Anti-Fraud Unit Would Be Hobbled by Funding Cut, Director Says

Editor's note: This story has been updated throughout.

The effort to ferret out fraud and corruption in state government will sustain a "huge blow" if Gov. Rick Perry carries out his threat to eliminate state funding for the Travis County-based Public Integrity Unit, the lead prosecutor in charge of it said Tuesday.

Assistant Travis County District Attorney Gregg Cox, the longtime director of the anti-fraud unit, said the $7.5 million it expected to receive from the state for the next two years is needed to support prosecutions in more than 400 cases, ranging from insurance fraud to public corruption investigations.

Perry is threatening to use his line-item veto authority to wipe out the funding unless Travis County District Attorney Rosemary Lehmberg, a Democrat who recently served a jail sentence for a DWI conviction, resigns from her post and allows the governor to appoint her successor. Lehmberg has previously said that she would not resign.

Officials close to the governor confirmed that he planned to zero out the integrity unit's state financing if Lehmberg did not step down. Critics say that shocking video of the district attorney's belligerent behavior during her arrest and initial jailing demonstrates that she is unfit for office. Lehmberg has said she is seeking treatment since being released from jail.

The deadline to veto bills, including line items in the state budget, is this weekend. Perry spokeswoman Allison Castle said the governor's office is "going through the budget line by line, and the governor has deep concerns over the integrity of the Public Integrity Unit." 

If the funding were wiped out, Lehmberg and her office would still have the authority to prosecute the cases, but its ability to do so would be greatly hobbled, Cox said. 

"That would be a huge blow to this caseload,” Cox said. "We would have to turn cases away. There would definitely be some that would have to be shut down.” Cox said there are 427 cases pending with the Public Integrity Unit, about half of which have not yet reached the indictment stage. Some 35 people — including 10 assistant district attorneys, seven certified peace officers and six forensic accountants — work for the unit, he said.

The unit is broken into three separate divisions. One deals with insurance fraud, involving cases, for example, when agents are accused of defrauding ratepayers. Another handles motor fuels tax fraud. And a third deals with general state cases, which typically involves accusations of fraud directed at state programs but can also include allegations of public corruption involving politicians or their staffers.

While those cases generate a lot of attention, they are a relatively small part of the total load. Cox said there are only 16 such cases pending, about 5 percent of the total.

“We’re a sort of a high-level white collar crime unit focusing on crimes affecting state government or the insurance business,” he said.  

Some Republicans have raised concerns for years that the Public Integrity Unit is based in Travis County, a Democratic stronghold. They've accused it of being a politically charged operation, and its funding has been a political football under both Lehmberg and her predecessor, Ronnie Earle. 

In the last legislative session, repeated efforts by some lawmakers to move the unit from Travis County to the Texas attorney general's office gained little traction. 

Sam Bassett, an Austin defense lawyer and former appointee to the Texas Forensic Science Commission, said he was worried that Perry's intervention could disrupt the work of the district attorney's office and leave elected officials across the state without oversight.

"I just worry that the defunding of an important unit like this will at least interrupt, if not eliminate, some of the oversight into the conduct of public officials," he said.

One investigation launched by the Public Integrity Unit involves the Cancer Prevention and Research Institute of Texas, which came under fire over revelations that cancer research money was awarded without proper oversight. Democrats say the threat to cut off the unit's money is inappropriate because Perry has ties to CPRIT appointees and grant recipients.

"For Perry to say I’m closing down the investigation shop is outrageous,” said Democratic activist Glenn Smith, who brought the initial CPRIT complaint to the attention of prosecutors.

Cox confirmed that the CPRIT investigation is still under way but would not elaborate on who might be in its crosshairs.

"We have already started the presentation of that case to the grand jury. It’s ongoing," Cox said. "To comment further, I think, would just be inappropriate.” 

Perry's office declined comment on the attack from Democrats.