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Kwame Brown pleads guilty to bank fraud, campaign charges

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Local,DC,Liz Farmer,Alan Blinder

Former D.C. Council Chairman Kwame Brown pleaded guilty to a pair of charges Friday — including a felony bank fraud count — and acknowledged that he had erred when he falsified documents to secure a pair of loans.

“Six years ago, I made some very serious mistakes in judgment,” a tearful Brown told reporters after he entered a guilty plea before U.S. District Court Judge Richard Leon. “I want to apologize from the bottom of my heart to all those who I have let down.”

In a packed courtroom, Brown, appearing gaunt and humbled, wiped his eyes and spoke in a voice barely above a whisper. Former aides — including Megan Vahey, who served as Brown's chief of staff, watched the proceedings from the front row — though Brown's wife and children were not present.

Brown, who signed a plea agreement with prosecutors Wednesday, admitted to inflating his income artificially to help gain approval for a home equity loan, as well as a loan to purchase a 38-foot boat called Bullet Proof.

Brown’s path toward a felony conviction began in September 2005 when he applied for a $184,000 line of credit on his home from Industrial Bank, faxing the documents from his D.C. Council office.

In his application, he included an employment verification form and claimed that he was an unnamed company’s “vice president of strategy” and made $3,000 per month from the job. He also told the bank that he was due to receive a $10,000 raise in 2006 and that he had “great” odds of continued employment.

But Brown held no such job. Instead, he forged the name and signature of a college friend, labeling the person as the company’s president.

“Brown filled out and submitted this form with the specific intent to overstate his annual income in an effort to ensure that Industrial bank would approve his loan application,” prosecutors wrote in a filing that Brown acknowledged was accurate. “Brown believed that the 2005 loan application would not be approved without artificially inflating his income.”

Ultimately, Industrial Bank approved a loan for $166,000, an amount that prosecutors said has since been paid back.

Brown also acknowledged that he falsified a federal tax document when he sought a $56,000 loan for a boat in 2007.

Although Brown was making $35,000 in private life, he altered a Form 1099 to say that his income from the job was $85,000.

Industrial Bank again approved a loan, prosecutors said, on the basis of Brown’s false claims.

Brown is scheduled for sentencing on Sept. 20, and under his plea agreement with prosecutors, he would face up to six months in prison on the felony. Leon, though, has wide discretion in determining Brown’s sentence, and he could opt for harsher sanctions.

Brown quit his post as the District’s second-ranking official Wednesday afternoon, and prosecutors revealed the felony charge hours after he privately agreed to plead guilty.

Brown’s legal troubles, though, were not limited to the bank fraud count.

In a separate proceeding in D.C. Superior Court, Brown pleaded guilty to aiding and abetting an unlawful cash campaign expenditure.

Between August 2009 and May 2010, an unidentified person wrote five checks — with Brown's authorization — for up to $5,000 to boost Brown's campaign. 

Brown's voice was notably softer in his second court appearance, with few people able to understand his guilty plea in Judge Juliet McKenna's courtroom.

In his first extensive remarks since he abruptly left city government, Brown said that the campaign finance charges were unusual.

“I am guilty of knowing that poll workers and others received more than $50 in cash payments for doing campaign work, which is and has been done in this city for years,” Brown said. “I believe I am the only candidate who has ever been charged with a misdemeanor [for it].”

Brown acknowledged that he has a challenging road ahead.

"Today, I am taking the first steps in regaining the trust and respect of the people I serve and love," Brown said. "Today, I hold my head high, not because of any pride that I may have in my heart, but it’s because I am in God’s hands, and God is able."

U.S. Attorney Ronald Machen has not commented on Brown's guilty pleas, but he will hold a 4 p.m. news conference.

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