Che Brown pleads guilty in bank fraud case

December 13, 2012

The District’s top federal prosecutor urged city elections officials to keep probing the reelection campaign of former D.C. Council chairman Kwame R. Brown on Thursday even as his office concluded its criminal investigation.

The announcement by U.S. Attorney Ronald C. Machen Jr. that his office does not plan to bring additional charges related to Brown’s 2008 campaign came hours after the former council chairman’s brother pleaded guilty to bank fraud.

Che Brown, 44, admitted in federal court to lying on loan documents, inflating his income by $35,000 after missing several mortgage payments on his home in Southeast Washington.

Prosecutors and federal law enforcement officials began investigating the Brown brothers after a complaint was filed with the D.C. Office of Campaign Finance against Kwame Brown’s campaign for an at-large council seat — a bid in which Che Brown was involved.

In June, Kwame Brown resigned as council chairman after pleading guilty to bank fraud in a separate case. He also pleaded guilty to a misdemeanor charge of violating a city campaign finance statute, the first time the city’s 35-year-old law was criminally enforced, according to prosecutors.

Machen said in a statement that the closure of the criminal investigation “should not be interpreted as a clean bill of health” for Kwame Brown’s 2008 campaign. In a letter to the D.C. Board of Elections, he urged the panel to pick up its probe of the initial complaint and to “vigorously enforce” regulations of cash expenditures and donations.

Specifically, Machen noted that Kwame Brown acknowledged that he had authorized his brother to open a “side account” and allowed him to make cash withdrawals from the campaign’s accounts.

A D.C. audit found that Brown’s campaign did not report raising and spending more than $270,000. The report also found $239,000 in initially unreported campaign money passed to a consulting firm run by Che Brown.

After the plea hearing Thursday, Che Brown’s attorney said that his client had provided many documents to the government to show that the funds were used for campaign purposes. Attorney A. Scott Bolden said he was disappointed that so much “time, money and resources” was spent on this type of case.

Bolden disagreed with Machen that elections officials should continue to investigate, noting that the 2008 campaign committee was dissolved and Kwame Brown was out of office.

“There’s no entity to enforce any action against,” he said. “As a practical matter, these issues should not have much of a future.” If a fine were levied, for instance, he said it is unclear whether any of the campaign’s key players would be able to pay.

Some of the documentation and receipts provided appeared to be valid, Machen said in a statement, but other items “raised eyebrows.”

“There’s a real difference between not being criminally charged versus running a campaign properly,” he said.

Deborah K. Nichols, chairwoman of the Board of Elections, said the panel takes the case “seriously and we will pursue it.”

More details emerged during the hearing Thursday about Che Brown’s financial troubles. According to prosecutors, he applied for a loan modification in September 2009, but the income he reported to GMAC Mortgage LLC was not sufficient to make his monthly payments.

One month later, according to court documents, Che Brown falsely claimed that he was employed at a company called Bookkeeping Works, earning a monthly salary of $5,907. He submitted fake pay stubs issued by the owner of the company, who was a friend of Brown’s, prosecutors said.

The mortgage company eventually lowered his monthly payment by about $700. He had previously pleaded guilty to bank fraud in 1995.

Che Brown’s sentencing is set for March 5 before U.S. District Judge Amy Berman Jackson. Under federal sentencing guidelines, he faces a sentence of up to six months in jail.

Kwame Brown was sentenced in his case to one day in custody and six months of home detention.

Ann covers legal affairs in the District and Maryland for the Washington Post. Ann previously covered state government and politics in California, New Hampshire and Maryland. She joined the Post in 2005.
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