DALLAS - Two developers pleaded guilty to federal charges that they bribed Dallas officials to approve low-income apartment projects financed with tax-exempt private-activity bonds.
The guilty pleas by Brian Potashnik and his wife Cheryl were unsealed Monday, the opening day of the bribery trial of former City Council member Don Hill, his wife and three other defendants at the federal courthouse in downtown Dallas.
The defendants are accused of accepting bribes from Potashnik's Southwest Housing Development Co. to ensure the developer could obtain more than $2 million of tax-exempt bonds through the Dallas Housing Finance Corp. Proceeds financed four low-income apartment complexes.
According to the 166-page indictment handed down in September 2007, Hill spoke in favor of Southwest Housing's successful requests for tax-exempt bonds and 4% tax credits from the housing finance agency at council meetings on Oct. 27 and Nov. 10, 2004. At the same meetings, Hill opposed similar projects by other developers.
Hill is also accused of lowering the development costs of favored projects through the use of city general obligation bond proceeds dedicated for infrastructure projects in each council district.
The indictment said the bribery conspiracy began in February 2002 and did not end until June 2005. The Federal Bureau of Investigation raided Hill's office at Dallas City Hall on June 20, 2005.
The Potashniks, who were among the 14 people originally indicted, also agreed to cooperate with prosecutors. In the agreement, which was unsealed on Monday, prosecutors agreed to a maximum sentence for Potashnik of 28 months and a maximum 16-month sentence for his wife.
The couple admitted they concealed bribes to Hill and former city planning commissioner D'Angelo Lee by categorizing them as consulting fees, birthday party contributions, and payments for professional services.
Potashnik pleaded guilty to one count of bribery and agreed to testify against the Hills, Lee, and two others.
Cheryl Potashnik admitted to subsidizing the rent of Texas state Rep. Terri Hodge at one of the company's apartment complexes. She said she signed company checks totaling nearly $28,000 for Hodge's benefit.
Four other defendants already have pleaded guilty and are expected to testify in the trial. Their sentences have been capped at three to five years.
In an unusual move approved by U.S. District Judge Barbara Lynn, federal prosecutor Chad Meacham played portions of the wiretapped evidence to the jury as the government outlined its case.
Attorneys for the remaining defendants, all of whom are black, said their clients were targets of a racially motivated investigation by the Bush administration's Justice Department and entrapped by an informant with a grudge against the Potashniks.
"You will be able to determine who is the victim of overzealous prosecution," defense attorney Darlene Clayton-Deckard told the jurors.
In his opening statement, Hill's attorney, Ray Jackson, said the former councilman was not corrupt. "The evidence will show that Hill wasn't motivated by money," he said. "Don walked around with holes in his shoes."
Hill was elected to the City Council in 1999 and left in 2007 due to term limitations.
Evidence in the case includes transcripts of more than 30,000 wiretapped telephone calls, 100 consensual recordings by a wired witness, and more than 200 boxes of documents. Federal investigators also seized 17.5 terabytes of electronic information from city computers, the equivalent of more than 238,000 boxes of documents.
The trial is expected to take 10 weeks.
