LIT UPDATE: DEC. 24, 2020
President Donald J. Trump on Tuesday commuted the remaining prison sentence of former Republican Texas congressman Steve Stockman, who was sentenced to 10 years in 2018 after he was convicted of nearly two-dozen felonies, including fraud.
Prosecutors said the conservative firebrand from Friendswood misused $1.25 million in funds from political donors to pay for expenses like hot air balloon rides, kennel bills and a new dishwasher — rather than for charity like the donors were told. He was also accused of planting an undercover intern in the state House office of a political rival.
Stockman, 64, has underlying health conditions that place him at heightened risk during the pandemic. He has already been infected with the coronavirus while in prison, the release said.
He has served more than two years of his decade-long sentence, and will “remain subject to a period” of supervised release and a requirement that he pay $1 million in restitution, the release said.
United States Court of Appeals
December 23, 2020
Lyle W. Cayce Clerk
United States of America,
Stephen E. Stockman,
Appeal from the United States District Court for the Southern District of Texas
USDC No. 4:17-CR-116-2
Before Haynes, Duncan, and Engelhardt, Circuit Judges. Per Curiam:*
Stephen E. Stockman, former federal prisoner # 23502-479, appealed the district court’s denial of his motion for a sentence reduction pursuant to 18 U.S.C. § 3582(c)(1)(A) (compassionate release).
While the appeal was pending, Stockman was released from prison pursuant to a Presidential directive, mooting his appeal. Accordingly, this appeal is Dismissed as Moot.
Question for #AppellateTwitter #lawtwitter and #LawProf ‘s nationwide; Is this a first at CA11? @Heikekrieger2 @StanfordLaw @JonathanTurley @YaleLawSch @Harvard_Law @JoshMBlackman @VolokhC @FolgerLibrary @KannonShanmugam @ProfWrightGMU @SMU @UTexasLaw @TAMULawSchool @STCL_Houston pic.twitter.com/ceTjfJNxCY
— LawsInTexas (@lawsintexasusa) November 14, 2020
Appeals court slams incarcerated ex-congressman Steve Stockman, saying Houston conviction stands
Jan. 13, 2020
A federal appeals court summarily rejected what it called a “self-serving” appeal by disgraced former U.S. Congressman Steve Stockman, finding the lower court properly convicted him of 23 felony counts in a massive fraud scheme involving illegal spending of more than $1 million in charitable donations.
The 5th U.S. Circuit on Friday slammed the “somewhat tortuous” argument by the ex-lawmaker that the trial judge erred by failing to acquit him and by improperly instructing jurors. The 18-page opinion was riddled with stinging barbs.
Stockman’s lawyer picked apart the lengthy jury instructions on appeal, but the court said those arguments were “confected on a foundation of sand” and found “ample support” for conviction. Each of six claims that the trial judge improperly instructed the jury lacked merit, the appellate panel found, in an opinion dripping with sarcasm.
“Stephen E. Stockman served four years in Congress and now faces ten years in prison,” begins the opinion written by Sen. U.S. Judge E. Grady Jolly. “He seeks to avoid this career detour.”
The opinion goes onto say that the Republican ex-congressman argued “that prison should not be the next item on his résumé because the convictions were tainted by improper jury instructions and unsupported by the evidence.” The appellate court strongly disagreed, in the ruling joined by Judges James E. Graves, Jr. and Stephen A. Higginson.
Stockman’s appellate lawyer and Justice Department prosecutors could not be reached for comment.
Stockman, 63, of Clear Lake, a Tea Party firebrand who championed gun rights and curtailing immigration during two nonconsecutive terms representing southwest Houston and then East Texas, is currently detained at a low security federal lockdown in Beaumont.
The scheme the Capitol Hill veteran orchestrated involved funneling charitable contributions between 2010 and 2014 from two megadonors who ran conservative nonprofits and using it to pay for a spy operation targeting a potential GOP rival at the statehouse in Austin, among other illegal and unrelated expenses including dolphin tours and hot air balloon rides. Two aides, Thomas Dodd and Jason Posey, pleaded guilty and took the stand at Stockman’s trial, delivering some of the most damning testimony in the month-long trial.
A federal jury on April 12, 2018, found Stockman guilty of illegally diverting $1.25 million of federal election donations toward personal expenses. At sentencing, Chief U.S. District Judge Lee H. Rosenthal said the ex-lawmaker’s sentence took into account that Stockman hired workers to secretly rifle through trash and surveil a perceived opponent from his own party. Rosenthal said he’d cheated taxpayers and constituents, and violated the public trust. He tried to conceal acts and continued to seek the political spotlight all the while.
Stockman’s appellate lawyer David A. Warrington previously served as counsel to the 2016 Trump campaign at the Republican National Convention and describes himself on his firm’s website as “one of the leading Republican lawyers in the nation.” He argued in court documents that prosecutors failed to prove Stockman intentionally defrauded two major GOP donors when he solicited donations to pet projects.
“Stockman was convicted for nonprofit fundraising and political activities subject to protection under the First Amendment,” Warrington wrote, asking the court to dismiss the case because “The Government’s case against him turned his failure to achieve completion of certain nonprofit political activism and projects into fraud.”
However, the appeals court responded last week by referencing the painstakingly detailed evidence of money transfers showing the ex-congressman perpetrated “a scheme to separate wealthy donors from their money and to spend that money at Stockman’s pleasure and direction.”
The ruling ends with a final decisive punch:
“In sum, the judgment of the district court is, in all respects, AFFIRMED.”
Stephen Ernest Stockman (born November 14, 1956) is an American who was a member of the Republican Party. He served as the U.S. Representative for Texas’s 9th congressional district from 1995 to 1997 and for Texas’s 36th congressional district from 2013 to 2015. Stockman ran in the Republican primary for the United States Senate in the 2014 election but lost to incumbent Senator John Cornyn.
On April 12, 2018, he was tried in a U.S. district court in Texas, and was found guilty of 23 felonies and remanded into custody. On November 7, 2018 he was sentenced to serve 10 years in prison, to be followed by three years of supervised release, and ordered to pay $1,014,718.51 in restitution. He is being held in the low security Federal Correctional Institution, Fort Worth in Fort Worth, Texas. His scheduled day of release is December 26, 2026.
Early life of Steve Stockman
Stockman was born in Bloomfield Hills, Michigan, outside Detroit. His parents were evangelistic Christian teachers.
He graduated from Dondero High School in Royal Oak, Michigan.
From 1985 to 1986, he attended San Jacinto College but dropped out because he suffered from what he called “partying syndrome”.
In 1977 as Stockman was reporting to jail for traffic tickets, the jailers found valium in his possession after his girlfriend allegedly hid some in his underwear. He was charged with felony possession of a controlled substance, but the charge was later dropped.
He later became a born-again Christian.
In 1990, he earned a bachelor’s degree in accounting from the University of Houston–Clear Lake. He worked as a computer salesman in Friendswood, Texas
Former U.S. Congressman Sentenced to 10 Years in Prison for Extensive Fraud, Tax, and Election Crimes Scheme
Former U.S. Congressman Stephen E. Stockman was sentenced today to serve 120 months in prison and ordered to pay $1,014,718.51 in restitution, to be followed by three years of supervised release, for orchestrating a four-year scheme to defraud charitable donors of hundreds of thousands of dollars and secretly to funnel the proceeds to pay for personal expenses and to illegally finance his campaigns for public office.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Ryan K. Patrick of the Southern District of Texas, Special Agent in Charge Matthew J. DeSarno of the FBI’s Washington Field Office’s Criminal Division and Special Agent in Charge D. Richard Goss of the IRS Criminal Investigation (IRS-CI) Houston Field Office, made the announcement.
“Former Representative Stockman stole hundreds of thousands of dollars from charities, then used the money to pay personal expenses and fund his political campaigns,” said Assistant Attorney General Benczkowski. “As this case demonstrates, the Justice Department and our law enforcement partners will aggressively pursue corrupt public officials, including those who seek to corrupt our elections for personal gain.”
“At trial, the government proved to the jury that former Congressman Stockman ran his campaign and fraudulent charities to simply enrich himself and defrauded well-meaning donors,” said U.S. Attorney Patrick. “This type of corruption by public officials gives our entire democratic system a black eye.”
Former U.S. Representative Stephen E. Stockman, 61, was convicted by a federal jury in Houston on April 12, of 23 counts of mail fraud, wire fraud, conspiracy to make conduit contributions and false statements to the Federal Election Commission, making false statements to the Federal Election Commission, making excessive coordinated campaign contributions, money laundering, and filing a false tax return. Two of Stockman’s former congressional staffers previously pleaded guilty in the case. Thomas Dodd, 39, of Houston, Texas, pleaded guilty on March 20, 2017, to one count of conspiracy to commit mail and wire fraud and one count of conspiracy to make conduit contributions and false statements. Jason T. Posey, 48, of Tupelo, Mississippi, pleaded guilty on Oct. 11, 2017, to one count of mail fraud, one count of wire fraud, and one count of money laundering.
“Former Congressman Stockman was entrusted by his constituents to serve in their best interest,” said FBI Special Agent in Charge DeSarno. “Instead, Stockman used his position in a series of schemes for personal gain at the expense of the public. Today’s sentence should send a clear message that the laws of the land apply to everyone, regardless of position or power. The FBI and our partners at the IRS will continue our efforts to identify fraudulent practices carried out by elected representatives. Public officials who abuse their position will be investigated, prosecuted, and subjected to the full punishment of the law for their actions.”
“Congressman Stockman used his position to defraud charitable foundations to advance his political career and pay for personal expenses,” said IRS-CI Special Agent in Charge Goss. “His actions and failure to pay taxes on these illicit funds not only undermines the American tax system, but cultivates a lack of trust in our elected officials. Today’s sentencing demonstrates IRS-Criminal Investigation’s commitment to bring justice to those public officials who believe they are above the law.”
According to the evidence presented at trial, from May 2010 to February 2014, Stockman and his co-defendants solicited $1,250,571.65 in donations from charitable organizations and the individuals who ran those organizations based on false pretenses, then used a series of sham nonprofit organizations and dozens of bank accounts to launder the money before it was used for a variety of personal and campaign expenses.
Specifically, the evidence established that in 2010, Stockman and Dodd solicited an elderly donor in Baltimore, Maryland for $285,000 to be used for legitimate charitable and educational purposes. Stockman and Dodd used a sham charity named the Ross Center to funnel the money to be used for a variety of personal expenses. The evidence further established that, in 2011 and 2012, Stockman and Dodd received an additional $165,000 in charitable donations from the Baltimore donor, much of which Stockman used illegally to finance his 2012 congressional campaign.
The trial evidence also showed that shortly after Stockman took office as a Member of the U.S. House of Representatives in 2013, he and Dodd used the name of another sham nonprofit entity, Life Without Limits, to solicit and receive a $350,000 charitable donation, to be used to create an educational center called the Freedom House. Stockman, Dodd, and Posey instead used this donation for a variety of personal and campaign expenses, including illegal conduit campaign contributions, a covert surveillance project targeting a perceived political opponent, an in-patient alcoholism treatment for a female associate, and payments for hundreds of thousands of robocalls and mailings promoting Stockman’s candidacy for U.S. Senate in early 2014.
In addition, the evidence established that, in connection with Stockman’s Senate campaign, Stockman and Posey used another sham nonprofit entity to secure a $450,571.65 donation in order to fund a purportedly legitimate independent expenditure promoting Stockman’s candidacy. The evidence showed that the purportedly independent expenditure was in fact secretly controlled by Stockman, who directed his campaign and Posey to file false affidavits with the FEC covering up Stockman’s involvement.
Finally, the evidence at trial demonstrated that Stockman failed to pay taxes on any of the $1,250,571.65 in fraudulently acquired donations. In addition, during the early stages of the investigation, Stockman directed Posey to flee to Cairo, Egypt, for two and a half years so that Posey could not be questioned by law enforcement.
The FBI and IRS-CI investigated the case. Trial Attorneys Ryan J. Ellersick and Robert J. Heberle of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Melissa Annis of the Southern District of Texas are prosecuting the case.
The Stockman Criminal case & Co-Conspirators
In March 2017, Stockman was arrested for allegedly conspiring to use contributions designated for a charity to fund his campaign and for personal use, a felony, under 18 U.S.C. § 371.
According to the Federal Bureau of Investigation (FBI), in January 2013, Stockman requested and received $350,000 in donations from an unidentified businessman. Stockman allegedly solicited the money by using the name of Life Without Limits, a Las Vegas-based nonprofit intended to help people who have experienced traumatic events. The donation was allegedly intended to be used to renovate the Freedom House in Washington D.C.
Stockman was also charged with conspiracy to falsify statements when reporting contributions to try launder the money.
The FBI alleged that at the time of the events in question, Stockman had no formal control of the Life Without Limits organization, but that he had opened multiple bank accounts under the name “Stephen E Stockman dba Life Without Limits.” The FBI also alleged that financial records indicate that Stockman “made no significant expenditures toward the purchase, renovation, or operation of the ‘Freedom House,’ which was never opened.”
Stockman conspired with Thomas Dodd, a former campaign worker and congressional special assistant. According to the Houston Chronicle, the alleged conspiracy involved attempts “to bilk conservative foundations out of at least $775,000 in donations meant for charitable purposes or voter education”.
Dodd was indicted by a Federal grand jury in Houston and, on March 20, 2017, he pleaded guilty. Dodd was sentenced to 18 months and ordered to pay a fine of $800,000.
Stockman staffer Jason Posey entered a guilty plea before Chief U.S. District Judge Lee Rosenthal to counts of wire fraud, mail fraud, and money laundering.
He faced a prison term of up to 45 years and a fine of more than $4.8 million, plus hundreds of thousands more in restitution. Posey admitted that at Stockman’s direction he and Dodd illegally funneled hundreds of thousands of dollars from charitable foundations and individuals in charge of the foundations to pay for Stockman’s campaigns and personal expenses. On April 2, 2019, Posey was sentenced to 18 months and ordered to pay a fine of $720,000.
On March 28, 2017, a federal grand jury issued a 28 count indictment that included 24 counts against Stockman. He was accused of obtaining $1.25 million under false pretenses and using the funds for his political campaigns.
He was charged with eleven counts of money laundering, eight counts of mail and wire fraud, one count of conspiracy to make “conduit contributions” and false statements (conspiracy to conceal the real source of the contributions by false attribution), two counts of making false statements to the Federal Election Commission, one count of making excessive contributions, and one count of willfully filing a false 2013 Federal income tax return by not reporting some of his income.
Posey was charged with money laundering, mail and wire fraud, conspiracy to make conduit contributions and false statements, making false statements to the Federal Election Commission, making excessive contributions, and falsification of records.
Due to its complexity and the need for time to review 142,378 pages of documents disclosed by the prosecution, a motion for postponement of Stockman’s trial by his court-appointed attorney was granted. His trial began on January 29, 2018.
On April 12, 2018, Stockman was convicted by a jury on 23 of the 24 felony counts against him, for which he faced up to 20 years in prison for each count.
He was acquitted on one count of wire fraud. Because he was judged to be a flight risk, he was remanded into custody pending sentencing, which was re-set for November 7, 2018.
On November 7, 2018 Stockman was sentenced to serve ten years in prison and ordered to pay $1,014,718.51 in restitution, to be followed by three years of supervised release.
Stockman is incarcerated at a medical facility of the Federal Bureau of Prisons at Fort Worth, Texas.