In what federal prosecutors are calling a “major victory against public corruption,” Dallas Mayor Pro Tem Dwaine Caraway resigned his city council position today after pleading guilty to using his office to defraud taxpayers and enrich himself.
Caraway asked for and received over $450,000 in bribes, kickbacks, and other benefits as part of a multi-year money-laundering conspiracy involving now-defunct school bus bureaucracy Dallas County Schools. In return for the money, Caraway used his position to convince fellow city council members to approve a bogus school bus stop-arm camera ticketing program run by DCS — approval that was vital to keep the scheme going.
The money came from Robert Leonard, CEO of camera company Force Multiplier Solutions, who also pleaded guilty today in the conspiracy case. Leonard and then-DCS Superintendent Rick Sorrells hatched the stop-arm camera ticketing scheme back in 2010. The program, which laundered more money than it made, plunged the agency into debt and precipitated its financial collapse.
From 2011 to 2017, Leonard funneled $3 million in bribes and kickbacks to Sorrells, using a variety of shell corporations, sham agreements, and phony invoices. In exchange, Sorrells awarded $70 million in DCS contracts to Force Multiplier. Sorrells pleaded guilty in April to one count of conspiracy to commit honest services wire fraud, in return for a maximum 10-year prison sentence and forfeiture of his ill-gotten gains.
Leonard also paid Caraway to use his political position to “further Leonard’s interests in real estate developments” in Dallas. Leonard told prosecutors the payments to Caraway were a clear “quid pro quo,” and he paid the bribes because Caraway “did not do anything unless he … got paid.” Caraway never reported the income and benefits he received from Leonard and knowingly filed false tax returns.
Leonard pleaded guilty to one count of conspiracy to commit wire fraud. Caraway pleaded guilty to conspiracy to commit honest services wire fraud and tax evasion.
“There is absolutely no level of acceptable public corruption,” Erin Nealy Cox, U.S. Attorney for the Northern District of Texas, said at a press conference today announcing the guilty pleas. “It does not merely strike at the heart of good government,” she said. “It erodes public confidence.”
Eric Jackson, Special Agent-in-Charge handling the case, said the FBI will continue to “take an aggressive lead to conduct thorough investigations” and “identify those public servants who have used their positions to harm citizens of Dallas.”
Asked whether charges were expected against former DCS President Larry Duncan or other current city council members, Cox responded that the FBI is “thoroughly looking at all aspects of this case.”
State Sen. Don Huffines (R–Dallas), who led the legislative effort last year to abolish DCS, said he “would not be surprised to see more guilty pleas or indictments soon.”
Dallas County residents voted to shut down the scandal-plagued bus bureaucracy last November. Since then, a dissolution committee has been working to wind down the agency, which it did July 31, and figure out how to pay off the mountain of debt left behind.
The committee filed a civil racketeering lawsuit seeking to recoup taxpayer money that was illegally siphoned to corrupt officials and others involved in the conspiracy. Under federal racketeering statutes, plaintiffs can recover triple damages. The committee estimates racketeers bilked $125 million from DCS taxpayers.
The lawsuit names Caraway, Leonard, Sorrells, and Duncan, along with Force Multiplier and other companies used to transfer money. The suit also targets Slater Swartwood, Sr., the middleman who helped funnel millions in bribes and kickbacks from Leonard and Force Multiplier to Caraway, Sorrells, and others. Swartwood was the first to be indicted on criminal charges in the DCS case. He pleaded guilty to one federal money laundering count in exchange for providing prosecutors information about his co-conspirators.
Caraway faces up to seven years in federal prison; Leonard could serve up to 10 years. Sentencing for Caraway and Leonard is set for December 14.
