Developers Charged With Defrauding TxDOT, Taxpayers
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DENTON (CBSDFW.COM) - A federal grand jury has indicted two North Texas developers, James Kevin Bollman and Wade Blackburn, for allegedly cheating taxpayers out of millions of dollars.
The charges involve six tracts of land they sold to TxDOT so the agency could widen Interstate-35E in Denton County. For residents like Bonnie Brown of Hickory Creek, the accusations against the developers hits close to home. Brown says she was devastated when TxDOT bull-dozed the house she grew up in, and where she was raising her own daughters. "It was more than a house, it was a home."
Back in August of 2011, she says she applied to TxDOT for a hardship case, so the state could buy her house quickly to widen I-35-E. "We applied because we were the only home basically north of the lake up to Loop 288 with children in the home and I wanted to get our lives moving on. I had children who didn't need to be in this while it was going on," says Brown.
But she says TxDOT denied her request, and she had to wait two more years for a buy-out. Federal prosecutors say the two developers who owned the tracts of land right up the road from Brown now face federal charges, after applying for that same hardship status.
Bollman and Blackburn are accused of lying, claiming their land was going to be developed, so they could receive higher prices.
"These defendants sold land fraudulently to TxDOT claiming the land was under development. These bogus assertions resulted in significantly inflated prices being paid by TxDOT to the defendants and their limited partners," according to U.S. Attorney of the Eastern District of Texas, John Bale. "These same two defendants secured preferential treatment in how quickly their land was purchased by TxDOT resulting in a very expedited payment from the state of Texas."
Bales says the men profited nearly $13 million dollars from sales of six tracts of land to TxDOT. The government now wants the two men to forfeit all of the money. The U.S. Attorney also says Bollman and Blackburn couldn't have done it without the help of a TxDOT employee, who wasn't charged. The employee wasn't publicly identified by prosecutors, but in the indictment, he's called an un-indicted co-conspirator.
"We thought very long and hard about whether the TxDOT employee should be prosecuted or not. Right now, we're not prosecuting him. To comment further, would be inappropriate," says Bales. He says the employee wasn't granted immunity
and left the agency several years ago and became a consultant whose sole clients were Bollman and Blackburn. While at TxDOT, the U.S. Attorney says the employee had a lot of discretion.
"TxDOT looks bad in this," says Bales.
When asked if TxDOT has improved its system of checks and balances as a result of this case, agency spokeswoman Veronica Beyer wouldn't comment, except to say it continues to cooperate with federal authorities. If the developers are convicted, they could each face a maximum of 20 years in prison. They're scheduled to appear in federal court in Sherman next week to hear the charges filed against them.
Matt Orwig represents Bollman and Blackburn. In a statement, Orwig says, "The subject property sales were lawful and legitimate. Kevin Bollman and Wade Blackburn relied on their market experience and publically available information to make these investments. They followed TxDOT's processes and procedures. An independent appraiser selected by TxDOT appraised each property, and the purchase prices TxDOT paid were based on those valuations and were comparable to what other landowners received."
TxDOT's appraisal process was not working properly, according to Bales. None of the appraisers were charged, and Bales says their investigation continues now five years after it started. As for Bonnie Brown, she says she wishes she could have received the same alleged deal the developers did. "It's appalling... absolutely appalling."
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