Read the Dannenbaum Engineering settlement agreement

THE STATE OF TEXAS

vs.

DANNENBAUM ENGINEERING CORPORATION

Civil action No. ________________

SETTLEMENT AGREEMENT

Dannenbaum Engineering Corporation ("DEC") and the State of Texas, by and through the District/County Attorney for Cameron County ("STATE OF TEXAS") enter into this Settlement Agreement.

INTRODUCTION

After a thorough investigation by the STATE OF TEXAS of the Port of Brownsville, Brownsville Navigation District's ("the PORT") contractual arrangements with DEC to perform engineering services related to the Port of Brownsville International Rail and Truck Bridge Project ("PROJECT") and given DEC's significant cooperation with this investigation, its detailed presentations, and because of its assistance, the STATE OF TEXAS and DEC have identified $1 million from monies improperly paid by the PORT that are subject to forfeiture.

This Settlement Agreement ("the Agreement") covers all matters referenced herein including all matters involving the PROJECT, and matters contained in the STATEMENT OF FACTS, the contracts, supplemental contracts, and subcontracts referenced herein, and all payments made or received pursuant thereto.

DEC's acceptance of this Agreement should not be considered or interpreted as an admission of wrongdoing of any kind nor an acknowledgment of any involvement in any kind of criminal activity. Asset forfeiture cases are remedial in nature. The settlement funds shall be disposed of by statute, specifically Art., 59.06, Texas Code of Criminal Procedure.

PARTIES

THE STATE OF TEXAS is represented by the District/County Attorney of Cameron County.

DEC is a Texas corporation in good standing with the State of Texas, with corporate headquarters located at 3100 West Alabama, Houston, Texas. James D. Dannenbaum is the Chairman of the Company. Louis Jones, Jr., is a principal. Dannenbaum Engineering has six Limited Liability Company subsidiaries located in Houston, Austin, Dallas, Fort Worth and McAllen. All references to DEC shall include James D. Dannenbaum, Louis H. Jones, Jr., all representatives, agents, employees, principals, officers and directors, parent companies, and subsidiaries. DEC is represented by Joel Androphy, attorney at law.

FORFEITURE ISSUES

The State of Texas claims that a portion of the PORT'S payments from the PROJECT, specifically monies paid and intended to be paid to COBINA, HOMEFRAMES, and SISTEMAS, are contraband as defined by statute, and subject to civil forfeiture. DEC denies that those payments from the PROJECT are contraband of any kind and denies that it was involved in any kind of criminal activity. DEC's acceptance of this Agreement should not be considered or interpreted as an admission of wrongdoing of any kind nor an acknowledgment of any involvement in any kind of criminal activity.

STATEMENT OF FACTS

In 1991, the PORT obtained a $21 million bond issue to fund a limited road/bridge Project. The original Project was limited to three miles of road and rail and a half a bridge on the U.S. side of the border.

On or about July 21, 1997, DEC and the PORT entered into a contract for Engineering Services ("the Contract") for engineering and design work for the United States' side of the Project. The Contract did not require DEC to be engaged in any actual construction of the Project.

Over time, the Project greatly expanded in scope. The United States' State Department issued a U.S. Presidential Permit approving the Project effective November 3, 1997. The Project expanded again in 2002. On or about June 6, 2002, the Mexican government, via the Secretaria de Relaciones Exteriores ("SRE''), approved the permit for the project studies to begin. As a condition of approval, the Mexican government required the inclusion of a 30-mile road and rail loop around Matamoros and a half a bridge on the Mexican side of the border resulting in the construction cost increasing to $171 million.

DEC and the PORT entered into several Supplemental Agreements that further defined the parties' respective responsibilities under the Contract. Supplemental Agreement No. I was entered into on or about April 20, 1998. Supplemental Agreement No. 1A is undated. Supplemental Agreement No. 2 was entered into on or about January 7,1999. Supplemental Agreement No. 3 was entered into on or about March 16, 2000. Supplemental Agreement No. 4 was entered into on or about March 21, 2001. Supplemental Agreement No. 5 was entered into on or about February 27, 2002. Supplemental Agreement No. 6 was entered into on or about June 17, 2002. Supplemental Agreement No. 7 was entered into on or about February 4, 2003. Supplemental Agreement No. 8 was entered into on or about February 4, 2003. Supplemental Agreement No. 8A was entered into on or about September 13, 2003. Supplemental Agreement No. 9 was entered on or about March 29, 2004. Supplemental Agreement No. 10 was offered on or about July 6, 2004 and was never acted upon.

Among the obligations from DEC to the Mexican subconsultants, was the payment of "success fees." These "success fees" payments are identified in consulting subcontracts, including, but not limited to, contracts on March 10, 2002, July 30, 2002, January 10, 2003, February 1, 2003, and February 1, 2004. The STATE OF TEXAS contends that the success fees were not properly earned. DEC contends that DEC was misled by the Mexican subconsultants. These success fee payments were defined in the respective subconsulting contracts between DEC and the Mexican subconsultants as referenced above.

DEC has consistently cooperated with the STATE OF TEXAS during this investigation. DEC also voluntarily provided the STATE OF TEXAS with numerous documents related to the investigation. In accordance with this agreement, DEC provided the STATE OF TEXAS with: (1) a Detailed Timeline of Events During DEC Involvement with Port of Brownsville International Bridge & Matamoros Rail/Truck Loop PROJECT; Response to Allegations Against DEC, James Dannenbaum and Louis Jones Arising from Port of Brownsville International Bridge & Matamoros Rail/Truck Loop PROJECT; and (3) a large three ring black binder containing 107 numbered and tagged exhibits. In September, 2007, DEC provided the investigating Grand Jury with certain evidence, the specifics of which cannot be listed due to grand jury secrecy laws.

CONDITIONS FOR SETTLEMENT

By DEC's signature on this Agreement and upon the authority of the STATE OF TEXAS, there shall be no additional civil actions brought by the Cameron County District Attorney's Office against DEC, including, but not limited to, James D. Dannenbaum, Louis H. Jones, Jr., and all representatives, agents, employees, principals, officers and directors, parent companies, and subsidiaries, for the matters involving the PORT PROJECT, and matters contained in the STATEMENT OF FACTS, the contracts and supplemental contracts and subcontracts referenced herein, and all payments made or received pursuant thereto.

DEC will tender $1 million from the revenues of the PROJECT in complete and final settlement of civil forfeiture proceeding cause number __________. Disposition of the monies shall be in compliance with Art. 59.06, Texas Code of Criminal Procedure. DEC's payment is not an admission of wrongdoing of any kind nor an acknowledgment of any involvement in any kind of criminal activity.

This Settlement Agreement does not cover any other parties other than DEC, as defined herein, and the STATE OF TEXAS.

ACKNOWLEDGMENTS

I, James D. Dannenbaum, DEC's duly authorized representative hereby expressly acknowledge that (1) I have read this entire Agreement and all attachments thereto; (2) I have had an opportunity had an opportunity to discuss this Agreement fully and freely with DEC's attorneys; (3) DEC fully and completely understands each and every one of its terms; (4) DEC is fully satisfied with the advice and representation provided to it by its attorneys; (5) DEC has signed this Agreement voluntarily, (6) DEC has authorized me, by corporate resolution, to execute this document on behalf of DEC, and (7) DEC agrees to waive any and all claims against any member of the Cameron County District Attorney's office for any actions connected with the prosecution of the civil forfeiture proceeding.

Dannenbaum Engineering Corporation

BY:

____(Signature)_____________

James D. Dannenbaum,
Chairman

COUNSEL FOR DEC

Joel M. Androphy, DEC's counsel, hereby expressly acknowledges that: (1) I have discussed this Agreement with my client, DEC; (2) I have fully explained each one of its terms to my client, DEC; (3) ,I have fully answered each and every question put to me by my client, DEC, regarding the agreement; and, (4) I believe that my client, DEC, completely understands all of the Agreement's terms.`

___(Signature)_____________________

Joel Androphy

ON BEHALF OF THE STATE OF TEXAS 

Armando Villalobos
Cameron County and Criminal District Attorney
974 E. Harrison
Brownsville, TX 78520
956.544.0849
956.544.0869

Date: April 21, 2008