Lands in Federal Prison
by Matthew T. Clarke
Dan Morales, the former Texas at
torney general who ran on a law-and-order platform, was sentenced on October 31, 2003, to four years in federal prison after pleading guilty to mail fraud and filing a false income tax return.
Morales was indicted by a federal grand jury on March 6, 2003, for twelve counts of mail fraud, conspiracy, filing a false tax statement, and making a false statement on a loan application in connection with his attempting to defraud the state of $520 million in lawyer fees from the $17.3 billion anti-tobacco lawsuit, using campaign funds to purchase a $775,000 house, and falsifying his 1998 income tax return. Morales had faced a potential maximum sentence of 83 years in federal prison and $3.6 million in fines.
Morales was Texas Attorney General from 1991 until 1999. He is particularly remembered for being tough on "deadbeat dads," showing no mercy for state prisoners who accumulated hundreds of thousands of dollars in child support arrears while serving decades as unpaid slaves of the state. As part of his plea bargain, Morales admitted backdating a government contract and forging government records related to the state's $17.3 billion tobacco suit settlement in an attempt to funnel $520 million to his friend Marc Murr. He also admitted filing a 1998 federal income tax report showing his income as $39,734, when he had transferred $400,000 from his campaign account to his personal account that year. The plea follows more than four years of investigation by the FBI and IRS.
Morales's plan had been to make it seem that Murr had been an important litigator in the anti-tobacco suit who deserved 3% of the settlement in lawyer's fees. The five-law-firm team which actually litigated the tobacco suit consisted of major Democratic campaign contributors and was hired by Morales on a contingency fee basis. Team members, who spent $50 million of their own money in pursuing the suit, said that Murr did little or no work on the case. Arbitrators awarded the team $3.3 billion in legal fees, but awarded Murr only $1 million, an amount Murr eventually waived. In another plea bargain, Murr, a Houston lawyer, pleaded guilty to mail fraud on October 3, 2003, in exchange for a five-year probated sentence, six months of which must be served in a federal prison.
The indictment also stated that Morales required the team lawyers to hire Morales's political consultant at $250,000 and demanded another $250,000 in campaign contributions. Morales initially denied the charges, implying that they were a revenge smear campaign instigated by the large tobacco companies and welcoming a chance to vindicate himself before a jury in a trial.
Morales had been a Bexar County prosecutor until his election to the state legislature in the 1984. He served three terms as a state representative and then twice won election as attorney general in 1990 and 1994.
Morales ran for Texas governor in 2002, but was soundly defeated by Tony Sanchez in the Democratic primary following a campaign of mud slinging by both sides. Sanchez was defeated in the election by Rick Perry. Michael Morales, Dan's brother, pleaded guilty in January 2002 to attempting to extort $280,000 from Sanchez by threatening to reveal damaging personal information.
George W. Bush, who was Texas governor when the tobacco suit was settled in 1998, opposed the $2.3 billion lawyers' fees as excessive. Later arbitration raised the fees to $3.3 billion. Bush political advisor Karl Rove worked for the Phillip Morris Tobacco Company at that time.
Citing Morales's expertise on money laundering, Governor Perry supported Morales's appointment to Perry's Anti-Crime Commission in the spring of 2002. Morales, a Democrat, endorsed Perry, a Republican who ran his campaign for lieutenant governor on the promise of being (then governor) George Bush's man. Perry became governor when Bush resigned to run for the presidency.
On June 26, 2003, U. S District Judge Sam Sparks ordered Morales, who had been free on a personal recognizance bond, jailed after it was discovered that Morales lied on loan applications for loans he used to buy two luxury cars. Morales claimed he was employed as a lawyer and earning $20,000 a month to get the loans to buy a 2000 Mercedes convertible and a 2000 Lexus SUV. He had been unemployed since October 2001 and had $163,715 in credit card debts, owed another $745,000 on his home, and had asked the federal judge to appoint him a public defense attorney due to indigence. "This is beyond stupidity," said Sparks, calling Morales a financial danger to the community. Morales was thereafter incarcerated in the Caldwell County jail in Lockhart until his guilty plea on July 17, 2003. He was then released on personal recognizance bond with the condition that he incur no new debts. After sentencing on October 31, 2003, he was returned to the jail where he remained until his transfer to the federal prison in Texarkana, Texas on November 7, 2003.
Morales will be remembered by Texas state prisoners as the man who convinced a federal judge to terminate federal oversight of the Texas state prison system by claiming that state officials were honorable enough to maintain constitutional conditions in the prisons without court intervention. g
Sources: Houston Chronicle; KUHF NPR News
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