REGIONAL REPORT
SOUTH CENTRAL
Housing Scandal
Rocks Dallas
BY DANA ENFINGER
AFFORDABLE HOUSING FINANCE • MARCH 2008
DALLAS — Sixteen people have been charged in an extensive
bribery and extortion scheme involving
affordable housing in Dallas. Prosecutors
allege that former Dallas Mayor Pro Tem Don
Hill, Hill’s current wife and former political
consultant Sheila Farrington, state Rep. Terri Hodge, and
others took bribes from low-income housing developer
Brian Potashnik and his wife, Cheryl Potashnik.
In exchange, their firm, Southwest Housing, allegedly
received multimillion-dollar contracts to build apartments
in Dallas. The Potashniks and other defendants have pleaded
not guilty.
The investigation is two years old, but the federal
indictments were unsealed last fall.
Prosecutors claim that Southwest Housing received the
support of state and local officials by bribing them. The
Potashniks used the approvals to receive low-income housing
tax credits to build apartments in south Dallas.
Prosecutors accuse some of the defendants of “disguising
payments to make them look like gifts.”
“We are not guilty of any of the things they have alleged
here,” said Don Hill, according to CBS 11 News. “We haven’t
had the chance to tell the world that we are not guilty …
We’re just going to prepare for that fight—to prove our innocence.”
Evidence in the case includes more than 30,000 wiretapped
phone calls, 200 boxes of documents, 100 consensual
recordings, surveillance photographs, and videos of city
council meetings. The FBI also seized information mostly
from city computers, which equates to an additional
238,000 boxes of documents. This information was released
to defense attorneys last December.
Also in December, a judge permitted the defendants
and their lawyers to get affidavits, which FBI agents began
using in 2005 to obtain search warrants and use wiretaps.
The affidavits are not being released to the public to protect
the privacy of informants who interacted with the defendants,
according to prosecutor Marcus Busch. At least one
former council member, Leo Chaney, has admitted being a
witness.
In another Dallas housing scandal, Darren Reagan, the
founder of the Black State Employees Association, has been
accused of stealing money from the Dallas Housing
Authority’s Sec. 8 program.
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