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Reese Sentenced In Tax Case
February 3, 2001

The Richmond political consultant gets probation and fine, but a three-year FBI probe into political payoffs revealed nothing 



OAKLAND -- A political consultant investigated by the FBI for possible influence peddling at Richmond's City Hall was sentenced in federal district court Friday to probation, electronic home detention and a small fine for filing false income tax returns two years in a row. 

Darrell Reese, who agreed to a plea deal last fall, will serve three years of probation, spend four months on home detention and pay a $1,000 fine. 

He also will shell out roughly $8,000 in restitution to the Internal Revenue Service for underreporting his income. 

The sentence by Judge D. Lowell Jensen in U.S. District Court in Oakland brings to a close a three-year probe of allegations that Reese, 64, had bribed Richmond City Council members in exchange for votes on city contracts dating back to 1992, Reese and his attorney said Friday. 

Matt Jacobs, spokesman for the U.S. Attorney's Office in San Francisco, and FBI spokesman Andy Black both declined comment. 

Reese expects to begin serving his time in two weeks. A retired Richmond firefighter, he will be free during the day to continue his work as a political consultant for the influential Richmond firefighters union and other clients, he said. 

"I broke the law -- it's the kind of law that millions of people break regularly -- but it was not political corruption," Reese told the Times, breaking months of silence. "If I was guilty of bribing politicians, then I would have been indicted. They never indicted me, and I was the one who supposedly was doing the bribing." 

Reese was among dozens of Richmond politicians and city officials subpoenaed to appear before a federal grand jury or questioned by the FBI in late 1999 concerning allegations that Reese illegally influenced city leaders to win lucrative contracts for his consulting clients. 

Reese's false tax statements were discovered by the IRS during the probe. 

The U.S. Attorney's Office charged Reese on Oct. 11 with one count of filing a false income tax return after the IRS found he failed to report a total of $40,000 in consulting income he received in 1996 and 1997. 

Reese, who had no criminal record, pleaded guilty to a single felony charge as part of a plea agreement. 

"The defendant in this matter has clearly accepted responsibility," Jensen said before announcing the sentence. 

Assistant U.S. Attorney Ben Burch argued unsuccessfully for a "somewhat higher fine," saying Reese has a net worth of $400,000. 

"The fine should be commensurate with his financial situation," Burch said. 

Defense attorney Robert Breakstone countered Burch's argument, saying Reese had suffered enough considering the three-year FBI probe, with its attendant negative publicity and costly attorney's fees. 

"This has been a learning experience for Mr. Reese," Breakstone told the judge. "You won't see him back here." 

The FBI ended its probe in exchange for Reese's guilty plea, Breakstone said after Friday's hearing. Reese is required to remain under electronic surveillance at his Rodeo home until May. 

After the sentencing, Reese said the FBI told him the probe started two years before federal agents swept into Richmond in October 1999 with subpoenas and questions about possible bribes and political payoffs. 

"It was an intensive investigation," Reese said. "They took all of our records going back seven years trying to find something illegal. They wiretapped my phone. They listened in on my most intimate moments. At the end of the day there were no criminal indictments against me." 

Reese said he knows of four council members who were asked if they had received payoffs from him. 

He went on to condemn the timing of the FBI's sweep, two weeks before a November 1999 City Council election in which Reese, a longtime power broker in Richmond politics, carried a significant stake. 

Just one of four candidates backed by the firefighters union, International Association of Firefighters Local 188, went on to win the election. 

"It changed the dynamics of the election without a doubt, without a question," Reese said. "There is supposed to be some kind of integrity and sanctity to elections in this country. They violated it. And that's the great evil." 

Reese's federal prosecution comes on top of a $17,000 state fine paid by the Richmond firefighters union for misrepresenting campaign donations in the 1997 election. Reese admitted to state officials that he incorrectly reported proceeds from a circus fund-raiser as coming from 96 retired firefighters in order to circumvent state campaign contribution limits. 

Despite his recent legal problems, Reese has remained active behind the scenes. 

He has been in negotiations with the city for a salary increase for the firefighters and for a new state retirement benefit for the city's public safety employees. 

Reese has also taken an interest in the debate about whether Hercules should withdraw its schools from the rest of the West County district, said Councilman Ed Balico. 

The firefighters union in November contributed $399 to the Hercules School Rescue Committee, according to recently filed campaign finance statements. 

The union, with Reese as its adviser, has also been a longtime financial supporter of Black Men and Women, a small but influential group of Richmond's black politicians. 

Reese's federal conviction doesn't trouble the group's president, Lonnie Washington. 

"He has always been straight and up front with us," Washington said. "I have no reason to believe that he would attempt to do anything illegal with us. 

"I don't really think that at this point or any point in the future we would sever our relationship with him because of his personal affairs. I trust him, as far as our relationship is concerned." 

Councilman Tom Butt, a longtime critic of Reese, said he doubts the FBI is through with Richmond. 

"My sense is that there aren't any major bombshells that are going to come from (the probe)," Butt said. "They're continuing to monitor politics in West County, but I'd be surprised if we see any indictments." 

Reese vowed Friday to continue playing a role in Contra Costa County politics. 

"I'm going to be involved in campaigns," Reese said. "I'm going to be doing other activities that are legal, obviously."  

Shawn Masten covers Richmond. Reach her at 510-262-2725 or e-mail smasten@cctimes.com