Houston Chronicle Sunday

Feds out­line al­leged fraud

Stock­man ac­cused of head­ing com­plex crim­i­nal con­spir­acy

- By Lise Olsen

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.

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