EAST TEXAS (KTRE) - During the punishment phase for Walter Diggles, Anita Diggles, and Rosie Diggles, a federal judge sentenced Walter Diggles to nine years in a federal prison for financial crimes including wire fraud, theft concerning programs receiving federal grants, and money laundering.
Anita and Rosie Diggles were each sentenced four-and-a-half years in a federal prison. All three of the family members were ordered to report to the federal detention facility on July 10. They will each have three years of supervision upon release.
The punishment phase started Tuesday morning at the Ward R. Burke United States federal courthouse in Lufkin.
"We respect the position of the court and our family will be appealing this decision with the 5th Circuit Court and we expect that appeal to happen immediately," said Walter Diggles.
Each of Walter Diggles' nine-year prison sentences for the 16 charges will be concurrent, meaning that he will serve them at the same time. Rosie Diggles' sentences for her 12 charges.
Walter, Anita, and Rosie Diggles will be responsible for paying restitution in the amount of $1.3 million. Walter Diggles will be responsible for paying the largest part of that total.
"The defendants stole from the taxpayers, and these kinds of frauds take money away from real people - disaster victims," Joseph Brown, the U.S. Attorney for the Eastern District of Texas said in a press release." This was an appropriate sentence, and hopefully, it will help deter some of this type of behavior the next time."
"Offenders who abuse the public trust inherently are more culpable," Tamera Cantu, the IRS Special Agent in Charge of the Dallas Field Office said in a press release. "The defendants made a conscious decision to deceive and benefit personally at the expense of the citizens of the State of Texas. Today's sentences underscore our commitment to work in a collaborative effort to promote honest and ethical government at all levels and to prosecute those who violate the public's trust."
"We're they're required to pay restitution. Obviously we'll be settled on appeal. One of the problems again with the government giving out a big sentence like this, it's going to be very very hard to recoup that money," Ryan said. "I mean Walter will be in his mid-70s when he's done with this, will not likely be employable. Not sure how the government is going to thinks they're going to get the money."
In August 2017, Walter Diggles was convicted of financial crimes on 11 counts of wire fraud, two counts of theft concerning programs receiving federal funds and three counts of money laundering.
His wife Rosie was found guilty on 10 counts of wire fraud, one count of conspiracy to commit wire fraud and one count of money laundering. Anita Diggles was found guilty on one count of conspiracy to commit wire fraud.
All three appeared before Judge Ron Clark. Clark told the court he received a wide diversity of character letters, far more than any other case, on all three defendants.
FBI Special Agent David Gipson took the stand on behalf of the government. He helped explain to the judge the financial evidence such as checks, bank statements, and charts created to establish the flow of money from DETCOG to the foundation and the church where Walter Diggles was an executive director for all three. He testified saying $1,324,000.49 were determined in what's called an overcharge. According to Gipson, for Anita and Rosie Diggles, that money is $971,143.57 in overcharge.
"According to information presented in court, the defendants devised a scheme to obtain and make personal use of federal block grant funds that Congress appropriated following hurricanes Rita, Katrina, Ike, and Dolly," a press release stated. "These funds were made available to the State of Texas, which in turn, contracted with several councils of government within the state to assist in administering and distributing the funds. Walter Diggles was the executive director of the Deep East Texas Council of Governments during this time and used his position to approve inflated billing rates and requests for reimbursement of federal block grant funds while Rosie Diggles and Anita Diggles prepared many of the requests."
The press release stated that Walter Diggles also "engaged in activities and approved requests for block grant funds that were fraudulent in nature, and all the defendants spent significant amounts of the excess funds on personal expenses."
Walter Diggles' defense attorney argued that the government doesn't have evidence saying that money went to personal use at all. He argued against Gipson's method to calculate those amounts.
After lunch, Judge Clark clarified to the courtroom punishment ranges from 20 years or more.
The case was investigated by the Federal Bureau of Investigation, Internal Revenue Service-Criminal Investigation, the U.S. Department of Homeland Security/Homeland Security Investigations, the U.S. Department of Housing and Urban Development, and the Texas State Auditor's Office, and it was prosecuted by Assistant U.S. Attorneys Tom Gibson and James Noble.