STOCKMAN FOUND GUILTY OF FRAUD

Former U.S. Rep. Steve Stockman - a political maverick once viewed as a champion of right-wing causes - was convicted Thursday of masterminding a wide-ranging fraud scheme that diverted $1.25 million in charitable donations from wealthy conservative philanthropists to cover personal expenses and campaign debts.

After deliberating more than 15 hours over three days, the jury found Stockman guilty on 23 counts of mail and wire fraud, conspiracy, making false statements to the Federal Elections Commission, money laundering and filing a false tax return. The jury found him not guilty on one count of wire fraud.

Stockman, 61, of Clear Lake, who served two nonconsecutive terms as a Republican congressman in separate southeast Texas districts, showed no reaction to the jury's verdict. His wife, Patti, watched from the courtroom gallery, as did U.S. Attorney Ryan K. Patrick.

Brandon Rottinghaus, a political science professor at the University of Houston, called the case "a cautionary tale for politicians who might try to use their authority to gain political power."

"Steve Stockman was on track to be among the next generation of conservative leaders in Texas, formerly a rising star on the right undone by the hubris of ambition and selfish behavior," he said. "The 'House of Cards' style antics will almost always catch up to elected officials. No one is above the law and the number of indicted current and former elected officials proves that."

Patrick said Stockman abused his position of trust.

"When public officials use their office to defraud donors and violate federal law, we will hold them accountable," Patrick said in a statement after the verdict. "Corrupt officials like former Congressman Stockman make it harder for the honest ones to do their jobs."

Chief U.S. District Judge Lee H. Rosenthal ruled that Stockman was a flight risk and ordered him taken into custody by U.S. marshals.

Stockman faces a maximum of 20 years in prison on each of the seven fraud convictions and one money laundering count, with a potential for lesser sentences on the other counts. Sentencing is set for Aug. 17.

Two former Stockman aides who pleaded guilty to participating in the scheme were among those who testified against the former congressman, who made an unsuccessful run in 2014 for the U.S. Senate against Republican incumbent John Cornyn.

The jury of seven women and five men heard testimony over three weeks from 39 witnesses and reviewed thousands of pages of documents, tracking donations through bank accounts, campaign finance reports, texts, emails and other correspondence.

Prosecutors presented a meticulously documented case, featuring flow charts and canceled checks, to illustrate how the two-time Republican lawmaker funneled charitable donations through a series of sham nonprofit organizations and shell bank accounts to spend on an array of personal expenses that included his brother's homemade Advent books, a dolphin-watching trip and an amateur spy operation that trailed a perceived GOP rival around the statehouse in Austin.

Stockman's three defense lawyers, who argued at trial that their client did not intentionally commit fraud, said they were disappointed and saddened by the verdict.

"It's really an unfair situation," attorney Sean Buckley said. "We had hoped the jury would conclude that these funds from the donors were paid with the donors' knowledge and belief that they would be used to finance Mr. Stockman's political work and his projects."

The verdict drew a quick response from the Harris County Republican Party, which noted that Stockman represented his constituents "with genuine care and concern."

"His conviction today in court is a sad and unfortunate conclusion to his life of public service," according to an emailed statement. "Our thoughts and prayers are with him and his family as they deal with this challenging circumstance."

Political life cut short

Stockman was arrested March 15, 2017, at George Bush Intercontinental Airport as he was boarding a flight to the United Arab Emirates after being charged in a criminal complaint.

Federal charges were also brought against aides Jason Posey, 47, of Tupelo, Miss., and Thomas Dodd, 38, of Houston, who pleaded guilty and agreed to testify against their former boss.

After his first appearance in federal court, Stockman told reporters he had been targeted for speaking out against the Internal Revenue Service and was a victim of the "deep state" that allegedly exists within federal agencies.

Stockman served in Congress from 1995 to 1997 in District 9 representing an area that stretched from Jefferson, Port Arthur, Beaumont and Galveston to parts of Harris and Brazoria counties. He was defeated in a bid for re-election in 1996.

He won a second term in Congress in 2012 to the newly created 36th District, which includes portions of Harris County including Stockman's then-hometown of Friendswood, as well as Liberty, Chambers, Polk, Tyler, Hardin, Jasper, Newton and Orange counties. During that term, he aligned with tea party Republicans and opposed the Affordable Care Act, the reauthorization of the Violence Against Women Act and introduced legislation to repeal gun bans at schools.

His term was cut short in 2014 when he ran against Cornyn.

Shadow charities

The criminal probe of Stockman was triggered by investigations by the Sunlight Foundation and the Houston Chronicle that examined a series of 2013 checks that straw donors made to Stockman's tapped-out congressional campaign fund. Law enforcement traced the money from these fake donors back to its source, a $350,000 check to one of Stockman's charities from philanthropist Richard Uihlein, and into bank accounts of the two aides.

Uihlein, the head of a Midwestern shipping supplies empire, gave $800,000 to Stockman projects.

He testified a $350,000 check was meant to pay for the rehabilitation of Freedom House, a live-in training center for conservative interns on Capitol Hill that never materialized.

Uihlein believed his second contribution of $450,000 would cover an independent campaign expenditure related to Stockman's bid for the U.S. Senate. The donor testified he believed the funds would be used for a statewide mailing of fake tabloid newspapers portraying Cornyn as a fan of President Barack Obama's national health care policy.

Another heavyweight GOP donor, the late Stanford Z. Rothschild Jr., a Baltimore money manager, donated $450,000 to Stockman's charities, but witnesses said the money didn't go toward the broad-based conservative causes that Stockman and Dodd had promised. Instead, Stockman spent it on a variety of personal expenses.

Posey, an aide who knew Stockman for decades, testified he wrote checks, set up bank accounts and moved the money as directed by Stockman into shadowy charities, including one called the Egyptian American Friendship Society and another named Life Without Limits, supposedly dedicated to helping people recover from trauma.

Lost 'a golden opportunity'

Posey testified that he and the former congressman knew they were breaking the law, but Stockman instructed him to push forward, spending charitable money on hotel rooms, plane flights and so-called "burner phones" for secret conversations.

He complied, he said, even fleeing to Egypt at Stockman's request for more than two years when Stockman realized the scheme was under investigation.

Testimony from Dodd was also critical, since he dealt directly with Stockman's major donors.

Dodd testified that he knew the donations were intended for charitable purposes and that Stockman was using the money for unrelated expenses, including Dodd's own credit card debts.

The defense called just two witnesses, both of whom were peripheral to the prosecution's allegations. Stockman did not testify.

Attorney Philip Hilder, who represented Posey, said in the universe of white-collar crime, Stockman's conduct stood out because he was in office when many of the crimes occurred.

"This was a highly elaborate scheme that was hatched shortly after Stockman was sworn into office in 2013 and continued throughout his term," Hilder said.

"What makes this unusual is that a member of Congress abused his authority shortly after being given the oath of office," he said. "Stockman manipulated his staff and squandered a golden opportunity to represent the constituents in his district who obviously placed faith in him."

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