FEDS TO FOCUS ON DALLAS STATE REP. TERRI HODGE'S RENT
ARRANGEMENT WITH DEVELOPER
DALLAS DISTRICT ATTORNEY BILL HILL'S OFFICE TOLD TO DEFER STATE INVESTIGATION OF
Nov 10, 2005 10 pm US/Central
By Todd Bensman and Robert Riggs, Investigation Unit,
The U.S. Attorney's office in Dallas and the FBI will investigate whether any
federal crimes occurred when Dallas State Rep. Terri Hodge accepted at least
$32,000 in unreported rent and utilities from a developer and then provided her
political support to his projects, two sources have told CBS-11 News.
The government's new focus in a pre-existing FBI corruption investigation
centering on an affordable housing boom in Dallas came shortly after CBS-11
disclosed that Southwest Housing Development Company CEO Brian Potashnik
arranged for Hodge to live in one of his apartment complexes since April 2002
and has since paid most of her monthly $1,000 rent and utilities there. The
CBS-11 report also cited state public records that showed how Hodge used her
elected position to provide critical political support that helped Potashnik
gain federal subsidies for his developments - before and after she began
accepting his financial support.
After seeing a CBS-11 report published Nov. 3, the office of Dallas County
District attorney Bill Hill wanted to open a criminal investigation into whether
Hodge violated state income disclosure requirements, or other laws, according to
a knowledgeable source in Hill's office. Hodge has
never reported any of Potashnik's rent subsidies on personal finance disclosure
forms as either income or gifts, records from 2002 through 2005 show.
But the source said U.S. Attorney Richard Roper and the FBI directed that any
state investigation by his state counterpart's public corruption division be put
on hold pending a federal probe into the rent arrangement between Potashnik and
A source in U.S. Attorney Richard Roper's office confirmed that Hill's office
was told to stand down until the FBI could investigate the matter.
In addition, a source in the office of Travis County District Attorney Ronnie
Earle, which enforces laws for state legislators, said the CBS-11 report about
Hodge's living arrangements also prompted a decision to determine whether Hodge
violated state law. It remained unclear Thursday whether the Dallas-based U.S.
Attorney's office also directed Earle's office in Austin to hold off.
At the time of the CBS-11 report, the FBI was already investigating Potashnik
and his company as part of a wide-ranging bribery, extortion and money
laundering sting centering on a host of Dallas city officials, contractors and
non-profit groups involved in an affordable housing boom. A primary issue has
been whether developers were extorted to pay council
members, planning commissioners and contractors for permission to build
affordable housing in southern Dallas. Hodge's District 100 encompasses a broad
swath of an area targeted by affordable housing developers like Potashnik.
In August, Hodge's name surfaced among many in a broad FBI subpoena for public
records at Dallas City Hall, which turned up no documents bearing her name.
But there was no indication that the FBI was specifically interested in the
financial and political relationship between Potashnik and Hodge until CBS-11
aired two reports about them in August and then published a Nov. 3 report
disclosing the free rent and utilities. The Nov. 3 report quoted three former
Southwest Housing employees and cited internal rent records.
None of the three former employees had ever been approached by the FBI, and
Hodge's attorney Mike Snipes said his client was not approached by the FBI for
an interview until after CBS-11 aired its first reports in August. In addition,
Potashnik discontinued his rent payments to Hodge but only until after the
Hodge has refused to cooperate with the FBI, and no subpoena has been issued to
compel her to testify before a grand jury.
On Thursday, Snipes, a former federal prosecutor, reiterated that his client was
innocent of any state or federal law violation. In previous interviews, Snipes
has acknowledged the free rent to his client but said the state lawmaker and
Potashnik believed the arrangment was not improper.
"My client is innocent," he said.
Potashnik's attorneys have declined to comment on the CBS-11 stories about his
relationship with Hodge.
Public records show Hodge lent crucial political support, both in official
correspondence under her State Representative letterhead and in public testimony
to a half dozen Potashnik projects before and after she began accepting $700
monthly rent and an estimated $100 monthly utilities payments. The records show
in some cases she lent Potashnik this support despite strong opposition from her
own constituents and for Potashnik projects that were not in her Dallas District
One development she supported that generated heated neighborhood opposition was
the complex in which she now lives, the Rosemont at Arlington Park near Parkland
Memorial Hospital. In 2000, residents submitted opposition petitions they said
represented 97 percent of the area's homeowners to the Texas Department of
Housing and Community Development. Hodge, according to transcripts, testified in
favor of the project.
Neighborhood activists said they had always been aware that Hodge later moved
into the complex they had fought. This week, they said they felt angered and
betrayed by Hodge after CBS-11 revealed her free rent and utilities arrangement
with the developer, as well as how she lent Potashnik her political muscle in
SeGwen Tyler, an Arlington Park area leader, said the residents of her working
class neighborhood deserve a full criminal investigation - and justice if their
elected representative is found to have gone against them for the price of rent
"Everyone knew this neighborhood was against those apartments. Everyone at the
City of Dallas. Everyone knew," Tyler said. "Yet it still got built. It still
Tyler said she recalls Potashnik himself spoke to a group of residents at the
time and, in a tone she described as arrogant, boasted to them the affordable
housing project would be approved despite their unanimous opposition.
"I think it should be investigated from the very beginning. Not just starting
with the state representative," Tyler said. "I want it to be investigated from
the very beginning with the school district, the city council, everyone needs to
be investigated at this point in time."
To comment on this story, email: Todd Bensman and Robert Riggs