Posted on 08/31/2002 6:38:38 AM PDT by GailA
Fraud charge lodged against state legislator Newport's Davis accused in bogus-passport case
By Tom Humphrey, News-Sentinel Nashville bureau August 31, 2002
NASHVILLE - State Rep. Ronnie Davis, R-Newport, and a "personal companion" were accused Friday of fraud, extortion and money laundering in a scheme involving fake diplomatic passports.
The federal grand jury indictment levies 13 charges against Davis, 58, an 18-year veteran of the Legislature who served several terms as assistant Republican leader.
Diana Dorothy Burton, a former division director in the state Department of Employment Security, was named in the 13 counts and charged with an additional two counts of tax evasion. She is depicted as initiating the "scheme to defraud."
The indictment says that Davis initially tried in 1998 to obtain valid diplomatic passports for two Texas businessmen by working with the offices of then-Vice President Al Gore Jr. and U.S. Rep. Bill Jenkins of Rogersville.
When that failed, the indictment says, two regular passports were altered to make them appear as special diplomatic passports, which U.S. Attorney James K. Vines said would give holders "access to places you might not otherwise have access to."
The two men, identified as Glenn D. Guillet and Robert Littell Jr. of Beaumont, Texas, were also given "false and fraudulent letters of introduction" that purported to be official letters from Gore, Gov. Don Sundquist, then-United States Secretary of State Madeline Albright and Kofi Annan, secretary general of the United Nations.
The other named officials are "absolutely not" implicated in any wrongdoing, said Vines at a news conference.
The two Texas men, who were not charged, then gave Davis and Burton $100,000 in exchange for the altered passports and the bogus "letters of introduction," the indictment says.
The indictment says that Davis, a married father of two, had purchased a house for Burton's use in Murfreesboro, and the two on occasion portrayed themselves as husband and wife. Vines said the house was purchased in 1994 and is owned by Davis.
The two set up a "shell corporation," one known as DDB Inc., and opened a joint account in an unnamed Sevierville bank under that name, the indictment says. Another shell company they set up, given the name Burton Group, listed its address as an apartment rented by Davis just a block from the state Capitol, the indictment says.
The indictment says they also had joint personal accounts at First Tennessee Bank in Murfreesboro, where they presented themselves as husband and wife and made other false statements in seeking three loans for a total of $245,100.
Those allegations are the basis for three counts of bank fraud in the indictment. Other counts levied against both defendants allege they either conspired to or committed acts of mail fraud, extortion and violated federal laws dealing with passports.
An extortion count alleges that Davis acted "under color of official right," meaning that he used his official position to further the scheme and equates to "public corruption," officials said.
The money-laundering counts involve transfers of funds between a First Tennessee account and a Hartford Life Insurance Co. annuity account plus an $11,000 payment to Nashville's Union Station Hotel.
The tax charges against Burton allege that she received $113,493 in income in 1996 and $100,200 in 1997 but failed to file a federal income tax return.
Vines said he did not know Burton's current employment. State records indicate she was employed as a "division director" in the state Department of Employment Security from Aug. 1, 1996 to July 14, 1997.
Kristie Goad, press secretary to Sundquist, said she was classified as an "executive service" employee, meaning she was subject to termination at the will of the appointing official, in Burton's case former Employment Security Commissioner Hazel Albert. Burton was paid $3,406 per month by the state.
A form signed by Albert lists "expiration of appointment" as the reason for her termination.
Davis was arrested at his Newport home on Friday morning while Burton was arrested at Murfresboro, officials said. Each was freed on $25,000 bond. Vines said they are scheduled for arraignment at Nashville on Sept. 11.
Davis' initial appearance was before U.S. Magistrate Dennis Inman at Greeneville, where he appeared in handcuffs. When Inman asked Davis if he understood his rights, he replied:
"I wasn't interviewed by the grand jury, and I have no idea about this."
As he left the court, Davis was asked if he had any comment and replied only that, "I have no idea what's going on."
Vines and Assistant U.S. Attorney Robert J. Washko, a veteran Middle Tennessee federal prosecutor assigned to handle the case, said the maximum penalty for each of the 15 counts is 30 years in prison and a $1 million fine.
Vines and Washko were joined at the news conference by Tennessee Bureau of Investigation Director Larry Wallace, David Booth, special agent for the Internal Revenue Service's Criminal Investigations Division in Nashville, and Phil Thomas, special agent in charge of the FBI in Middle and West Tennessee.
All the agencies cooperated in the investigation, Vines said.
Davis, one of the most senior Republicans on the House Finance Committee and the House Education Committee, is director of the Ben Hooper Vocational School, a branch of Cocke County High School.
He has been a key sponsor of education reform and tax legislation over the years and had supported tax reform, including a state income tax, in this year's legislative session.
Davis is up for re-election in November and is opposed by Democrat Eddie Yokley of Greeneville, the Greene County tax assessor, as well as independent candidate Richard Spriggs of Cosby, who has lost to Davis in previous elections.
Though a conviction on felony charges can prevent a candidate from seeking election to state office, an indictment causes no legal impediment to his continued service in the Legislature.
"It would only be a problem in the sense of public perception," said Washko at the news conference.
"I was shocked and surprised to learn today that Ronnie Davis has been charged with a number of very serious crimes," said House Speaker Jimmy Naifeh in a statement issued in response to reporter inquiries.
Naifeh described Davis as "an excellent House member" who has "served his constituents and the people of Tennessee well."
"This matter is now before the courts and his guilt or innocence will be decided there," said Naifeh.
House Republican Leader Steve McDaniel of Parkers Crossroads could not be reached for comment.
Davis served as assistant House Republican leader until two years ago, when he was defeated in a bid for re-election to that post by Rep. Stancil Ford, R-Talbot.
Davis is the second legislator to face criminal charges this year. State Rep. Keith Westmoreland, R-Kingsport, committed suicide in June after being charged with indecent exposure.
Washko was a key federal prosecutor in the "Rocky Top" state government corruption scandal during the 1980s, including overseeing the conviction of former state Rep. Tommy Burnett, D-Jamestown, on extortion and illegal gambling charges.
Tom Humphrey may be reached at 615-242-7782 or humphrey@edge.net
According to WKRN Nashville it took FIVE years for this investigation to be completed. Contact info for davis is on the original thread.
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