Caraway, pictured here in 2015, stands outside of Rudy's Chicken in South Dallas. (Photo by Elizabeth Lavin)

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Federal Indictment Details Dwaine Caraway’s Involvement in $3.5 Million Bribery Scheme

The hard details of the scheme that brought Caraway down.

Mayor Pro Tem Dwaine Caraway pleaded guilty this morning to accepting about $450,000 in bribes and kickbacks, money that the feds say was distributed through sham entities masked as fake loans and sometimes given to him as checks made out to cash that the councilman negotiated at liquor stores and pawn shops.

Caraway is facing up to seven years in federal prison on the two counts to which he pled guilty: conspiracy to commit honest services wire fraud and another for tax evasion. The feds said that he masked those payments on his tax returns. He has resigned from the City Council and will pay up to $250,000 to the feds and $68,906 to the IRS. He is set to be sentenced on December 14.

“Over the past several weeks, through a lot of prayer and soul searching, I have decided that I must take responsibility for my actions,” wrote Caraway in his resignation letter. “I have dedicated much of my life to serving others, but have never claimed to be without sin. 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.”

Pleading guilty alongside him was co-conspirator Robert Leonard, the founder of Louisiana-based Force Multiplier Solutions, which entered into a sizable contract with the defunct Dallas County Schools to provide cameras that could be placed on school bus stop-arms. The idea was to ticket drivers who sped by the school buses, kind of like a mobile red light camera, and reap the revenue windfall. But the program failed; most of the cameras wound up sitting unused in a warehouse.

The payments came to Caraway from Leonard and his colleague Slater Washburn Swartwood. Swartwood is accused of working with Caraway to set up sham companies to launder the payments. The vast majority—$390,000—came through these entities. The rest included payments for security cameras around Caraway’s home, luxury suits, a campaign bus, expenses for a funeral. Leonard and Swartwood also covered all expenses-paid trips to New Orleans, Las Vegas, and Austin. They even included money for gambling. Other payments got disguised as loans, complete with fake loan documents. Others came in as checks that Caraway cashed at pawn shops and liquor stores, the latter of which he once led an effort to keep out of southern Dallas. 

The indictment says the payments got Caraway to influence a City Council vote to OK the deal, which U.S. Attorney Erin Nealy Cox said sunk Dallas County Schools into “intolerable levels of debt.” Voters did away with DCS last November. The head of the agency, Rick Sorrells, pled guilty in April to a charge of wire fraud. These indictments say he was also paid about $3 million in bribes and kickbacks.

“This day is also hopefully about reconciliation, perhaps a starting point for returning to harmony after conflict,” Cox said in a news conference Thursday morning. “The citizens of Dallas deserve honest government and there is absolutely no level of acceptable public corruption.”

Eric Jackson, the special agent in charge of the Dallas FBI, said the feds launched an investigation after the dogged reporting of NBC Channel 5, which broke the news of the scandal last year. Caraway admitted to the station that he accepted money from Force Multiplier to help search for locations in southern Dallas to build affordable housing. The indictment says the money also went toward using “the Council Member’s official position if and when necessary to forward Leonard’s efforts to help develop low income housing.” He also told the station that he received $20,000 as a loan, which he never made any payments toward.

The second count, for tax evasion, pinned Caraway for leaving $97,000 off his tax returns from 2014 through 2016. The indictment identifies $3.5 million in total paid to “Dallas area officials,” money which helped Force Multiplier land $70 million in “contracts, agreements, orders, and other beneficial treatment” that “coconspirators concealed from DCS, its board, the Dallas City Council, and the citizens.”

Cox said the investigation into the scheme was ongoing, but declined to provide any details.

“The investigation continues; obviously there are a lot of parties implicated in this,” she said. “I can’t speak to anyone in particular.”

A spokesman for Mayor Mike Rawlings said his office would likely issue a statement later this afternoon. Rawlings told NBC 5 that he met twice with Leonard, in 2013 and 2016, and began second-guessing the latter meeting after he pitched building a new sports stadium in Dallas that would be bankrolled by a prince from the United Arab Emirates. Rawlings told the station that Caraway introduced him to Leonard at City Hall in 2013. Caraway was not present at Wednesday’s Council meeting. This was his fifth term around the horseshoe; he was term-limited out in 2015 and lost in a race for County Commissioner against John Wiley Price. He regained his seat the next year.

Council Member Tennell Atkins, who represents the district just south of Caraway’s, said he “didn’t see anything,” but had just gotten back into town and hadn’t read the indictment. “I heard about it but I haven’t read the paper. I don’t know. I haven’t talked to the attorneys, I haven’t talked to the city,” he said.

Councilwoman Jennifer Staubach Gates, who represents portions of North Dallas, told our Tim Rogers that she felt today was “a sad day for Dallas. It’s painful, and I think it reflects poorly on our city.” We have a huge responsibility to have the public’s trust; it’s a stain on our city.” She wasn’t exactly surprised.

“I’ve been following this story and the filings for the civil case recently,” she said. “It’s not like you’re shocked. But you don’t expect this.”

Gates was the lone council member to vote against the camera deal. She said she couldn’t believe that such a large contract had bypassed the Public Safety Committee and landed on the consent agenda.

“My colleagues felt comfortable, for whatever reason, and passed it,” she said.

City Attorney Larry Casto sent a memo to Council on Thursday that details next steps. The city must order a special election by August 20 in order to get the District 4 race on the ballot in time for the mid-terms on November 6. The City Council will vote on establishing the election on August 15. Candidates then have until August 23 to file to run.

In a statement Thursday afternoon, Mayor Mike Rawlings said he had “not yet reviewed the the public details of the case,” but, “as we all now know, the corruption at Dallas County Schools extended beyond the confines of that now shuttered organization.” The statement continues:

As your mayor, I am saddened by what we learned today about the actions of one of my former colleagues. I am sad for the city, especially the citizens of District 4, and for Mr. Caraway’s friends, family and supporters. Mr. Caraway championed much good in his time in public service, particularly for the youth of our city. I appreciate that he is 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. 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.

The indictment and Caraway’s resignation letter are below.

Resignation of Mr. Dwaine R. Caraway by goodmoine on Scribd

Caraway Indictment by goodmoine on Scribd

 

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