James Dannenbaum, a prolific Texas Republican donor and former University of Texas regent, is resigning from his namesake engineering company after admitting to coordinating illegal campaign contributions in 2017.
Dannenbaum, the president and CEO of Houston-based Dannenbaum Engineering, was charged Monday with recruiting employees to donate over $20,000 to three congressional candidates in February 2017 and then reimbursing them with corporate funds. It is a felony to set up such “conduit” donations, which typically happen when the offender has already given the maximum amount to campaigns, which was $2,700 per election last cycle.
James Dannenbaum “this week acknowledged that he made prohibited contributions to various federal election campaigns,” Dannenbaum spokesman Bill Miller said in a statement. “His acknowledgement to the federal government has led to his agreement to plea to this offense and he has agreed to step down as Chairman, President, and CEO. Jim has been active in philanthropy and in the community for over 50 years. He deeply regrets these events.”
His resignation was first reported by the Houston Chronicle.
Court records do not name the candidates that benefited from the scheme but say they included two candidates for U.S. House and one for U.S. Senate. Federal Election Commission records show the only U.S. Senate candidate who got donations from Dannenbaum and his employees around February 2017 was John Cornyn, the state’s senior senator.
“The campaign was not aware of what Mr. James Dannenbaum was doing and we will fully cooperate with the US Attorney’s office,” Cornyn campaign manager John Jackson said in a statement. “We will be returning the contributions in full to the Treasury, as required by law. We take great strides to ensure all contributions are proper and follow the law.”
Dannenbaum is a prominent political donor, mainly to Republicans but also to both parties in his hometown of Houston. Since the beginning of the 2018 cycle alone, he has given hundreds of thousands of dollars at the federal and state levels, including five figures each to some GOP statewide officials.
In 2007, then-Gov. Rick Perry appointed James Dannenbaum to a six-year term on the University of Texas System Board of Regents. He later became vice chairman of the board.
The new attention on the Cornyn-Dannenbaum connection comes amid the senator’s 2020 reelection race, which has drawn a crowded Democratic field.
The campaign of one of the Democrats, MJ Hegar, said in a statement that Cornyn “attempting to erase the fact he took illegal campaign contributions from a corrupt donor is the perfect example of everything that is wrong with his career in DC.”
James Dannenbaum’s history of corruption
Bribery became a reoccurring theme at Dannenbaum. In 2017, the FBI raided many of the company’s offices across the state.
The raids were related to contracts associated with the construction of Hidalgo County’s first border wall — a levee project worth over $200 million. A federal lawsuit filed in 2018 alleges that Dannenbaum Engineering participated in a “racketeering scheme” cooked up by the director of the Hidalgo County drainage district, Godfrey Garza.
Garza directed Dannenbaum, and other contracting firms, to hire a company run by his children as a survey and mapping company. The company, Valley Data Services, received a no-show job contract worth at least $1.6 million.
Garza wasn’t the only crooked county official Dannenbaum got into bed with. The FBI investigation also found that Dannenbaum paid off a Webb County Commissioner Jaime Canales as well as a Laredo City Councilman Johnny Amaya.
Both Canales and Amaya were charged with conspiracy to commit bribery. Dannenbaum’s problems extended to its own employees. In 2018, a high-ranking Dannenbaum Engineering executive, Louis H. Jones Jr., committed suicide.
Although Jones was never explicitly named in any indictments, he is widely believed to have conspired with Canales. Jones wrote a $5,000 check to Canales’ campaign a few weeks before Webb County awarded Dannenbaum Engineering a $300,000 road contract
Jones also bragged about “paying off a county commissioner.” Dannenbaum Engineering has repeatedly denied any wrongdoing.
Despite all of the accusations and questions, Republicans hold up the construction of the border wall in Hidalgo County as a success.
In June 2019, Cornyn praised the Hidalgo County levee-wall as a “win-win.” It’s unclear if Cornyn is aware that the Hidalgo County construction contracts involved fraud, graft, corruption, and ultimately led to suicide and imprisonment.
The allegations of corruption surrounding Dannenbaum aren’t unusual for Texas.
In 2018, the Center for Public Integrity gave the state a ‘D-‘ in integrity.
The investigative journalism non-profit ranked Texas in 13 categories — including political financing, electoral oversight, accountability and access to information. The state recevied an ‘F’ in eight categories.
The only area where the Texas recieved an ‘A’ grade was in the state budget process.