A 31-count indictment handed down by a federal grand jury in Dallas last week charges 16 people in a kickback and bribery scandal involving affordable housing contracts. Among those charged was a prominent state lawmaker, a pair of Dallas city councilmen, a city planner, and four real estate developers. Most of the defendants appeared in court this week to enter pleas of not guilty.

The indictments, which were unsealed Monday, accuse 14 defendants of illegal dealings with contractors who were building publicly funded affordable-housing developments. A 15th defendant was indicted on allegations of tax fraud and a 16th on a count of embezzlement. The indictments stem from a two-year probe of Dallas' City Hall by the FBI.

"We place great emphasis on combating corruption committed by public employees and private industry," said Erick Martinez, special agent in charge of the Dallas Field Office of IRS Criminal Investigation. "Conduct like that alleged in the indictment is very disturbing not only because it involves bribery of public officials but also because the alleged conspiracy and fraud included under-reporting federal income taxes and money laundering."

The builder tied to the allegations, Southwest Housing, built low-income housing in the Dallas area under a government program that provides income-tax credits to its backers. Brian L. Potashnik, founder and president of Southwest Housing, turned himself in to U.S. Marshals on Tuesday. His wife, Cheryl Potashnik, and his father, Jack Potashnik, were also indicted. In a press statement, Brian Potashnik pointed to the numerous community improvement projects his company helped foster over the years.

"We have been great citizens to this community for the past 15 years. We have improved the lives of over 10,000 residents of this community, senior citizens, [and] families," Brian Potashnik said. "We have improved the worst neighborhoods in this city. This isn't justice, and we will be vindicated."

Potashnik has hired high powered attorney Abbe D. Lowell, whose client list has included former House speaker Jim Wright, Rep. Patrick Kennedy, former Rep. Gary Condit, and former Washington, D.C. lobbyist Jack Abramoff. Lowell says case prosecutors have "gone overboard" in the case by issuing a 166-page, "novel-type" indictment, filing 31 counts, and charging Cheryl and Jack Potashnik.

"That was cruel," Lowell said in a statement.

If convicted, Potashnik and his wife face a maximum statutory sentence of 130 years in prison and a $3.5 million fine.

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