Grand Juror in PEC investigation resigns, raising questions of due diligence by local DA, AG

Having served on two grand juries and presented cases to others, there is no excuse for Ms. Dahmann to have been allowed to sit on this panel while sensitive criminal investigative information was being provided to the grand jury

Editor's Note: An Austin American-Statesman story reports that Tonya Dahmann has resigned from the Blanco County grand jury that is looking into possible criminal activity at the PEC. Dahman, 46, works in the finance department at PEC's Johnson City headquarters. Concerns were raised after it became known that Dahman may be closely related to former PEC assistant general counsel Will Dahmann, who resigned from the co-op in March.

This latest PEC embroglio has raised questions over due diligence in the investigation by both the Blanco County DA and state Attorney General. Guest commenter Abel Ruiz addresses some of those questions below.

From the recently released PEC audit by Navigant: "Mr. (Will) Dahmann also routinely received bonuses from PEC, averaging between $15,000 and $20,000 in 2006 and 2007. As with Messrs. Fuelberg and Burnett, Mr. Dahmann received two to three different bonuses in a given year, including a standard bonus allocation approved by the Board, as well as discretionary bonuses approved by Mr. Fuelberg. During the years from 1998 through 2005, with the exception of 2002, Mr. Dahmann received bonuses ranging from approximately $30,000 to almost $45,000. Mr. Dahmann received a Board approved one-time severance bonus upon his departure on March 31, 2008.[Note 380] The payment was equivalent to one-half his current annual salary, or $129,854.40."

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By Abel Ruiz

This should be considered in the best of lights as a total disaster and embarrassment for the Attorney General's Office and all State of Texas officials.

Having served on two grand juries and presented cases to others, there is no excuse for Ms. Dahmann to have been allowed to sit on this panel while sensitive criminal investigative information was being provided to the grand jury. Every District Attorney (or designated staff) knows who the district judge is considering for appointment to the grand jury, and they have an obligation to oppose a selection if they see an obvious conflict of interest.

The District Attorney or Attorney General has an obligation to ask each potential grand juror to disclose any conflicts of interest they may have in order to prevent a reversible appeal. Ronnie Earle's Office in Travis County often reminded and asked grand jurors about conflicts when a sensitive case was being presented. He did not want to take a chance on a reversible error at the grand jury level.

In addition to the local DA and the Attorney General overlooking this detail, the General Manager of PEC and PEC's legal counsel were at least morally obligated to tell the Attorney General about Ms. Dahmann since she was still drawing down her PEC salary for either jury or court leave.

If the PEC was indeed interested in doing the right thing for the citizens of Texas and being a facilitator for good government instead of an obstructionist, they should have insisted that Ms. Dahmann be removed. Yet their silence only means they intentionally wanted to give themselves a legal out of any future indictments.

Unfortunately, a good case can be made by any decent defense counsel that Ms. Dahmann (with any "baggage" or agendas she may have) may have tainted the entire grand jury with her prejudice for these past 3 months. Simply replacing her with a substitute is the typical quick and lazy government way to fix a screw-up by higher officials. In the long run, the cleanest solution is to empanel a whole new panel and maybe in Travis or Hays County instead.

Can't wait to get a copy of the Navigant report and share it with my Certified Fraud Examiner colleagues for their input. Unfortunately, this case seems to be too ETHICALLY big for the State of Texas to handle – that is why similar government fraud cases in Chicago, New York, New Jersey, El Paso, and Dallas are handled by the US Attorneys and local FBI offices.

Hopefully this helps you and yours to stop any fraudulent settlement. The PEC should be first in court tomorrow to stop the settlement. I won't hold my breath.

Just follow the money, and don't forget the obvious

Please do not get intimidated with this PEC story. Yes it is a massive decades long fraud but there are no new fraud schemes here. Any trained fraud investigator can get to the bottom of this with dedication, aggressiveness and time. Always remember the Watergate lesson...."Follow the Money," and not just the money involved in fraud but also the money that allowed the fraud to occur by acts of commission or omission.

Many checks and balances by professionally certified and insured companies (i.e. CPA firms and law firms) should have easily prevented or reported these acts years ago. Just look back at the multi-million dollar lawsuits and settlements that had to be paid by CPA firms and law firms representing some of the big fraudster companies of our time (Enron, World com and even the attorneys and auditors representing the Ponzi frauds discovered these past two weeks in New York).

Any experienced fraud examiner could tell you that something is really wrong with this "investigation" of PEC. First no criminal investigation entity would allow an inside source like Navigant to have a crack of investigating a potential criminal case because of the worry of competence and cover up. Second a grand jury panel should have been empanelled earlier this spring so they could issue search warrants for records at PEC, PEC Board members houses and all Bank Accounts. I would ask how many search warrants have been issued by the Texas Attorney General via the grand jury to date. I wouldn’t be surprised if the number will be zero or less than ten. Dozens should have been served months ago based on known testimony given in the civil trial.

Austin native Abel Ruiz is an internationally certified fraud examiner and a partner with Ruiz & Guevara Consulting Services with offices in California and Texas. His many years of experience include investigating and packaging fraud cases for prosecution.