Major Texas engineering firm headed by ex-UT regent admits to hundreds of thousands in illegal campaign contributions

James Dannenbaum arrives to the Bob Casey United States Courthouse to appear in court on allegations of election fraud on Friday, Nov. 22, 2019, in Houston. Dannenbaum, a former University of Texas regent and ex-CEO of an influential engineering firm, faces allegations of election fraud, involving alleged improper donations his employees made to three candidates for U.S. Congress. less James Dannenbaum arrives to the Bob Casey United States Courthouse to appear in court on allegations of election fraud on Friday, Nov. 22, 2019, in Houston. Dannenbaum, a former University of Texas regent and ... more Photo: Brett Coomer, Houston Chronicle / Staff Photographer Photo: Brett Coomer, Houston Chronicle / Staff Photographer Image 1 of / 12 Caption Close Major Texas engineering firm headed by ex-UT regent admits to hundreds of thousands in illegal campaign contributions 1 / 12 Back to Gallery

A dominant Texas engineering company led by a former University of Texas regent has admitted to a pattern of illegal campaign contributions to political power brokers involving top level staffers facilitating hundreds of thousands of dollars in donations over many years.

Dannenbaum Engineering, the name behind major airport and highway projects and the infamous “Bridge to Nowhere” in Brownsville, is facing federal charges from the public integrity division of the Justice Department for an election fraud scheme. The company and its longtime CEO James Dannenbaum were charged this month with circumventing federal election law by making donations in their employees’ names to three congressional candidates re-election campaigns.

Under a newly installed CEO, the firm agreed to a $1.6 million fine and entered into a three-year deferred prosecution agreement on Friday, promising to restructure its board, halt “all politically related payments to its employees” and terminate “any and all relationships with corrupt and questionable third parties.”

MORE ON HOUSTONCHRONICLE.COM: Engineering company admits to broader scheme

The agreement states that installing an independent compliance monitor at the company was essential due to “the nature and seriousness of the offense conduct, which lasted for years, was carried out by employees at the highest level of the organization, including its CEO and another high-level executive.” The agreement also said the fraud involved hundreds of thousands of dollars in illegal campaign contributions and “improper tax and accounting treatment of the reimbursements to (company) employees.”

Michel Maksoud, CEO of Dannenbaum, said the deal with prosecutors includes improved compliance policies and continued cooperation with the government. The company also agreed to hire a compliance officer, install a whistle-blower reporting system and train employees about the rules for making political donations.

“This ensures the company can continue to provide the same high quality engineering services it has provided to the people of Texas for over 70 years,” said Maksoud, a 20-year veteran of the company who previously served as a manager in its transportation division.

James Dannenbaum, the company’s 80-year-old namesake, has been a major donor to Sens. John Cornyn and Ted Cruz as well as Gov. Greg Abbott, Attorney General Ken Paxton and Mayor Sylvester Turner.

Dannenbaum retired from his executive duties as chairman and CEO and is expected to appear in magistrate court Friday afternoon.

gabrielle.banks@chron.com