Former Texas Attorney General Dan Morales has pleaded guilty to mail fraud and filing a false tax return and will serve a four-year prison sentence.
U.S. Attorney Johnny Sutton said as part of the mail fraud plea, Morales admitted backdating a government contract and forging government records related to the state's tobacco lawsuit. Morales is accused of trying to funnel millions of dollars in legal fees from the $17.3 billion settlement to his friend Marc Murr, who is awaiting trial.
Morales, 47, also admitted he filed a false income tax return in 1998 when he claimed taxable income of $39,734. That was the year he allegedly transferred $400,000 from his campaign funds to his personal account.
Sutton, attorney for the Western District of Texas, said Morales' plea should send a message to citizens and other public officials.
"It doesn't matter how powerful you were. Nobody is above the law," Sutton said.
The plea culminates more than four years of investigation by the FBI and Internal Revenue Service. However, Sutton would not say how the plea might affect Murr's case.
The indictments were returned in March against Morales and Murr, and both had pleaded not guilty.
Mike Ramsey, who represents Murr, said that Morales' plea could benefit his client.
"If Dan tells the truth, it's very, very good for us. Murr earned every cent he ever contracted for. I don't think there's any case left," said Ramsey, a Houston lawyer.
Ramsey said he had a meeting already scheduled with prosecutors for today.
The indictment charged that Morales and Murr fabricated and backdated a bogus contract to make it appear that Murr was entitled to 3 percent of the state's settlement, or $520 million.
Other lawyers in the case said Murr did little, if any, work on the litigation. An arbitration panel awarded those lawyers $3.3 billion in legal fees, paid by the tobacco companies, and awarded Murr only $1 million.
After then-Attorney General John Cornyn started investigating the contract, Murr waived his claim to the $1 million award.