The Texas Observer

The story behind the story of James Dannenbaum, a new UT regent, hasn’t gotten much play outside the Valley, where Dannenbaum has received quite a bit of notoriety. In the interest of shedding some light on the case, here’s our take:

In October, Gov. Rick Perry appointed three new regents to the University of Texas System Board of Regents. The prestigious post usually goes to loyal party members who have donated generously to the governor. One of the new regents is James Dannenbaum, president of Houston-based Dannenbaum Engineering, who has stuffed Perry’s campaign purse with $247,500 since 2000. That’s business as usual. What’s new is that Dannenbaum’s company is embroiled in a border scandal that involves a $21 million bridge that doesn’t exist, Mexican shell companies, and pending legal troubles.

The story begins in 1991 when South Texas voters approved $21 million in bonds for the construction of an international bridge to connect the Port of Brownsville to Matamoras, Mexico. The Brownsville Navigation District tapped Dannenbaum Engineering to manage and engineer the job. Although the firm received $15.4 million, the bridge was never built. Presently, $9.2 million of the $15.4 million simply can’t be accounted for, according to the 2005 findings of a special investigator appointed by the navigation district. The investigator traced the sum to three Mexican shell companies with ties to Dannenbaum principal Louis H. Jones. The only products from the 17 subcontractors hired by Dannenbaum were 49 black binders with a few sheets inside.

In February, the navigation district and Dannenbaum reached a settlement in which the district agreed to surrender its ability to collect on the missing funds. In exchange, Dannenbaum agreed to perform the equivalent of $2.9 million in engineering work on the U.S. portion of the bridge. The company has the right to recover that sum from whatever Mexican company is eventually selected for the Mexican half of the bridge. Navigation district commissioner and attorney Peter Zavaletta voted against the settlement, calling it “indefensible” at the time. “I cannot overstate how upset people were about that settlement,” Zavaletta tells the Observer.

Now Zavaletta is suing Dannenbaum on behalf of nine taxpayers, of which he is one. “My case is a very specific challenge asking the court to rule that the settlement must be declared null and void,” Zavaletta says. He argues that Dannenbaum has violated the settlement because, eight months later, they haven’t bothered to start on the project. Meanwhile, a special grand jury is looking into the possibility of criminal wrongdoings surrounding the bridge deal. As of yet, James Dannenbaum has not been directly implicated in the scandal, although he might at a minimum become a witness in the grand jury probe. “Regarding legal issues, the governor is not aware of any criminal investigation into Mr. Dannenbaum or his company,” says Krista Moody, a spokesperson for Perry. “The governor believes Dannenbaum will serve as a good steward of the people of Texas with integrity and character.”

As you can see it’s a long and twisted tale, typical of South Texas. Adding to the confusion is a credulous Paul Burka, over at Texas Monthly. Yesterday, he reported (the deleted post has been reproduced here) on the BurkaBlog that Zavaletta “has been indicted by a Cameron County jury on a charge of misapplication of fiduciary funds.” Pretty juicy stuff. Only problem is the indictment came down in 1988. And the charges were dismissed against Zavaletta. By his own admission, Burka based his post on a nearly 20-year-old Brownsville Herald article that was faxed to him from Dannenbaum Engineering. Burka did the right thing, retracting his post today and apologizing to Zavaletta. He blamed the mistake on an “extremely blurry” fax.

by Forrest Wilder

This entry was posted on Wednesday, October 31st, 2007 at 5:47 pm and is filed under Gov. Perry, The Valley. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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