SE Texas Record

Friday, December 6, 2019

ATTORNEY'S OFFICE FOR THE SOUTHERN DISTRICT OF TEXAS: Houston engineering corporation enters into corporate resolution and agrees to pay $1.6 million fine

By Press release submission | Nov 27, 2019

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U.S. Attorney's Office for the Southern District of Texas issued the following announcement on Nov. 22.

A major local-based civil engineering company and its parent company have agreed to enter into a three-year deferred prosecution agreement (DPA) in connection with a criminal information charging the company with violating the Federal Election Campaign Act. As part of the agreement, Dannenbaum Engineering Corporation (DEC), based in Houston, and its parent company, Engineering Holding Corporation (EHC), agreed to pay a $1.6 million criminal fine for its involvement in a multi-year conduit contribution scheme.

“DEC engaged in a criminal scheme that undermined the fairness and transparency of our nation’s campaign finance laws in a misguided effort to increase its own power and prestige,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division. “Today’s resolution demonstrates the Department’s resolve to aggressively pursue those who seek to corrupt our democratic process.”

“Protecting the integrity of the finest democratic system in the world is a cornerstone of our collaborative prosecutive efforts,” said First Assistant U.S. Attorney Tim S. Braley for the Southern District of Texas. “Any corporation that attempts to circumvent the protective cloak provided by the nation’s election laws will be held accountable for its actions.”

“The Federal Election Campaign Act is designed to limit financial influence in the election of candidates for federal office. In other words, it's designed to make sure that our democratic process, and representation in our democratic process, is fair and transparent,” said Special Agent in Charge Perrye K. Turner of the FBI’s Houston Field Office. “In this case, through DEC Jim Dannenbaum thought that by exceeding its contribution limits it could unfairly and illegally outweigh the lawful ones, and now that company is being held accountable. Our system of representative government works only when honest contributions are not diluted by fraud. Through our Public Corruption Unit, the FBI will continue to do its part in making sure there are fair and free elections.”

According to the companies’ admissions made in connection with the DPA, from 2015 through 2017, DEC and EHC made $323,300 in illegal conduit contributions through various employees and their family members to federal candidates and their committees. DEC corporate funds were used to advance or reimburse employee monies for these contributions. DEC did not reveal to any of the federal candidates that the corporation was the true source of the contributions. The object of the scheme was for DEC, its CEO James Dannenbaum, and a former employee to gain access to and potentially influence various candidates for federal office, including candidates for the presidency as well as the Senate and House of Representatives.

The department reached this resolution based on a number of factors, including DEC’s cooperation with the investigation, the internal investigation conducted and the significant remedial measures taken. For example, DEC altered its board structure to ensure the former CEO does not control the board and stopped all politically-related payments to its employees (including, but not limited to, payments treated as “marketing advances”) resulting in a cessation of these expenditures. Further, DEC hired and/or designated a full-time chief governance and compliance officer. The department also took into account the companies’ inability to pay a fine.

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U.S. Attorney's Office for the Southern District of Texas