Plea accepted: Scott Walker pleads guilty to conspiracy, fraud

Feb. 21--HATTIESBURG -- Scott Walker turned down a federal plea deal in October, but after he saw the case being built against him and learned his co-defendant had cut a deal, the 34-year-old realized he would have to accept a less generous plea agreement prosecutors extended this week, his attorneys told a judge Thursday.

When U.S. District Court Judge Keith Starrett asked if Walker wanted to plead guilty to conspiracy and fraud, the Coast businessman, once an assistant to U.S. senators and an Ocean Springs mayoral candidate, responded, "Yes sir." In exchange for his plea, the U.S. Attorney's Office will drop eight other felony charges against Walker in two cases.

His father, Bill Walker, sat in the first row of the courtroom behind the defense table. Bill Walker, who headed the Mississippi Department of Marine Resources from 2004 until January 2012, plans to enter his own guilty plea to the conspiracy charge on March 10. If he pleads guilty, four felonies charged in one case will be dropped against him.

Seated solemn-faced beside Bill Walker were his wife, Sharon Walker, and Scott Walker's wife, Trinity Ryals Walker. Trinity Walker, dressed in black, is scheduled to have labor induced today to deliver their second son.

The men who built cases against the Walkers -- FBI agent Matt Campbell and federal task force agent Ron Werby, now retired from the Harrison County Sheriff's Department -- sat in the first row behind prosecutors.

When the Walkers first entered the courtroom, Scott Walker strolled up to the agents with a smile and shook their hands. His father followed suit, but without the smile. "Thank y'all for being here," Scott Walker told members of the media.

D'Iberville crime

Starrett entered the courtroom just before 10 a.m.. Scott Walker stood before a podium, flanked by his attorneys, Arthur Madden of Mobile and Corban Gunn of Biloxi. Starrett asked questions designed to ensure Walker understood the gravity of his plea and freely entered it.

In one case, Walker admitted that he and co-defendant Michael Janus had defrauded the government of $180,000. Janus, the former city manager of D'Iberville, recently pleaded guilty to the same crime.

The two men schemed from March to December 2011 to land Scott Walker a $180,000 consulting fee he did not earn. They created paperwork after the fact, Assistant U.S. Attorney Jerry Rushing said, to legitimize the deal Janus entered while serving as city manager. Walker supposedly landed a $3 mil

lion grant for the city, but state officials were prepared to testify he had nothing to do with the money awarded to support Ocean Expo aquarium.

Janus and Walker knew up front that some of the money would be deposited in an account of their business, JaWa Investments. They put $90,000 in the account, using $40,000 to pay off a loan for an interest in The Columns bar in downtown Biloxi.

Conspiracy with father

Rushing then turned to the conspiracy Scott Walker admitted to with his father and one other co-defendant, former DMR manager Tina Shumate. Walker confessed that they conspired to defraud the federal government of $210,000.

While he was her boss at the DMR, Bill Walker asked Shumate to approach the Land Trust of the Mississippi Coastal Plain about buying a piece of property Scott Walker owned on the waterfront in Jackson County. DMR would supply the money, Bill Walker said.

It so happened that Bill Walker had co-signed and was paying the loan Scott Walker used to buy the property in 2008, Rushing said. Bill Walker also was paying the property taxes. The Land Trust bought the property in 2011 for the appraised value of $190,000. (Records the Sun Herald has examined show Scott Walker paid more for the property.)

"The defendant Scott Walker became upset because he thought the appraisal was too low," Rushing said.

The remaining $20,000 DMR paid for the property covered closing costs, land maintenance, insurance and taxes.

"The proof would have also shown that during the time the land transaction occurred, the Walkers were having difficulty meeting the land note obligations at the bank," Rushing told the judge.

The Walkers paid off a portion of the loan after the sale, Rushing said. They paid off the loan balance with a new loan they took out.

To buy the land, Bill Walker used $100,000 in U.S. Park Service Heritage funds, money never intended for property acquisition. When the original Land Trust invoice listed "property acquisition," Bill Walker asked for and received a new bill that did not include those words.

Bill Walker took the other $100,000 from an account he had set up with federal money that was supposed to pay disaster relief wages in Hurricane Katrina's aftermath. At DMR, Rushing said, the account "was referred to as Walker's 'rainy day fund' and no withdrawals were made from that specific fund unless approved by William Walker."

The punishment

Once Scott Walker's crimes were established, the hearing turned to his punishment. His potential prison sentence is up to five years for conspiracy and 10 years for fraud.

Starrett will consider, but not be bound by, prosecutors' undisclosed recommendation. The U.S. Probation Service also will delve into Walker's life to write a pre-sentence report.

Walker will have to repay his portion of the money taken, with amounts still to be determined. Fines could total up to $500,000.

Walker is working, he told Starrett. He and two others own a Gulfport company called Precision Marketing Group.

Starrett set Walker's sentencing for 1:30 p.m.May 6. Janus is scheduled to be sentenced that morning.

As court broke up, Bill Walker told a reporter he had no comment. He said he is retired now.

Two defendants remain in the case against both Walkers: Shumate and former DMR Chief of State Joe Ziegler. Shumate has pleaded not guilty to conspiracy and fraud. Ziegler has pleaded not guilty to one count of conspiracy to commit mail fraud and two counts of mail fraud, charges the Walkers also faced. The charges against Walker and Ziegler involve a separate alleged scheme to defraud the government of $295,162 intended for DMR. Instead, the government alleges, the funds were funneled to Bill Walker's private foundation to benefit the conspirators.

Outside the courtroom, Assistant U.S. Attorney John Dowdy, who heads the Southern District's Criminal Division, said: "There could be additional indictments. We have to see how the case plays out."

Dowdy also provided a statement from Southern District U.S. Attorney Gregory K. Davis: "Today's guilty plea concludes a significant case of fraud committed against the city of D'Iberville. Today's guilty plea also takes us one step closer to holding accountable those who, through the Mississippi Department of Marine Resources, fraudulently diverted and misused both federal grants and money belonging to the state of Mississippi."

Scott Walker attorney Corban Gunn offered this assessment of his client's predicament: "The evidence was against him. He made the best decision he could for his family."

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