Ex-CEO pleads guilty to election fraud
Namesake of Dannenbaum Engineering says he illegally paid employees back for donations
A former University of Texas regent pleaded guilty Friday to circumventing federal election law in 2017, characterizing the plea as a solemn turning point in his 80-year life otherwise centered on family, church and philanthropic work.
Houston resident James Dannenbaum, the former CEO of a prominent Texas engineering firm, admitted to a federal judge he illegally reimbursed employees for donations to a candidate for the U.S. Senate and two candidates for the U.S. House of Representatives. He pleaded guilty to making contributions between $10,000 and $25,000 in the names of other people.
Dannenbaum told the judge he couldn’t recall all the details but didn’t contest the allegations. He faces up to two years in prison at his sentencing, which U.S. District Judge Sim Lake set for March 5. Larry Eastepp, one of Dannenbaum’s trio of lawyers, informed the judge he may ask to adjust the sentencing due to his client’s forthcoming heart surgery.
In written responses to the
Chronicle, Dannenbaum said he’d been deeply involved in politics his whole life — posting his first yard sign for a Houston politician at the age of 5, with the help of his father, a former city engineer for Houston who founded Dannenbaum Engineering. He recalled making his first political gift in 1963 “because an elected official asked me to contribute to his campaign.”
“At this stage of life — and I mean precisely this moment — I am prepared to make amends for mistakes that are my sole responsibility,” wrote Dannenbaum, the grandson of a former state district judge whose portrait still hangs in the Harris County courthouse. His plea is a key component in a larger deferred prosecution agreement that the 200-person company made in November with the Justice Department to avoid the firm being prosecuted for its role in the scheme.
Dannenbaum Engineering agreed to a $1.6 million fine after it admitted to a pattern of illegal campaign contributions involving executive staffers funneling hundreds of thousands of dollars to two dozen political power brokers.
Newly appointed CEO Michel Maksoud said the prosecution of its leader was an unfortunate moment in the company’s history.
“We’ve served the state of Texas for almost 75 years,” Maksoud said. “It’s unfortunate for such a cloud to be cast on us that has
nothing to do with what we do best, which is engineering.”
Among many projects around the state, the firm has managed the planning and design of portions of the $800 million Houston Ship Channel Bridge currently under construction and designed a segment of the Grand Parkway between U.S. 290 and Texas 249.
“We want to continue providing excellent engineering work that is respected by peers and clients,” Maksoud added.
Dannenbaum Engineering was also involved in the so-called Bridge to Nowhere in Brownsville and other major airport and highway projects. They company acknowledged its criminal conduct following an election fraud charge from the public integrity division of the Justice Department.
Dannenbaum and his company came under scrutiny in the wake of FBI raids at the company’s corporate offices in Houston, San Antonio, McAllen and Laredo.
The company previously admitted in its agreement with prosecutors to a sweeping scheme led by Dannenbaum and Louis H. Jones, Jr., who headed most South Texas projects.
The judge Friday confirmed in open court that Jones, who died by suicide in 2018, was the unnamed co-conspirator in the scheme.
Along with Dannenbaum, Jones helped recruit 31 people to contribute more than $323,300 to two dozen federal political campaigns between 2015 and 2017, and the pair used corporate money to reimburse the contributions. Dannenbaum funneled corporate money to his own bank
account to reimburse himself for political contributions, according to the company’s agreement.
There is no indication candidates knew the company was the source of the contributions, according to court documents.
The donations related to Dannenbaum’s plea occurred in February 2017 and went to two candidates for the U.S. House and one for the U.S. Senate.
During that time period, Dannenbaum employees made donations that match the amounts listed in the court record to Sen. John Cornyn, a Republican; U.S. Rep. Kevin Brady, R-The Woodlands; and U.S. Rep. Filemon Vela, DBrownsville. Court records identify the co-conspirator as a person in McAllen who directed most of the company’s South Texas work.
The FBI probe into Dannenbaum became statewide news when agents executed raids the following April 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.
A report from the Crockett County medical examiner said Jones was found dead in his car in October 2018. His death happened days after Canales and
Amaya pleaded guilty in connection with the bribes from Dannenbaum Engineering.
Dannenbaum declined to comment about what happened with his late colleague. But in his written remarks to the Chronicle he stated, “Obviously, Louis Jones’ death broke my heart.”
Bill Miller, a spokesman for the longtime magnate, said as Dannenbaum rose in stature as a businessman, people approached him more frequently for donations.
“He became a bellwether on who to give to and when,” Miller said. “He didn’t take care of his business properly, and over time it caught up with him. He wasn’t careful about the giving. It wasn’t a big plan over time — it just evolved. It got careless at one point.”