Breaking news this afternoon from the U.S. Attorney's Office: Allen J. McGill -- one of the 14 folks indicted in the City Hall corruption case that also involves former Mayor Pro Tem Don Hill, State Rep. Terri Hodge and former city planning commissioner D'Angelo Lee -- has pleaded guilty to one count of conspiracy to commit extortion. McGill will be sentenced by United States District Judge Barbara M.G. Lynn in late June and faces a maximum statutory sentence of five years in prison, a $250,000 fine and restitution.
McGill was the president and vice chairman of the Black State Employees Association of Texas (BSEAT) and the BSEAT Community Development Corporation (BSEAT CDC). After the jump, we're providing the entire media release -- which is an extremely detailed and comprehensive narrative. But here's a taste of what lies ahead -- and it ain't looking good for Don Hill.
Allen J. McGill and co-defendant Darren L. Reagan, a/k/a Dr. Darren L. Reagan, were officers of BSEAT and BSEAT CDC, the BSEAT entities. Reagan was the chairman and chief executive officer. Co-defendant Donald W. Hill, a/k/a Don Hill, was an attorney and elected official who represented District 5 on the Dallas City Council. Co-defendant D'Angelo Lee was the Plan Commissioner for District 5 on the City Plan and Zoning Commission (CPC). According to documents filed in court, McGill admitted that he knowingly and willfully combined, conspired, confederated, and agreed with Hill, Reagan and others to wrongfully obtain and attempt to wrongfully obtain, property from another person with that person's consent, induced by wrongful use and threat of use of economic harm and under the color of official right.Much more below. But here's McGill's account of the events leading up to the investigation and indictments, as well as his plea agreement. --Robert Wilonsky
FIRST DEFENDANT PLEADS GUILTY IN BRIBERY AND EXTORTION SCHEME THAT CHARGED 14 CURRENT AND FORMER DALLAS PUBLIC OFFICIALS AND THEIR ASSOCIATES
DALLAS - Allen J. McGill, 64, of Dallas, the former president and vice chairman of the Black State Employees Association of Texas (BSEAT) and the BSEAT Community Development Corporation (BSEAT CDC), pled guilty today before United States District Judge Barbara M.G. Lynn to a Superseding Information charging one count of conspiracy to commit extortion, announced U.S. Attorney Richard B. Roper of the Northern District of Texas. McGill faces a maximum statutory sentence of five years in prison, a $250,000 fine and restitution. He is scheduled to be sentenced by Judge Lynn on June 27, 2008.
Allen J. McGill and co-defendant Darren L. Reagan, a/k/a Dr. Darren L. Reagan, were officers of BSEAT and BSEAT CDC, the BSEAT entities. Reagan was the chairman and chief executive officer. Co-defendant Donald W. Hill, a/k/a Don Hill, was an attorney and elected official who represented District 5 on the Dallas City Council. Co-defendant D'Angelo Lee was the Plan Commissioner for District 5 on the City Plan and Zoning Commission (CPC). According to documents filed in court, McGill admitted that he knowingly and willfully combined, conspired, confederated, and agreed with Hill, Reagan and others to wrongfully obtain and attempt to wrongfully obtain, property from another person with that person's consent, induced by wrongful use and threat of use of economic harm and under the color of official right.
In August 2004, developers James R. "Bill" Fisher and Brian Potashnik sought local and state approval to construct multifamily affordable housing developments in South Dallas using federal tax credits and tax-exempt bonds. Reagan and McGill, seeing an opportunity to further their own financial interests, agreed to use the BSEAT entities to profit personally from the developments. Reagan met with Hill, who agreed to direct affordable housing developers to BSEAT. The developer would then have to get BSEAT's approval, which was contingent on the developer agreeing to terms financially beneficial to Reagan and McGill, and through them, ultimately beneficial to Hill himself, before Hill would support the project at the Dallas City Council.
Reagan and McGill continued to make it clear to Fisher that Fisher had to work with BSEAT to get Hill's support of Fisher's affordable housing developments that were pending Dallas City Council approval and Fisher indicated he was willing to work with BSEAT. On September 21, 2004, McGill sent an email to Fisher in which he stated: "I am particularly encouraged to hear your reaction to my proposal to broaden your company's involvement with Black State Employees Association of Texas and its recommended business partners." McGill admitted that the "recommended business partners" to which he referred were subcontractors who would kick back a portion of their fees to Reagan and McGill.
The following day, Fisher emailed McGill a draft agreement between Fisher's business, Provident Odyssey Partners LP (Provident Odyssey), on the one hand, and Reagan and McGill, on the other. The agreement concerned one of Fisher's affordable housing developments, Dallas West Village, which was located in Hill's district and was pending Dallas City Council approval of tax credit financing and re-zoning. Under the agreement, Fisher agreed to pay BSEAT $55,000 for, among other things, obtaining a support letter from "Don Hill [and] The Dallas City Council, .... for the development prior to 10/30/04." Although Reagan and McGill did not accept such terms, they began negotiating with Fisher.
On October 8, 2004, Reagan faxed a counterproposal to Fisher that required Provident Odyssey to make the following payments to BSEAT CDC: (a) $100,000 cash by February 2005 (to be paid as follows in subsections (b) and (c)); (b) a $15,000 non-refundable initial payment/retainer; (c) $85,000 at the time the bonds closed; (d) $1,500 per hour for services provided after February 2005; and (e) five percent of the general partner's developer's fee, cash flow and residual value from the project.
A zoning change application for another of Fisher's affordable housing developments that was located in Hill's district, Memorial Park Townhomes, was on the Dallas City Council's voting agenda for October 13, 2004. Also on the agenda that day was Southwest Housing Development Corporation, Inc.'s (SWH) zoning change application for Rosemont at Laureland, a competing affordable housing development also located in Hill's district. Brian Potashnik owned SWH. Reagan indicated to McGill that either Hill or another council member was going to move the Dallas City Council to postpone the votes on these applications to put pressure on both Fisher and Potashnik, thereby enabling Reagan and McGill to obtain contracts. McGill and Regan discussed how such postponements, which were part of their agreement with Hill, would help them extort the developers.
Sometime in October 2004, but before the October 27, 2004, Dallas City Council meeting, Reagan and McGill met with Hill to discuss the affordable housing developments that were pending city council approval. Hill noted that, with respect to the developments, everything was going to continue to run through Reagan, which meant that Fisher had to satisfy Reagan's demands before Hill would support Fisher's developments.
McGill attended the October 27, 2004, Dallas City Council meeting at which Hill moved the council to support tax credit financing for two of Potashnik's affordable housing developments, Rosemont at Scyene and Rosemont at Laureland, and to reject tax credit financing for two of Fisher's affordable housing developments, Dallas West Village and Memorial Park Townhomes. Later, in June 2005, McGill and Reagan discussed how Hill had sold his support to the highest bidder, who was Fisher's direct competitor, Brian Potashnik. McGill and Reagan also discussed how Hill had covered all of his bets by having Reagan work on Fisher while others brokered a deal with Brian Potashnik.
Reagan and McGill continued to make demands on Fisher, not only on Dallas West Village, but also on Homes of Pecan Grove. On November 10, 2004, the day the Dallas City Council was scheduled to vote on Homes of Pecan Grove, Reagan told Fisher that his development did not have the necessary support for approval and instructed Fisher to immediately meet him in the City Hall parking lot. Fisher complied and signed a BSEAT CDC consulting contract for Homes of Pecan Grove that contained the same payment provisions as the BSEAT CDC consulting contract for Dallas West Village. Shortly after Fisher signed the BSEAT CDC consulting contract, McGill and Reagan appeared before the Dallas City Council and spoke in favor of the resolution supporting Texas Department of Housing and Community Affairs (TDHCA) tax-exempt bonds and four percent tax credits for Homes of Pecan Grove. Hill then moved the Dallas City Council to approve the resolution, which the City Council did.
Following the October 27, 2004, Dallas City Council meeting, McGill attended more meetings with Reagan and others to discuss their efforts to obtain contracts from Fisher, including subcontracts for their "recommended business partners." At one meeting, in which McGill, Reagan, Hill, and Lee attended, Hill and Lee discussed placing deed restrictions on Fisher's properties to be used as a "weapon" to ensure Fisher's compliance with BSEAT's demands. When Fisher did not agree to BSEAT's deed restrictions, Lee moved the CPC to postpone the hearing on Fisher's zoning change application on November 18, 2004, and again on December 2, 2004.
Although McGill was unaware of all the payments Fisher made to Reagan to get the Dallas West Village zoning change application approved, Reagan occasionally mentioned to McGill that Fisher had paid him, but that "the money was spoken for" or "had been obligated" to others besides McGill. McGill became aware, through conversations with Reagan, that money Fisher paid to Reagan was being passed on to public officials, that is, to Hill and Lee. McGill expected to be eventually be paid through consulting agreements with Fisher's company.
After McGill contacted the TDHCA to obtain the financial pro formas for Fisher's Homes of Pecan Grove, the amounts Reagan and McGill demanded of Fisher increased significantly. Upon learning that the developer's fee totaled millions of dollars, Reagan and McGill demanded more money from Fisher because they knew how much money was in the project. Reagan and McGill discussed how they could "squeeze" as much money out of the development as possible.
In March 2005, Reagan told McGill that Fisher, who still had not signed the amended contracts, was being unresponsive and that he was not going to deal with Fisher anymore. At that point, Reagan and McGill stopped their efforts to extort Fisher using the BSEAT entities.
U.S. Attorney Roper praised the excellent investigative efforts of the FBI and IRS-CI. The case is being prosecuted by Assistant U.S. Attorneys Marcus Busch, Tammy Reno, Sarah Saldaña and Chad Meacham.
