JACKSONVILLE, Fla. – The attorney for state Rep. Reggie Fullwood, D-Jacksonville, said he disputes the facts of his client's indictment on 10 counts of wire fraud and four counts of failure to file federal income tax returns.
Fullwood pleaded not guilty to those charges in federal court Friday afternoon.
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According to the indictment, while Fullwood was seeking election to the Florida House of Representatives, and during subsequent re-election campaigns, he made numerous electronic funds transfers from his campaign bank account and a company owned by Fullwood, Rhino Harbor LLC.
According to Fullwood's attorney, Robert Willis, the federal government wrongfully applied felony wire fraud charges to a state election code violation.
"We have an honest disagreement on how the law applies. We believe an election code misdemeanor is the only fit," Willis said. "We don't believe the facts support wire fraud, and we are in the process of filing motions to dismiss the charges."
Prosecutors said Fullwood used the money from the campaign account, about $65,000 in financial contributions, for personal expenditures, including at restaurants, grocery stores, retail stores, jewelry stores, florists, gas stations and liquor stores. The indictment also alleges that in order to conceal his fraudulent embezzlement of campaign funds, Fullwood submitted false and fraudulent campaign expenditure reports to the state of Florida, which included inflated and/or nonexistent campaign expenses.
"It was further part of the scheme and artifice to defraud that Fullwood would use funds he had unlawfully obtained from the Reggie Fullwood Campaign account by using an ATM card issued on the Rhino Harbor bank account to pay personal expenses or withdraw cash at various locations, including restaurants, grocery stores, retail stores, jewelry stores, florists, gas stations, ATMs for cash withdrawals, and liquor stores," the indictment said.
INDICTMENT: U.S. vs. Reggie Fullwood
Fullwood was allowed to post $10,000 bond and be released from custody.
Under Florida law, a candidate or the spouse of a candidate may not use funds on deposit in a campaign account to defray normal living expenses for the candidate or the candidate’s family, other than expenses incurred for transportation, meals and lodging during travel in the course of the campaign.
"You're not supposed to commingle the funds, and if you do that, we're going to say that's the standard by which we measure your fraud on the contributors," former federal prosecutor and current defense attorney Curtis Falgatter said. "If you violate that state statute, which was only administrative, we also are accusing you of criminal fraud."
Fullwood is also charged with four counts of willful failure to file personal federal income tax returns for calendar years 2010 through 2013.
If convicted, Fullwood could face $2.9 million in fines and up to 204 years in federal prison, which includes 20 years for each wire fraud offense, and a year in prison for each failure-to-file charge. But Falgatter said that with no criminal record, Fullwood would likely only face one year in prison.
The indictment also seeks a $65,445 monetary judgment, which is the total of the wire transfers.
“Public officials, whether elected or appointed, hold positions of trust in the eyes of the public. That trust is broken when these officials commit crimes,” IRS Special Agent in Charge Kim Lappin said. “No public official gets a free pass to ignore the tax laws, and IRS-CI works to ensure that everyone pays their fair share.”
Fullwood has represented District 13 -- Jacksonville's urban core, Arlington and San Marco -- since 2010. He had to run in a special election last year because he missed the qualifying deadline for the November 2014 election.
Before becoming a state representative, Fullwood served on the Jacksonville City Council.
I-TEAM looks into Fullwood's finances
State lawmakers are required to file a financial disclosure form with the state every year of service.
During his first two years in the House, Fullwood listed income from Rhino Harbor, LLC, the company that federal prosecutors say he illegally transferred campaign funds to. The disclosure forms list Rhino Harbor as a property development and consulting firm and they state that Fullwood was president of the company.
His income was listed as $46,600 in 2010, but by 2012, it dropped to $14,600.
According to the Florida Division of Corporations, Rhino Harbor, LLC was formed in 2002 by Reggie Fullwood. But over the next eight years the state dissolved the company at least four times between 2003 and 2010, because a required annual report was not filed.
In 2006, 2007, and 2009, paperwork was filed to reinstate the company. But after Rhino Harbor was dissolved in 2010, it has not been reinstated with the state of Florida.
Fullwood's state financial disclosure forms also list Metro North Community Development District as a source of income, dating back to 2010. It's website said it is a nonprofit focusing on real estate and community development and Fullwood is the executive director.
His salary has grown over the years and was $75,000 in 2014.
Fullwood self-reported his net worth at $392,160 for 2014, the most recent year on file with the Florida Commission on Ethics. His net worth has hovered around $400,000 in each of his preceding annual financial disclosure reports.
FULLWOOD'S FINANCIAL DISCLOSURES: 2010 | 2011 | 2012 | 2013 | 2014
The I-TEAM talked to Jennifer Carroll, News4Jax political analyst, about the complexity of filing these financial disclosures with the state.
"With the state financial disclosure form, it is not so cut and dry like people might think it is. But no representative receives permission and instructions on how to fill out the information. So therefore, people do it how they think it should be," Caroll said.
However, Matt Carlucci, the vice chair of the Florida Commission on Ethics, disagreed. He said the financial forms have adequate instructions and if a public official has any questions, they can contact the ethics committee.
Fullwood's history of paperwork problems
The I-TEAM found history of Fullwood not filing required paperwork properly.
When Fullwod tried running for re-election in 2014, he ran into a problem. He filed most of his paperwork one day before the deadline.
But a notary had made an error on his financial disclosure form.
The Florida Democratic Party arranged for a second notary to redo the form and submit it. But, that second notary didn't check a required box.
By the time Fullwood learned of the error, he was back in Jacksonville, with 10 minutes to go before the deadline, and didn't qualify.
Since no one else had filed to run for his seat, the governor set a special election.
Fullwood beat city councilman Johnny Gaffney in a Democratic primary in December 2014. He then beat Republican Lawrence Jefferson in a general election in February 2015, with turnout just under 9 percent.
The I-TEAM received a statement from Steve Crisafulli, the speaker of the Florida House:
"Rep. Fullwood has been indicted but has not had his day in court yet. These are serious charges that he must answer."
Fullwood served on the Jacksonville City Council from 1999 to 2007.
When he was first elected, he was 24 years old and his online biography states he was the youngest person ever elected to the council.