Former Houston Treasurer indicted for 31 counts of embezzlement

This week, the Department of Justice released a 24-page indictment against former City of Houston Treasurer Jess George Adams, after a federal grand jury in Anchorage returned an indictment on March 21, 2023.

In the charging documents, the DOJ charged Adams with 31 counts of embezzling more than $1.16 million from the city and a former employer, identified only as an equipment company in near-by Wasilla city, from 2015 to 2022.

The indictment, which was returned last week but released on Wednesday, includes 17 counts of wire fraud, 8 counts of money laundering and 6 counts of tax evasion. The indictment alleges that from 2015 through 2018, while Adams served as the Treasurer for the City of Houston, assigned with bookkeeping responsibilities and administrative access to the City’s accounting records and software, he used this access to direct electronic transfers from the City’s bank account to a personal account in his name, maintained by Adams to hide the embezzled funds.

It is further alleged that Adams used fictitious entries in the City’s accounting software to make it appear as though these payments were made for legitimate business expenses.

In October 2018, Adams was placed on administrative leave, and later resigned his position in November 2018. A year later, Adams allegedly was employed as a bookkeeper by a local equipment company, where he again had access over the company’s accounting records and software.

The indictment charges that Adams used this access to direct electronic transfers from the company’s bank account to other personal accounts that Adams opened in his name to hide the embezzled money. To conceal his activity, it is alleged that Adams used false entries in the company’s accounting software to make it appear as though these funds were transferred for the payment of legitimate business expenses.

Adams allegedly laundered the embezzled money he obtained from the equipment company by making several wire transfers from his personal bank account to other accounts, each at a value greater than $10,000.

According to the indictment, Adams was a former seasonal tax return preparer for a national tax advisory company. According to the indictment, he filed false individual income tax returns for tax years 2016 through 2021, which did not disclose the additional income he diverted to himself in his attempt to conceal his embezzlement and evade the assessment of income taxes.

Meanwhile, the current Mayor of Houston, Carter Cole, released a statement regarding the indictment. In his statement, Mayor Cole says that he and Deputy Mayor Mike Adams, who is of no relation to the former treasurer, had never received any information about the active federal investigation in Adams’ alleged criminal activity while serving on the city council the year prior.

“After being elected to serve as your Mayor, and upon gathering enough information about the investigation, an Executive Session was held to notify the newly elected City Council. Deputy Mayor Mike Adams and I shared what we had learned at that point, which was not much. The current City Council was made aware of the federal investigation and was admonished not to disclose the information outside of the City Council.”

Mayor Cole said that Deputy Mayor Adams was tasked to keep the council up to date on the investigation, and has assisted the city through the investigative process, and better positioned the city to be actively involved in the legal proceedings.

He announced that at an upcoming regularly scheduled city council meeting, there will be an update of the available facts surrounding the indictment that will be read into the record.

Houston City Code, HMC 2.14.090 N, requires insurance in case of crime, and Mayor Cole stated that $272,501.00 minus the required deductible amount was collected from the insurance policy for these crimes.

“The city received that payment in late June 2021, which was incorrectly appropriated in a budget ordinance before the funds were actually received. That previous administration’s action caused a problem for the accounting of city finances, in fact from June 2021 to March 2023 all bank reconciliation stopped.”

The US Attorney for the District of Alaska offered a choice to be a silent party and spare the city the public scrutiny that could be involved in a high-profile case. Mayor Cole said the decision was made to be publicly named as a victim so the citizens of City of Houston would be informed of the criminal activities so the City Council could move the City of Houston forward.

If convicted, Adams faces a maximum penalty of 20 years in prison for each wire fraud count, 10 years in prison for each money laundering count, 5 years in prison for each tax evasion count, amounting to 450 years maximum prison time if convicted on all counts.

A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The IRS-Criminal Investigation is investigating the case with substantial assistance from the Alaska State Troopers. Trial Attorney Boris Bourget of the Justice Department’s Tax Division and Assistant U.S. Attorney George Tran of the District of Alaska are prosecuting the case.

An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.