Dumb and Dapper

Dan Morales Spends His Way Behind Bars

Dan Morales
Dan Morales (Photo By John Anderson)

It may be a very long time before former Texas attorney general and 2002 gubernatorial candidate Dan Morales rides in a luxury car again. Last Thursday, U.S. District Judge Sam Sparks ordered Morales to remain in jail until his trial Oct. 7 on fraud charges. At a routine court hearing the previous day, prosecutors revealed to Sparks that Morales -- who in April had sworn to the judge that he was broke and deep in debt and needed court-appointed counsel -- had applied for loans to purchase a Mercedes convertible and a Lexus SUV worth a combined $70,000, and had on those applications listed his income as $20,000 a month.

Sparks immediately revoked Morales' bail and, at another hearing the following day, ruled that the former AG posed a flight risk and could potentially commit more financial crimes while awaiting trial. The feds have not determined whether they will seek additional felony charges in connection with the car loans. Currently Morales is being held in solitary confinement at the Caldwell Co. Jail in Lockhart -- a precaution, authorities say, against any mischief fellow inmates might want to make with the former Texas top cop.

Upon his indictment in March on 12 counts of tax and mail fraud, conspiracy, and lying on the loan application for his West Austin house, Morales told Sparks that he was broke and unemployed, couldn't afford his own counsel, and needed a court-appointed attorney. Indeed, Morales' financial situation is dire: a $570,000 mortgage on his home, $245,000 in outstanding home equity loans, and $163,715 in credit card debt, according to prosecutors, who found no record of Morales having earned an income since before his 2002 gubernatorial bid. Yet four days after asking Sparks for a public defender, Morales told Apple Sport Imports in Austin, where he sought to purchase a used 2000 Mercedes convertible, that he made $20,000 a month as an attorney. (The Statesman reports that, after four rejections, Morales' loan was eventually approved by Compass Bank.) Morales repeated the performance the following week in San Antonio while buying a 2000 Lexus SUV (to replace the 1999 model he traded in on the Mercedes). These acts of deceit were summarized by Sparks as "beyond stupidity."

Ever since his indictment, Morales has claimed to the media that his indigent status is temporary, and that he only needed a court-appointed attorney to tide him over while he raised money -- $1 million, he estimated -- for the first-class legal team he promised to assemble to fight the federal charges. No action has yet happened on that front, though, and prosecutors argued that, even if Morales had the ample income he claimed, he needs to fork over at least $10,000 a month just to make payments on his other debts. (Prosecutors presented no evidence that Morales had in fact failed to make any payments.) Moreover, Morales can no longer legally practice law in Texas, after letting his license lapse for failing to meet continuing education requirements.

Morales' super-spending didn't just strike Sparks as stupid -- the judge seemed absolutely confounded by it, as evidenced by his long pauses in addressing the court. "It's hard to picture exactly what happened," Sparks said at one point during the 45-minute hearing. "I suppose everyone here wouldn't mind having a nice Mercedes convertible." While Morales wasn't called upon to provide his own explanation, his court-appointed lawyer, William Ibbotson, didn't do a stellar job of rationalizing Morales' actions to the judge or the jam-packed courtroom. Ibbotson's main argument for keeping Morales out of the pokey rested almost entirely on Morales' past public service as AG. Of course, Morales is under indictment for allegedly abusing that position's power to glean at least $200 million off the state's $17.3 billion tobacco settlement for his friend Marc Murr, a Houston attorney also now under indictment in the case.

Ibbotson's strongest point was that jailing Morales would make assembling his defense "problematic," but Sparks was intent on treating Morales like any other unreliable defendant. Though Ibbotson argued that Morales wouldn't pose a flight risk, if only because of his high public profile, Sparks and Asst. U.S. Attorney Jim Blankinship begged to differ. "What's holding him here?" the judge asked, citing Morales' financial situation and a possible 80-year sentence if he's convicted. Sparks also agreed with Blankinship that Morales may commit more financial misdeeds if given the chance: "[Morales] can't do anything but commit a crime and carry on like he's carrying on," Blankinship said. Sparks characterized Morales' apparent financial strategy as "spinning gold out of straw."

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Dan Morales, attorney general, Sam Sparks, public defender, tobacco settlement, Marc Murr, William Ibbotson, Jim Blankinship, Mercedes convertible

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