Trial begins for man accused of $1.8 million federal stimulus fraud
Under the guise of bringing wind power and green jobs to Jonestown, Charles Malouff told a lie that could send him to prison for life, prosecutors said.Malouff, now 55, obtained $1.8 million in federal stimulus money for a wind energy project, even though the former police officer had no expertise in turbines and no project to bring to life, authorities said. What he did have: a romantic relationship with Mary Jo Woodall, 57, then a Texas Comptroller employee who helped him navigate the grant process at her office with a falsified application, said Holly Taylor, an assistant district attorney.
“She didn’t sign the grant, but she wrote it. There was a conflict of interest,” Taylor said Wednesday during opening statements in Malouff’s criminal trial in Travis County District Court.
In 2011, Malouff was charged with a first-degree felony of securing execution of a document by deception. According to authorities, Malouff wooed Jonestown officials — the city technically applied for the grant — with promises of $90,000 in annual energy savings, and made his project sound ready for construction, when in fact it was still in the research stages. Malouff, a former police officer with the Bertram Police Department and the Bosque County Sheriff’s Office, told Jonestown officials he’d take care of the Department of Energy grant and construct the project.
Defense attorney Tamara Needles told jurors Malouff and Woodall did have a relationship, but Woodall did not help write the grant. “Her job was that of a cheerleader, rah, rah, to help all doing grant applications,” Needles said. She said a separate state comptroller committee reviewed and approved grants.
At the time, Malouff promoted the wind energy project for his company, CM Alternative Energies, and was working with a University of Texas professor and his students to build a prototype for the turbines. Only two of the turbines were ever installed, but did not operate, according to testimony.
A tearful Dana Malouff McCoy, Malouff’s daughter who testified she hasn’t spoken to her father in more than two years, was the state’s first and only witness Wednesday. She said her father asked her to become the company president during the grant application process, but she declined because she already had a job. She said her father believed it’d be an advantage during the application process to have a woman as head of the company. And because he was a convicted felon, that would not look good. Eventually she agreed to help her father and attended two wind energy seminars. “I was president of the company on paper … I did not know anything about wind energy,” she said. McCoy, then a Medicaid fraud investigator for the Attorney General’s Office, said her initial role in the company was hands-off. “I signed documents as needed during lunch in the parking lot of my office. He (Malouff) ran the company,” she said.
She testified that Woodall was instrumental to the company. “Mary Jo’s role was being the grant writer, in helping my dad,” she said. McCoy said she became concerned with all operations and she differed greatly with her father’s tough style of management.
Assistant District Attorney Susan Oswalt said the trial may take three weeks. Woodall’s trial on the same charge has not been set. Malouff is serving time in federal prison for possession of a firearm and destructive devices, including hand grenades, by a felon. He pleaded guilty to the charge in July 2012 in exchange for a 2 1/2-year sentence. At that time, he was on probation for a 2007 arrest for unlawful transfer of a firearm.
The city of Jonestown has also filed two lawsuits against Malouff and his company alleging the company broke a December 2010 agreement to provide a wind energy project. The first suit resulted in a temporary order allowing the city to retain the supplies and equipment purchased for the project.