LAWFUEL – The Legal Newswire – R. Alexander Acosta, United States Attorney for the Southern District of Florida, Jonathan I. Solomon, Special Agent in Charge, Federal Bureau of Investigation, Miami Field Office (“FBI”), and Michael E. Yasofsky, Jr., Special Agent in Charge, Internal Revenue Service, Criminal Investigation Division (“IRS-CI”), announced that defendant Warren H. Newell, 52, of Boynton Beach, Florida, has been charged in a criminal Information with a double-object conspiracy to commit honest services fraud and to file a false federal personal income tax return for the calendar year 2003. The Information also seeks forfeiture of assets derived from the conspiracy. Newell faces a maximum period of five years’ incarceration and a $250,000 fine, in addition to the criminal forfeitures.
The Information filed today in United States District Court in West Palm Beach describes Newell’s alleged pattern of defrauding the public of his honest services as an elected official, and his misuse of his position as a Commissioner on the Palm Beach County Board of County Commissioners (“BCC”) to personally enrich himself, his business partners and other associates in a series of transactions and ventures in Palm Beach County. The Information alleges that, among other things, Newell advocated and voted on matters while he concealed his true financial interests, and engaged in a deceptive practice of filing incomplete, false and misleading disclosures designed to misdirect the public and conceal to his true financial interests.
Specifically, the Information details Newell’s undisclosed financial interest in a water storage project located on property owned by Palm Beach Aggregates (“Aggregates”), a land holding and mining company in Palm Beach County. The Aggregates water storage project involved the potential sale of a tract of land to the South Florida Water Management District (“SFWMD”) for future regional water storage. In this transaction, Newell allegedly misused his position by voting for funding of the water storage project without disclosing that he stood to personally profit through a secret “success fee” contract between one of Newell’s business partners at his engineering firm, SFRN, and Aggregates if the sale of the property to SFWMD was consummated.
According to the Information, to conceal his hidden financial interest in the success fee contract, Newell’s share of the success fee profits was funneled through SFRN and disguised as “bonus payments,” or in one instance as a $200,000 personal loan from his partner. Newell further concealed his financial interest in this transaction by filing false and misleading disclosure forms with the BCC that materially omitted his financial connection to the water storage project. Newell received approximately $366,000 in proceeds from the undisclosed success fee contract.
In addition, Newell allegedly misused his elected position to advocate an expenditure of $14 million of taxpayer monies for the purchase of the working waterfront preservation easement and restrictive covenants for Palm Beach Yacht Center (“PBYC”) without disclosing a material financial debt he owed to PBYC and his financial partnership with one its owners. At several BCC meetings, Newell failed to disclose that he docked his boat at PBYC, and that he owed PBYC significant boat dockage fees. Newell further failed to reveal that he had been, and continued to be, a partner with the owner of PBYC in two different financial institutions in Palm Beach County. The Information also alleges that Newell later attempted to cover up this conflict of interest by creating the appearance that he had paid his $40,000 outstanding debt to PBYC. To accomplish this subterfuge, Newell caused a bogus SFRN invoice to be issued to PBYC, which was paid by PBYC. PBYC’s payment was immediately disbursed to Newell, and Newell in turn subsequently used that money to make a payment on his PBYC debt. Therefore, in actuality, Newell paid PBYC with PBYC’s own monies, and essentially received a $40,000 kickback in the form of debt forgiveness of his dockage fees.
The Information further alleges that Newell failed to disclose his true financial interest in a business venture involving two vacant adjacent parcels of real estate situated in Newell’s district, in Lake Worth. Newell and two other partners contracted to purchase vacant property, and formed three separate limited liability companies to develop and build medical office buildings. A contingency in the contract eventually required that the owners obtain an abandonment of a right-of-way easement owned by Palm Beach County that split the two parcels and obtain extensions in the time limitations to develop the property. Although Newell assigned his contract interests and resigned, in the same month as his resignation, he twice voted on those contract contingencies at the BCC without disclosing his previous financial relationship with the project. According to the Information, Newell used his resignation to justify his public action, but fully expected to be compensated at the time of the success of the project. To further conceal his hidden financial interest in a successful outcome of the property investment, Newell once again caused a false and fraudulent invoice to be issued by SFRN as a means by which he obtained monies for his sole and exclusive use from the profitable sale of the property. Newell also filed false and misleading disclosure forms relating to the land deal.
Defendant Newell has signed a Plea Agreement indicating his willingness to plead guilty and accept responsibility for this conduct. That Agreement also requires Newell to disgorge $150,000 of his illegal profits. Newell will be in Court on Wednesday, August 8, 2007 at 10 a.m. to be arraigned on this charge, and his guilty plea is expected to occur later before the assigned United States District Judge.
“The harm to Palm Beach County goes well beyond the money squandered or the self-serving votes cast by these corrupt individuals. The loss of faith and trust in government may never be fully measured, nor will the impact that these crimes have on the thousands of honest people in this County who have devoted their careers to public service,” said United States Attorney Acosta. “As a community, we must do what we can to ensure our public officials do not give in to the temptation to betray their public trust for quick cash. As a United States Attorney’s Office, we will likewise do what we can. Our work here continues; it is not done.”
IRS-CI Special Agent in Charge Michael Yasofky stated, “Public confidence in the political system allows government to function effectively. When elected officials are involved in corruption or misconduct, it erodes that confidence and taints government and those who operate within it. IRS-CI is committed to rooting out public corruption and this case is another step in our continuing efforts.”
Special Agent in Charge Jonathan I. Solomon stated, “The citizens of Palm Beach county deserve elected officials who are going to represent the county’s best interests, not their own. As we have demonstrated today and in the past, the FBI has a firm commitment to the South Florida community to investigate public corruption matters.”
Mr. Acosta commended the investigative efforts of the IRS and FBI. The case is being prosecuted by Assistant United States Attorneys John Kastrenakes, Julia A. Paylor, Stephen Carlton, and Antonia Barnes.
A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.