and other tactics seemed misleading to his rivals — and familiar. The FEC had fined Stockman’s campaign in the 1990s for mass mailing fake newspapers that lacked proper campaign labeling.
(Another similar complaint about Stockman’s 2014 Senate campaign remains pending with the FEC.)
In January 2013, after his election, U.S. Rep. Stockman made headlines by inviting Barack Obamahating, gun-loving rocker Ted Nugent to the State of the Union Address. He drew more attention via a Twitter account dubbed @steveworksforyou.
On the Hill, Stockman crusaded for obscure causes like Bitcoin — a digital currency that has yet to catch on but not for his lack of effort.
But he avoided questions about how he’d made his own money before becoming a representative. He finally filed a disclosure in 2013 — a year late — that listed his $350,000 income as coming from an entity called Presidential Trust Marketing. On that form, Stockman failed to disclose the 10 active business names he’d established from Texas to the British Virgin Islands, though federal law requires candidates and members of Congress to disclose both income and businesses, as the Chronicle reported at the time.
Presidential Trust Marketing is one of the businesses that Stockman allegedly used in the fundraising conspiracy, the indictment says. Duped an octogenarian
In 2010-2012, Stockman and his ex-staffers allegedly used two other business names, nonprofits called Life without Limits and the Ross Center, to dupe an octogenarian multimillionaire from the Rothschild foundations in Baltimore to cut a series of checks for $425,000 for charity and voter education efforts that never happened, the indictment says.
A foundation spokesman, David Daneman, told the Chronicle that their meetings “were solely with Stanford Z. Rothschild Jr., who was in his mid-80’s at the time and who passed away in February of this year. “It is clear that these individuals were taking advantage of a very philanthropic elderly man.”
Another target was a wealthy Illinois captain of industry who leads the Ed Uihlein Family Foundation, which provided $350,000 in 2013 for a project Stockman pitched called The Freedom House.
In support of the proposal, Dodd and Stockman arrived at a meeting Jan. 24, 2013, armed with an 18page document that promised a “three-pronged strategy to promote the ideas of liberty" — including creating a caucus, a training program and gathering place for young conservative Congressional interns.
Most of that donation was illegally diverted too, the indictment said.
About $41,000 was used to pay for months of covert surveillance of someone Stockman considered “a potential challenger in a future primary election,” the indictment says. About $20,000 went to Stockman’s brother’s book business; about $11,000 went to pay for a 30-day drug treatment program for a female associate of Stockman’s.
Another $2,200 went to pay for a summer camp for Stockman’s nephew and the daughter of a family friend, the indictment said. Missed 17 straight votes
In December 2013, Stockman declared that he would not run for re-election. Then he announced he’d challenge Cornyn. It was an odd campaign.
In January 2014, Stockman disappeared for three weeks, missing 17 straight votes in the House as well as Senate campaign events. It was during this period that federal prosecutors say he colluded with Posey in illegal mass mailings targeting Cornyn and other opponents. Cornyn easily won.
After leaving Congress in December 2014, Stockman kept right on tweeting with his handle @Steveworksforyou.
Stockman strolled to one recent federal court appearance smiling in sunglasses. He has promised he will be vindicated. Stockman has, after all, already made recent Texas history: It’s been more than a decade since any former or current congressman has been indicted in the Lone Star State.