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, plead guilty today to an Information that charged him 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. Newell faces a maximum period of five years’ incarceration and a $250,000 fine, in addition to the criminal forfeitures. Sentencing is scheduled for January 11, 2008 at 9:00a.m. before United States District Court Judge Kenneth A. Marra in West Palm Beach, Florida.
According to the Information and today’s plea, Newell defrauded the public of his honest services as an elected official, and misused 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. 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.
The Information to which Newell pled guilty today detailed 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 and the plea, 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 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.
In addition, 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.
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 http://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 http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.