Due to the lapse in appropriations, Department of Justice websites will not be regularly updated. The Department’s essential law enforcement and national security functions will continue. Please refer to the Department of Justice’s contingency plan for more information.

You are here

Justice News

Department of Justice
U.S. Attorney’s Office
Northern District of Texas

FOR IMMEDIATE RELEASE
Monday, October 22, 2018

Amid Bribery Scandal, Former Dallas City Councilman Pleads Guilty to Tax Evasion

This morning, four-term Dallas City Councilman Larry Duncan, a former president of Dallas County Schools’ Board of Trustees, pleaded guilty to one count of tax evasion before Chief Judge Barbara M.G. Lynn, announced U.S. Attorney for the Northern District of Texas Erin Nealy Cox.  

The charge stems from the federal investigation into the Dallas County Schools bribery scandal, which has now claimed its fifth conviction.

According to plea papers, between 2012 and 2016, Mr. Duncan, 72, accepted nearly a quarter of a million dollars in campaign contributions from Force Multiplier Solutions president Robert Leonard, who happened to be pursuing lucrative stop-arm camera contracts with DCS.

Instead of putting Mr. Leonard’s money towards legitimate campaign expenses associated with his DCS re-election bid, Mr. Duncan admits he used at least $184,726.03 for personal benefit, taking out cash withdrawals, passing on money to his wife, and even using funds to pay car-related expenses.

He then failed to disclose the money he diverted from the campaign on his tax returns, hiding the income from the IRS. 

“Today marks another important step in our ongoing commitment to expose public corruption,” said Nealy Cox. “Those who seek to capitalize on positions of power undermine public trust in the very system they are meant to serve.  And that is something we cannot abide.”

“Being a public official comes with its share of rewards and responsibilities; part of those responsibilities is to report all of your taxable income and pay your taxes.  Deliberate failure to do so is a serious matter, and IRS Criminal Investigation is dedicated to ensuring everyone is properly reporting and paying in accordance with the tax laws,” said Tamera Cantu, Special Agent-in-Charge of the IRS Criminal Investigation Division’s Dallas Field Office.

“The FBI remains committed to investigating anyone associated with the financial exploitation at Dallas County Schools,” said Eric K. Jackson, Special Agent-In-Charge of the FBI Dallas Division. “This latest indictment continues the efforts of the FBI, along with our partners at the IRS and U.S. Attorney’s Office, to protect and defend Dallas taxpayers from those who would exploit their position for personal gain.”

Mr. Duncan now faces up to a year in federal prison. In his plea agreement, Mr. Duncan agreed to reimburse the government for its tax loss.

Duncan’s campaign contributor, Mr. Leonard, along with former Mayor Pro Tem Dwaine Caraway, pleaded guilty in August to conspiracy to commit honest services wire fraud, after the DCS investigation revealed that Mr. Leonard had funneled over $3 million in bribes to Caraway and Dallas County Schools Superintendent Ricky Sorrells. Mr. Sorrells pleaded guilty in April to conspiracy to commit honest services wire fraud. Another defendant, Slater Swartwood, who operated the shell companies used to conceal the bribes, admitted in December 2017 to conspiring to launder money.

Dallas County Schools, an agency that collected property taxes to fund its fleet of around 2,000 buses, was shuttered in November 2017, approximately $103 million in debt.

The Internal Revenue Service Criminal Investigation unit (IRS-CI) and Federal Bureau of Investigation conducted the investigation. Assistant U.S. Attorneys Andrew Wirmani, Marcus Busch, Chad Meacham, and Joseph Magliolo prosecuted the case.

 

Topic(s): 
Public Corruption
Component(s): 
Contact: 
Erin Dooley, Public Affairs Officer 214-659-8707 erin.dooley@usdoj.gov
Updated October 22, 2018