HOUSTON -  A Houston businessman has pleaded guilty to making illegal political contributions in the names of others to campaign committees for U.S. Senate and House of Representatives in 2017, announced First Assistant U.S. AttorneyTim S. Braley along with Assistant Attorney General Brian Benczkowski of the Justice Department’s Criminal Division.

James D. Dannenbaum, 80, pleaded guilty today to violating the Federal Election Campaign Act. 

On Nov. 22, Dannenbaum Engineering Corporation (DEC) and its parent company, Engineering Holding Corporation, entered into a deferred prosecution agreement (DPA). They also agreed to pay a $1.6 million criminal fine for its involvement in a multi-year conduit contribution scheme. Dannenbaum is DEC’s former CEO.

As part of the plea, Dannenbaum admitted that from 2015 through 2017, he and DEC 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. Dannenbaum 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, 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.

U.S. District Judge Sim Lake of the Southern District of Texas accepted the plea and set sentencing for March 5, 2020. At that time, Dannenbaum faces up to two years in federal prison.

The FBI conducted the investigation. Assistant U.S. Attorneys Carolyn Ferko and John Pearson are prosecuting the case along with Trial Attorney Jessica C. Harvey of the Criminal Division’s Public Integrity Section.

HOUSTON – 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.

Former CEO Dannenbaum has been charged in a separate criminal information. An information is merely an allegation, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

The FBI conducted the investigation. Assistant U.S. Attorneys Carolyn Ferko and John Pearson and Trial Attorney Jessica C. Harvey of the Criminal Division’s Public Integrity Section are prosecuting the case. IRS-Criminal Investigation also provided substantial assistance in this matter.