BEAUMONT, TX (KTRE) - It was announced in federal court Monday that a DETCOG official and his wife and daughter are charged with 28 counts involving wire fraud and theft.
Walter Diggles, 62, Rosie Diggles, 61, and Anita Diggles, 39, are charged with one count of conspiracy to commit wire fraud from Nov. 2006 to Nov. 2012 as part of a scheme to obtain money involved with disaster relief, according to court testimony in Beaumont. Walter Diggles is also charged with 10 counts of wire fraud, one count of theft concerning programs receiving federal funding and three counts of engaging in monetary transactions and property derived from unlawful transactions. Rosie Diggles is also charged with nine counts of wire fraud, one count of theft concerning programs receiving federal funding and one count of engaging in monetary transactions and property derived from unlawful transactions.
According to a US Attorney's Office press release, the trio devised a scheme to make personal use of federal block grant funds that Congress appropriated following Hurricanes Rita, Katrina, Ike and Dolly. The funds were made available to the state, which in turn contracted with several councils of government to assist with distributing the funds.
The indictment alleges Walter Diggles approved inflated requests for reimbursement and Rosie and Anita Diggles prepared many of the requests. It alleges Walter Diggles approved requests for fraudulent block grant funds and all three spent the excess funds on personal expenses.
The indictment includes a notice of forfeiture for $1.3 million from the defendants.
A statement released Sunday by Executive Director of the Deep East Texas Council of Government Walter Diggles calls recent indictment "a fundamental misunderstanding of how federal and state block grants work."
The statement references a Dec. 2 indictment handed down by the United States Attorney's office for the Eastern District of Texas.
"Money provided by DETCOG block grants are given on a reimbursement basis rather than a contract basis. The entire indictment reflects a misunderstanding of this simple fact," the statement said.
All three of the Diggles pleaded not guilty in a court hearing Monday before Magistrate Judge Keith Giblin. Giblin set a final pre-trial hearing for Feb. 4 at the Lufkin federal courthouse.
The FBI raided Diggles' home and the DETCOG office, both in Jasper, in February 2014. Diggles said after that raid that they were looking at inner-party transactions "that may have some impropriety."
According to DETCOG President Wes Suiter, Diggles has been placed on paid leave.
The statement says Diggles will answer to the indictment in open court Monday afternoon and plans to "defend the reputation of DETCOG ... that has undergone countless audits of its finances before and after the raid in February of 2014".
Diggles and his family members will enter pleas of not guilty, the statement said.