Appeals Court Upholds Former Texas City Manager’s 35-Year Prison Sentence for Wire Fraud

August 28th, 2020 by Tad Nelson in White Collar Crime

White collar crimes are no laughing matter, especially when the defendant is a public official. The misuse of government funds can lead to serious felony charges such as wire fraud. And even a single conviction on wire fraud charges may carry a prison term of up to 20 years.

Recently, the U.S. Court of Appeals for the Fifth Circuit upheld the conviction–and 35-years sentence–of a former Texas city manager who was charged with four counts of wire fraud. The defendant previously served as city manager and city attorney for Crystal City, Texas. In 2013, Crystal City entered into discussions with Siemens Industry, Inc., to provide “energy-saving infrastructure upgrades” to the city.

court room photo

As it turned out, Crystal City had difficulty securing financing to pay Siemens. An Arkansas-based investment bank eventually agreed to provide financing, provided Crystal City issued “certificates of obligation,” which would effectively use the city’s property tax revenue to secure the loan.

These certificates functioned as a type of municipal bond, and by law the funds raised had to be kept separate from the city’s other funds and used exclusively to pay Siemens. But according to federal prosecutors, that is not what happened. Instead, they said the defendant ordered employees to place the proceeds from the certificates of obligation into the city’s general fund, where it was used to pay for “expenses that were not related to the infrastructure improvements,” including the defendant’s own salary. As for Siemens, it did not receive full payment for its work.

Prosecutors charged the defendant with four counts of wire fraud based on the “misapplication of the certificate proceeds.” After a six-day trial, a jury found the defendant guilty. The defendant then fired his court-appointed attorney and proceeded to represent himself at sentencing. The judge ultimately sentenced the defendant to 35 years in prison, which was significantly higher than the recommended sentence under federal guidelines.

On appeal, the Fifth Circuit rejected the defendant’s claim that there was “insufficient evidence” to support the jury’s verdict on wire fraud. Essentially, the defendant maintained there was never a “scheme to defraud” and no “false promises” were made regarding the use of the certificate funds. The appeals court noted that the investment bank “would not have participated in the public offering” without the certificates. More to the point, the defendant signed the certificates, which described “how the certificate proceeds would be used.”

The defendant also argued he was entitled to a new sentencing hearing because the trial judge declined to appoint a new attorney to represent him. As the Fifth Circuit pointed out, while a criminal defendant has a constitutional right to a court-appointed lawyer (if they cannot afford to hire one), that does not mean they are “entitled to appointed counsel of his or her choice.” While there are limited circumstances where a defendant may ask for a new court-appointed lawyer, the “mere fact that a defendant is not satisfied with an attorney’s performance does not qualify as good cause.”

Speak with a Houston White Collar Crimes Defense Lawyer Today

If you are facing federal wire fraud or similar charges, you need to work with an experienced criminal defense attorney with whom you have full confidence. Contact the Law Offices of Tad Nelson & Associates in Houston, Galveston or League City today to schedule a consultation. Call 281-280-0100

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