Dallas Mayor Pro Tem Dwaine Caraway pleaded guilty to federal corruption charges Thursday morning. He's also resigned from City Council.
Caraway pleaded guilty to one count of conspiracy to commit wire fraud and one count of tax evasion, according to the U.S. Attorney of the Northern District of Texas.
Caraway, the second highest-ranking elected official in Dallas, admitted to accepting more than $450,000 from the owner of Force Multiplier Solutions, the surveillance camera company involved in the scandal that took down the Dallas County Schools bus agency. The bribes and kickback payments date back to 2011.
Robert Leonard, the owner of the Force Multiplier Solutions, pleaded guilty to one count of conspiracy to commit honest services wire fraud.
Leonard also paid former Dallas County Schools Superintendent Rick Sorrells in excess of $3 million, U.S. Attorney Erin Nealy Cox said at a press conference.
In exchange, Sorrells entered into contracts and licensing agreements between Dallas County Schools and Force Multiplier Solutions. Sorrells approved hundreds of purchase orders for camera equipment costing millions of dollars, most of which was never installed and sat unused in a warehouse, Cox said.
“Caraway and Sorrells used these illicit funds to, among other things, repay personal loans, acquire luxury clothing, fund personal trips to Las Vegas and New Orleans and provide gambling money,” Cox said.
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Caraway's attorney, Michael Payma, says the court documents speak for themselves. He says Caraway must still be sentenced and declined to comment further.
A judge has scheduled a sentencing hearing for Caraway and Leonard for December, Cox said. The U.S. Attorney's office says it will recommend 84 months of prison time for Caraway and Leonard.
“Public officials who betray their position of trust harm the integrity of our government," Cox said. "Business executives who betray the trust of their companies, their shareholders, their employees, by bribing public officials, harm the integrity of the marketplace.”
Caraway went through the normal channels of being processed earlier Thursday morning, but he's currently free, Cox said.
'I am truly sorry'
Caraway, who represents District 4, resigned from City Council, effective immediately. In his letter Wednesday to the city secretary's office, Caraway said the decision to resign comes after "a lot of prayer and soul searching."
"I have decided that I must take responsibility for my actions," Caraway wrote. "I am truly sorry that I must end my career as an elected official because I betrayed the public's trust that I worked so very hard to earn."
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A special election must be held in November to elect someone to serve the remainder of Caraway's term, according to a statement from City Attorney Larry Casto. (Update, Aug. 15: A special election was approved by City Council for Nov. 6.)
'Politician who lost his way'
Dallas Mayor Mike Rawlings said he learned of Caraway's guilty plea and resignation Thursday morning and had not yet reviewed public details of the case. Rawlings said he would not make public comments Thursday beyond his statement issued in the afternoon.
The mayor said he was saddened by his colleague's actions.
"I am said for the city, especially the citizens of District 4, and for Mr. Caraway's friends, family and supporters."
Rawlings said Caraway did a lot of good for city, especially for the youth, during his tenure in public service. Rawlings said he appreciated Caraway "admitting his crimes and sparing the city what could have been a drawn-out legal battle.
"More than 12,000 people work for the City of Dallas," Rawlings said. "Almost every one of them serves honorably and ethically -- and never make the news. This city is so much bigger than any one politician who lost his way."
Details on the pleas from the U.S. Attorney's office:
"According to the Plea Agreements and Factual Resumes filed in the cases, Leonard paid and Caraway accepted more than $450,000 in bribe and kickback payments in the form of a phony consulting agreement, luxury suits, fully funded trips, gambling money, repayment of personal debt, checks and cash. Leonard also admitted to paying Rick Sorrells, former Dallas County Schools Superintendent, over $3 million in bribes and kickbacks payments in various forms, including $200,000 toward Sorrells’ credit card and student loan debt through a bank account opened in the name of a nonexistent entity.
"In return for the bribe and kickback payments, Caraway promised favorable official actions to further Leonard’s business interests in Dallas. These actions included key votes to promote and continue the school bus stop-arm camera program -- which contracted with Leonard’s company, Force Multiplier Solutions -- and other actions taken to benefit Force Multiplier Solutions.
"Both Defendants admitted to efforts undertaken to disguise and conceal the nature of the bribe and kickback payments. Leonard funneled a significant portion of the illicit payments through various pass-through companies created and operated by his business associate, Slater Washburn Swartwood, Sr., of Louisiana. Specifically, Swartwood, acting at Leonard’s direction, funneled and masked payments to Caraway and Sorrells as 'consulting fees' or 'loans' through his shell company ELF Investments. The co-conspirators originally characterized the payments to Sorrells as 'consulting,' but later attempted to recast the payments as a loan. Sorrells provided no legitimate consulting services in exchange for the payments. There were payments made to Caraway in the form of checks that were cashed at pawnshops and liquor stores.
"Caraway also admitted that in 2012 through 2014, he evaded and defeated the payment of substantial income tax due and owed to the IRS resulting in a tax loss of $68,906. Specifically, in 2014, Caraway failed to report for income tax purposes $97,000 of bribe and kickback payments he received from Leonard, under the auspice of 'consulting fees.' Caraway also offset a portion of bribe and kickback payments he did report as income in prior years via phony business expenses."
Earlier in the investigation
Leonard's business associate Slater Washburn Swartwood, Sr., and Rick Sorrells pleaded guilty in February and April, respectively, for their joint role in the conspiracy. Both are currently out on bond. Smartwood's sentencing hearing is scheduled for this month. Sorrells' hearing has not yet been scheduled.
The investigation was led by the FBI and the criminal investigation division of the IRS.
Dallas County voters decided last fall to shut down the embattled Dallas County Schools bus agency, which came under fire for finacial mismanagement, a failed stop-arm camera program, bues running red lights and drivers not getting kids to school on time.
The agency officially ceased operations at the end of July, Cox said.
The Associated Press contributed to this report.