FOR IMMEDIATE RELEASE
Monday, June 10, 2013
For Information Contact:
Former Council Member Michael A. Brown Pleads Guilty
To Accepting $55,000 in Bribes
-Also Admits Taking Part in Separate Scheme Involving Campaign Contributions-
WASHINGTON – Michael A. Brown, a former member of the Council of the District of Columbia, pled guilty today to a charge of bribery for a scheme in which he accepted a total of $55,000 in a series of meetings, spanning eight months, with undercover FBI agents posing as officials of a company that purportedly wanted to win government contracting opportunities.
The guilty plea was announced by U.S. Attorney Ronald C. Machen Jr.; Timothy Gallagher, Special Agent in Charge of the Criminal Division of the FBI’s Washington Field Office, and Thomas J. Kelly, Special Agent in Charge of the Washington Field Office of the Internal Revenue Service-Criminal Investigation (IRS-CI).
Brown, 48, pled guilty in the U.S. District Court for the District of Columbia. The Honorable Robert L. Wilkins scheduled sentencing for Oct. 3, 2012. The charge carries a statutory maximum of 15 years in prison and financial penalties. Under federal sentencing guidelines, the parties have agreed that the applicable range would be 37 to 46 months in prison and a possible fine of $7,500 to $75,000. The plea agreement, which is contingent upon the Court’s approval, calls for a sentence of up to 37 months, to be followed by up to three years of supervised release.
The plea agreement also calls for Brown to pay a money judgment of $35,000 in forfeiture, covering the amount of money he collected before confronted by law enforcement.
Brown is the third member of the Council of the District of Columbia to plead guilty within the past two years to federal charges involving crimes committed while they were in office. Harry L. Thomas Jr., who represented Ward 5, pled guilty in January 2012 to federal theft and tax charges in a scheme in which he used more than $350,000 in taxpayer money for his own personal benefit. Kwame R. Brown, the Council’s former Chairman, pled guilty in June 2012 to a federal charge of bank fraud, involving two personal loans, and a second criminal charge involving a violation of the District of Columbia’s campaign finance laws.
The charge against Michael A. Brown involves a scheme in which he admitted taking the cash payments in return for his assistance in winning the District of Columbia government’s approval for a company that was seeking to be classified as a Certified Business Enterprise, a designation that would create potentially lucrative business opportunities; Brown also agreed to help the company with government contracting opportunities.
In a second scheme, Brown admitted concealing the true source of $20,000 that was secretly contributed to his failed bid in 2007 for a seat on the District of Columbia Council. Under the plea agreement, Brown will not be criminally prosecuted for this conduct.
“Today Michael Brown became the third member of the D.C. Council to plead guilty to a felony in the last 18 months,” said U.S. Attorney Machen. “This prosecution should make clear that we will not allow the politics of pay to play to flourish in the District of Columbia. We will not tolerate the backroom deals, the secret payments, and the unreported cash that corrupt not only our elections and public officials but our entire system of government. Our work will not stop until we stamp out the show-me-the-money culture that has deprived the great citizens of the District of Columbia of the honest government that they so desperately want and deserve.”
“Today, Mr. Brown took responsibility for his actions and admitted to accepting bribes and knowingly circumventing campaign finance laws,” said Special Agent in Charge Gallagher. “This case is not only one more example of an elected official violating the public trust for their own benefit, but it is also another example of the determination and resolve of law enforcement in putting an end to such activity. We will not stop our pursuit until public corruption is a thing of the past within the District of Columbia.”
“IRS Criminal Investigation is committed to providing its financial investigative expertise to work with our law enforcement partners in order to combat public corruption, such as Mr. Brown’s," said Special Agent in Charge Kelly. “Today's plea is a reminder that one’s status as a public official will not protect you from federal prosecution.”
Brown was elected as an at-large member of the District of Columbia Council in 2008 and took office in January 2009. He left office on Jan. 2, 2013, following his defeat last November for re-election. Brown then launched a bid to win another at-large Council seat in a special election scheduled for April 23, 2013. However, he withdrew his candidacy on April 2, 2013, less than three weeks after he was confronted by law enforcement in the bribery scheme.
According to a statement of offense signed by the government as well as the defendant, Brown’s at-large Council duties included acting as Chair of the Committee on Economic Development and Housing. The committee is responsible for matters related to economic, industrial and commercial development. The bribery scheme focused largely on a special program run by the District of Columbia government to help its small local businesses become economically viable: the Certified Business Enterprise (CBE) program.
Status as a CBE carries preferential procurement and contracting opportunities. To be eligible for this designation, businesses must meet certain requirements and be certified by the District of Columbia’s Department of Small and Local Business Development (DSLBD).
Prior to July 11, 2012, Brown had discussions about obtaining assistance of $50,000 to $75,000 for Brown from a government contractor. Brown expected to assist the government contractor with its business if the contractor provided such financial assistance to Brown.
These discussions led to a series of meetings with two undercover FBI agents, posing as employees of a Maryland company that wanted CBE approval and contracting opportunities. Between July 2012 and March 2013, Brown met in person with one or both of the undercover agents a total of eight times. He communicated primarily with an agent described in the court documents as “Undercover Employee 1” or “UCE-1.” He was in contact with this undercover agent on more than 30 separate days, in person, by phone, or by text, frequently seeking payment, in whole or in part, for the efforts he was making on the company’s behalf.
Indeed, over the months, Brown made calls on the company’s behalf to the director of the Department of Small and Local Business Development, introduced the undercover agents to a contractor at a symposium he sponsored, and took other actions meant to speed through the company’s attempts to win approval as a CBE. He continued these efforts even after his defeat in the November 2012 election. In January 2013, the Department of Small and Local Business Development did a site visit for the company’s application.
According to the statement of offense, the payments were made during these meetings:
July 11, 2012: Brown met “UCE-1” at a Washington, D.C. restaurant. Brown accepted $15,000 in cash as part of a promised amount of $50,000 for Brown’s efforts to use his official position to assist the company in becoming a CBE and obtaining contracting opportunities. The cash was in denominations of $100 bills and in a duffel bag with a Washington Nationals baseball hat and two Nationals T-shirts. Brown referred to the cash payment as a loan, but “UCE-1” said that he could keep the money.
During subsequent discussions with the undercover agents, Brown occasionally referred to the payments as a “loan.” However, Brown understood that he was not expected to repay the money. No loan documents were ever drafted – and no loan terms were ever discussed – between Brown and the undercover agents.
Aug. 7, 2012: Brown met with “UCE-1” at the Washington, D.C. restaurant and accepted an additional $10,000 in cash in exchange for continuing to assist the company in obtaining approval of its CBE application and contracting opportunities. The cash was in denominations of $100 bills and placed inside a Washington Redskins coffee mug. “UCE-1” stated that Brown would get “the other 25” upon approval, and Brown said, “or north.” Brown said he would call the Department of Small and Local Business Development after the company submitted the necessary paperwork for the CBE application and aim to have the application moved “to the top of the pile.”
Aug. 28, 2012: Brown again met with “UCE-1” at the Washington, D.C. restaurant and accepted $5,000 in cash in exchange for Brown’s assistance with the CBE application and contracting opportunities. The cash was in denominations of $100 bills and in a silver coffee mug. Brown said he would continue efforts to move the company’s application as quickly as possible.
Nov. 29, 2012: Brown hosted his economic development symposium and introduced the two undercover agents to the director of the Department of Small and Local Business Development concerning the company’s CBE application. Brown also introduced the undercover agents to a local businessman, who, according to Brown, facilitated financing for contractors. That night, Brown met “UCE-1” at the Washington, D.C. restaurant and accepted another $5,000 in cash as payment for his assistance with the CBE application and contracting opportunities. The cash was in denominations of $100 bills and in an envelope.
March 14, 2013: Brown met the two undercover agents at a conference room at a Washington, D.C. hotel, after being told that the company was pleased with how quickly its application was moving along and ready to make its final payment. During the meeting, Brown accepted $15,000 in cash as fulfillment of the company’s promise to pay $50,000 to Brown for assistance in obtaining CBE approval and government contracting opportunities. Brown also accepted a “bonus” of $5,000 cash for Brown’s past official acts on behalf of the company and future influence if Brown were re-elected to public office. The cash was in denominations of $100 bills and wrapped with a rubber band.
At the end of the meeting, law enforcement agents entered the room to announce their presence and seized the $20,000 in cash from Brown. The company subsequently withdrew its CBE application.
Campaign Finance Scheme:
In the spring of 2007, Brown was a candidate in a special election for the Ward 4 seat on the D.C. Council. Around that time, he met with a business owner, who is identified as “Co-Conspirator 1” in the statement of offense. Brown sought a campaign contribution but understood that “Co-Conspirator 1” would not contribute in a public manner because certain business activities required support for other candidates, based on various political dynamics.
Brown understood that the contribution from “Co-Conspirator 1” would be publicly disclosed as having been contributed in the name of another person. He also understood from his discussion that it would exceed the limits on the amount that an individual could contribute to a political campaign committee. At the end of the meeting, “Co-Conspirator 1” told Brown that Brown would hear from somebody to arrange the contribution.
Following this meeting, Brown was contacted by Eugenia C. Harris, another business owner, in the District of Columbia. Then, as agreed upon by Brown, Harris and “Co-Conspirator 1,” a series of bank transfers began taking place. Brown understood that a total of $20,000 originated from “Co-Conspirator 1.” Harris sent two wire transfers, of $10,000 each, to Brown’s personal bank account. Brown, in turn, contributed the funds to his campaign.
Brown subsequently caused the campaign committee to file a form with the D.C. Office of Campaign Finance that publicly disclosed that Brown made an individual contribution of $25,000 to his political campaign committee, which Brown knew disguised the fact that “Co-Conspirator 1” was the source of most of this money.
Harris pled guilty on July 10, 2012 to conspiring to disguise the source of campaign contributions in federal and local elections, including the 2010 District of Columbia mayoral campaign. She pled guilty to one count of conspiring to violate federal campaign finance law and to obstruct justice; one count of engaging in fraud and making false statements, and one count of conspiring to violate District of Columbia campaign finance law.
In announcing today’s guilty plea, U.S. Attorney Machen, Special Agent in Charge Gallagher, and Special Agent in Charge Kelly commended those who investigated the case for the FBI and IRS-CI.
They also acknowledged the efforts of those who worked on the case from the U.S. Attorney’s Office, including Assistant U.S. Attorneys Michael K. Atkinson, David A. Last, and Bryan Seeley of the Fraud and Public Corruption Section, and Assistant U.S. Attorney Anthony D. Saler, of the Asset Forfeiture and Money Laundering Section. Finally, they expressed thanks for assistance provided by Forensic Accountant Maria Boodoo; Paralegal Specialists Tasha Harris, Lenisse Edloe, and Nicole Wattelet, and Legal Assistant Angela Lawrence.13-200