AUSTIN – Former Texas Attorney General Dan Morales and a friend were indicted Thursday on charges of trying to fraudulently obtain hundreds of millions of dollars in attorney fees stemming from the state's $17.3 billion settlement with tobacco companies in 1998.
Morales, a Democrat who ran unsuccessfully for governor last year, was also charged with trying to convert campaign contributions to personal use.
Both Morales and Marc Murr, a former law associate and personal friend, were expected to turn themselves in Friday, authorities said.
The two were named in a 12-count indictment.
The indictments stemmed from a long-running investigation into payment of legal fees from the state's $17.3 billion settlement with the tobacco industry in 1998.
Morales hired five private attorneys who handled the state's case. The lawyers received $3.3 billion in fees from the state's settlement. Those fees soon became the subject of controversy and a federal investigation as allegations of wrongdoing surfaced.
Joe Jamail, a prominent Houston plaintiff's attorney who interviewed for the tobacco work but turned it down, claimed that Morales solicited $1 million in political contributions from lawyers he considered hiring for the lawsuit.
Morales was also under scrutiny for allegedly trying to funnel $260 million in legal fees from the tobacco case to Murr.
In December 1997, Murr asked for $520 million for his role as an adviser to Morales, but other attorneys complained that Murr did little work on the case.
The private lawyers who handled the tobacco case included big names in Texas legal circles: John O'Quinn and John Eddie Williams of Houston, Walter Umphrey and Wayne Reaud of Beaumont, and Harold Nix of Daingerfield.
Morales and the five lawyers have repeatedly denied any wrongdoing.
Morales left office in January 1999 after not seeking re-election. He lost to multimillionaire Tony Sanchez in the Democratic gubernatorial primary last year.
"This is a case of an elected official charged with abusing the public trust," said U.S. Attorney Johnny Sutton, announcing the indictments during a news conference at the federal courthouse.
"As Texas attorney general, Dan Morales had an obligation to the people of this state to be honest, loyal and fair. This indictment alleges that he violated that trust," Sutton said.
Authorities said Morales also used campaign contributions to help pay for a $775,000 house in Travis County. He said he was paying for the house with proceeds from the sale of another house.