Updated 11:10 a.m. on Monday: Revised to include a link to a city of DeSoto statement posted on its website after this story's publication.

DeSOTO — For more than two years, leaders of this Dallas suburb have guarded a secret: City Council member Candice Quarles benefited from thousands of taxpayer dollars her husband stole as head of the town’s economic development corporation.

DeSoto officials and the Dallas County district attorney's office did little to investigate the councilwoman's potential role after her husband told police she knew of at least one fraudulent transaction, according to interviews and a review of police documents by The Dallas Morning News.

Her financial gains surfaced in records tied to husband Jeremiah Quarles’ theft case. He pleaded guilty in April to making more than $9,000 in illegal credit card charges from 2013 to 2016 and received probation.

Half the stolen funds covered personal memberships for the councilwoman: $3,250 tuition for a prestigious Dallas Regional Chamber leadership class in 2016 and $1,200 in lifetime chamber dues, according to records.

The invoices her husband submitted had been altered to remove her name, records show. She told police she knew nothing about the fraud. A DeSoto detective did not challenge the statement or dig deep into her involvement.

In a brief police interview, the officer, K.V. Jones, told her, “This case is sensitive. I’m very aware of your position with the city.”

DeSoto town leaders also did not seek a forensic audit to show whether the fraud went beyond the $9,000, despite other questionable expenses.

The details made public now for the first time were not known to voters when Candice Quarles was re-elected in 2018. The 37-year-old councilwoman is a rising figure in the Texas Democratic Party who has won favor with U.S. presidential candidate Beto O'Rourke for championing family leave policies.

Candice and Jeremiah Quarles did not respond to questions for this story. After it was published online, the councilwoman released a statement saying she appreciated the professionalism of authorities who handled the investigation, and "to question it after the fact seems targeted and unfair.''

Experts who reviewed the records for The News called the probe sloppy and said it raised questions about whether the councilwoman received preferential treatment as a top boss.

The town or the DA’s office should have called in an independent agency such as the Texas Rangers to investigate, said Kent Schoonover, a retired Wisconsin police detective.

“It is obvious that the DeSoto police should not have handled this case due to the closeness of the City Council and the police department,” he said.

DeSoto Mayor Curtistene McCowan and Police Chief Joseph Costa declined to comment for this story.

Those officials, city attorney Joe Gorfida and a few other town leaders knew that invoices showed Candice Quarles benefited from the theft but withheld the details from the public and most council members, according to Gorfida and a statement from the town.

Gorfida said they kept quiet at the request of a prosecutor in the DA’s public integrity unit, then overseen by Republican Faith Johnson, who left office this year. The prosecutor in Johnson’s office feared that if details leaked out, they could compromise the case, Gorfida said.

Yet David Henderson, a former prosecutor for Bexar County, said there was little risk because the investigation was seriously flawed from the start. The councilwoman was never identified as a suspect in the police records.

Dallas lawyer David Henderson, a former prosecutor now with the Ellwanger Law firm, says Dallas County authorities should have asked a grand jury to investigate DeSoto City Council member Candice Quarles. (Shaban Athuman / Staff Photographer)

Henderson said the DA's office also failed to ensure a thorough inquiry — the second time since March that the office has faced criticism for not fully investigating wrongdoing by suburban officials.

“There’s not much question that a case against her should have been presented to a grand jury for investigation,” Henderson said. “How could you not know $3,250 is being spent on you?”

Johnson and her successor, John Creuzot, did not respond to The News' questions.

Creuzot recused his office from the case without citing a reason. It’s unclear whether he knew Jeremiah Quarles or if he was aware Quarles was being prosecuted by his predecessor.

Creuzot may have removed himself from the case because Candice Quarles endorsed him last fall in his race against Johnson.

She featured him on her YouTube show "Candid with Candice,'' in which the two chatted about everything from his interest in law to his runner’s build.

Jeremiah Quarles' prosecution was shifted to the Tarrant County DA's office, which ordered deferred adjudication and payment of $9,073 in restitution.

Political ambitions

In recent years, Candice Quarles, a human-resources consultant from Missouri, and her husband, a finance specialist from Michigan, won spots in the competitive Leadership Dallas chamber program.

The class introduces potential leaders to North Texas civic issues and helps them build social networks with prominent decision-makers.

It’s unclear whether Jeremiah Quarles’ chamber connections helped him land DeSoto’s business-hunting CEO job in 2013. In that position, he oversaw a $4 million budget and spent more than $120,000 on travel, food and other expenses over three years, records show.

In 2016, the year Candice Quarles was accepted, she won her first council campaign. Ninety percent of her contributors, including Leadership Dallas alumni, lived outside DeSoto.

In an interview for the national podcast "Changing the Face of Power" after her victory, she described her close professional collaboration with her husband.

“We have a conversation of where could we put this on the schedule, what can we move off, and we make it happen,” she said.

In December 2016, Jeremiah Quarles quietly left the job. An email obtained by The News shows the city manager asked him to resign; no reason was cited.

In January 2017, board members of the economic development corporation, who are City Council appointees, discovered he had inserted a $17,000 bonus for himself into the budget -- more than twice what the board approved. But it had yet to be issued.

The discovery led to a review that uncovered other questionable expenses.

They ranged from thousands of dollars in payments to an area Urban League chapter - the Quarleses were members - to airline tickets for what appeared to be personal trips, records show.

The expensive chamber expenses jumped out. A board member obtained the originals from the chamber, showing the funds were spent on Candice Quarles. The tuition invoice showed it had been initially sent to her.

Graphic by Michael Hogue.

In March 2017, DeSoto police called her husband in for questioning.

Blown opportunities

Jeremiah Quarles started to crack about half an hour into the three-hour interrogation, a video recording shows.

At first, he denied misusing the credit account. But later he backtracked, saying he might have used it for a personal flight to Indiana and on a Disney World vacation with his wife.

A detective interrogated Jeremiah Quarles, DeSoto's former economic development chief, for about three hours in the spring of 2017. The Dallas Morning News obtained the interview recording through the Texas Public Information Act. (DeSoto police footage)

Soon he admitted to the illegal chamber payments.

And he mentioned that his wife knew of at least one.

Detective Jones cautioned him. Her potential knowledge would be “a big issue,” he said.

Quarles then qualified his response, saying his wife only knew about the transaction “after the fact.”

The detective didn’t press deeper. Left unexplored were multiple questions: Did she know of other improper expenses? How were the invoices altered?

About a month later, in April 2017, the detective met with Candice Quarles. She brought a lawyer.

The detective started by reminding her that she didn’t have to answer questions. He also agreed to cap her interview at 30 minutes.

The detective went straight to key questions.

Candice Quarles sat for a brief police interview in 2017. (DeSoto police footage)

Was she aware of how the chamber invoices were paid?

No, she said.

She acknowledged receiving the $3,250 tuition invoice and giving it to her husband to pay. But she said she couldn’t recall more details.

“My husband pays the bills,” she said. “He makes more money.”

The detective said he was “very aware’’ of her position with the town, and didn’t know how far the investigation would go.

After 14 minutes, he ended the interview with an apology. He said he hoped he didn’t catch her off guard.

Schoonover, the retired police investigator, said the inquiry didn’t go far because the detective’s interview was a failure.

The detective showed unusual deference, seemed nervous and did not appear to have a train of thought, Schoonover said.

The detective also failed to ask the councilwoman the most key question: Why would her husband say she knew about one illegal payment?

“Why was he so uncomfortable? Was he getting political pressure?” Schoonover asked.

Jones, who no longer works for DeSoto, declined to be interviewed.

No forensic audit

Former DeSoto councilwoman Rachel Proctor discovered the details of the theft in 2018 when she began serving as a liaison to the economic development corporation. She also learned that only a rough review of some of Jeremiah Quarles’ expenditures had been done.

"I had some very serious concerns about why no one called for a formal investigation or forensic audit," Proctor told The News recently. "It was that basic for me: Why wasn't it done from the very beginning, and why has it not been done up to this point?''

Proctor wanted to know for certain how much taxpayers lost.

Mayor McCowan and the corporation's board of directors opposed a formal inquiry, Proctor said. Some were concerned with an estimated $30,000 cost of an audit, officials told The News. Board members did not respond to requests for comment.

Mayor Curtistene McCowan speaking at a town hall meeting last year. ((Miles Moffeit photo))

Proctor said she told the mayor she was uncomfortable with the lack of scrutiny.

McCowan “was even present when I requested the forensic audit, and she was not in favor of it — I’ll put it that way,” said Proctor, who recently lost her spot on the council after an unsuccessful bid to unseat the mayor.

Asked to respond to Proctor's account, the mayor declined. But in a statement to The News, DeSoto officials said they asked Tarrant County special prosecutor John Newbern in recent months whether such an audit should be performed.

The prosecutor said he “did not see a need for it at that time and added that if he ever decided it was necessary, he would get his own forensic auditor to conduct it,’’ according to the statement. (Town officials repeated that assertion in another statement posted on DeSoto's website after this story's publication; they also said they ordered new financial safeguards to help prevent misspending in the future.)

Newbern declined to discuss details of the case, including what steps, if any, his public integrity unit took to investigate the case independent of police.

Proctor, however, emphasized that DeSoto officials have the latitude under the city's charter to do their own forensic audit.

Hushed details

Proctor said she also had asked Gorfida, the city attorney, to meet with the council about the case’s details, but he declined.

Gorfida told The News that prosecutor Mischeka Nicholson of the Dallas DA's public integrity unit had urged him and others to stay silent.

Nicholson told town officials not to interfere with the case last year, Gorfida said, after the corporation sought reimbursement from the councilwoman for the stolen funds as well as several thousand dollars in other expenses that board members said they did not authorize.

Nicholson said there was not enough evidence to bring a case against the councilwoman, Gorfida said.

Henderson, the former prosecutor, said Nicholson’s explanation doesn’t make sense, given that the DA and police did not appear to seriously investigate Candice Quarles in the first place. Nicholson could not be reached for comment.

Even if Candice Quarles later learned about one of the thefts, a case could be made that she aided her husband by not reporting it, he said.

Because she apparently was present for the Disney vacation that appeared in the credit card charges, it would be hard for her to argue she knew nothing, Henderson said.

Gorfida said he felt the town acted appropriately under the direction of the DA to “not taint the investigation’’ of Jeremiah Quarles.

But Proctor said the secrecy and lack of a broader investigation not only ensured Candice Quarles won re-election.

“It makes us look like we’re trying to cover it up,” she said.