KINGMAN - What started out as a business partnership developing real estate in Kingman turned into a federal indictment of U.S. Rep. Rick G. Renzi.
The 26-page indictment, announced Thursday, claimed 35 counts ranging from fraud, extortion and money laundering against the Arizona First Congressional District Republican.
"Public corruption creates a cynicism for government and unfairly stains legions of honest public servants," Alice S. Fisher, assistant attorney general in charge of the criminal division, said in a news release. "These charges represent allegations that Congressman Renzi defrauded the public of his unbiased, honest services as an elected official."
Kelly Kramer, the attorney for Renzi, told the Associated Press Renzi would "fight these charges until he is vindicated and his family's name is restored."
A federal grand jury in Tucson returned the indictment on Wednesday against Renzi, James W. Sandlin and Andrew Beardall. The indictment followed an extensive investigation dating back to June 2005, when the Federak Bureau of Investigation received information of criminal activity by the three co-defendants.
Each defendant will have an arraignment hearing at 11 a.m. on March 6 in Tucson.
The indictment charged Renzi and Sandlin in 27 counts with honest services wire fraud, extortion and money laundering and conspiracies to engage in these acts based on Renzi's active involvement in the sale of Sandlin's property in Cochise County to a participant in a federal land exchange proposal.
Renzi, 49, of Flagstaff and Sandlin, 56, of Sherman, Texas, co-owned Renzi Investments - later renamed Fountain Realty & Development - in 2001. The company was created to develop property in Kingman. In 2003, Sandlin, a real estate investor, bought out Renzi's interest for $200,000 and a note for $800,000.
The indictment charged that in 2005 Renzi insisted that two investment companies interested in doing a federal land exchange in Arizona purchase Sandlin's property when Sandlin still owed Renzi $700,000 in principal on the note. If the entities did so, Renzi would lend his support on land exchange legislation using his authority as a member of the House of Representatives Natural Resources Committee.
What Renzi allegedly didn't disclose to the entities was the $700,000 debt.
The indictment also claimed Renzi failed to disclose to the second entity the $733,000 he received from Sandlin at the commencement and close of escrow in the spring and fall of 2005, after that group purchased Sandlin's property.
Following the $733,000 in payment from Sandlin, Renzi allegedly failed to disclose to Congress his earnings from Sandlin in his 2005 financial disclosure statement.
The indictment traced the manner in which Renzi and Sandlin used the alleged proceeds of the above unlawful activities for their own personal and business uses.
The remaining counts of the indictment charge Renzi and Beardall, 36, of Rockville, Md., with violations of federal insurance laws by embezzling more than $400,000 in insurance premiums from the trust account of the Patriot Insurance Agency Inc.
The money allegedly funneled through the Renzi family-owned business was used to fund his first Congressional campaign in 2001 and 2002.
The indictment also allege Renzi and Beardall subsequently made false statements to influence state regulatory investigations from his position.
"This indictment demonstrates a commitment by the Department of Justice to root out public corruption wherever it is found," U.S. Attorney Diane J. Humetewa said.
"This commitment is grounded in a system of justice where all individuals, regardless of office or title, will be held accountable before the law, and which holds our elected leaders in whom we entrust great confidence to the very highest standards of ethical conduct," she said.
Convictions for honest services wire fraud and extortion each carry a maximum penalty of 20 years in prison; wire fraud conspiracy carries a maximum penalty of 5 years in prison; and money laundering conspiracy and concealment money laundering each carry a maximum penalty of 20 years in prison.
A transactional money laundering conviction for Renzi and Sandlin carries a maximum penalty of 10 years in prison.
Convictions for false statements to an insurance regulator and misappropriation of insurance premiums each carry a maximum penalty of 10 years in prison, and conspiracy to commit these insurance offenses carries a maximum penalty of 5 years in prison.
"Regardless of one's status or position, when a public official elects to betray the public's trust for personal gain, the very core of how and why our system of government operates is immediately and negatively impacted," FBI Special Agent in Charge John E. Lewis said.
"Restoring the faith and trust in how our government is supposed to operate, at all levels, is of paramount concern today as is evidenced by the present indictment and will continue to be one of the FBI's chief concerns far into the future," he said.
