Ex-husband aware of fraud, jurors told

He signed agency checks, ex-wife says

Wednesday, July 2, 2014

Elizabeth "Libby" Dodson admitted Tuesday from the witness stand in a Little Rock federal courtroom that she abused her two-year position as executive director of the Star City Housing Authority to embezzle federal tax dollars that funded the agency.

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"It originally started as need," Dodson told jurors hearing a case against her ex-husband, Donald Earl Dodson, who is charged with helping her defraud the public agency from February 2010 through May 2012.

She said that what began as an attempt to cover her bills when she was running short of cash soon "got out of hand, and I was living way beyond my means. Then I had to do more to sustain that lifestyle."

Wearing a blue uniform from the Pulaski County jail, where she is being held during the trial, Libby Dodson acknowledged that she began serving a one-year federal prison sentence on Jan. 6 as a result of her May 16, 2013, guilty plea to a charge of theft of federal program funds. She admitted that she wrote checks from the agency's checking account to other people -- her mother, her former brother-in-law and Donald Dodson, from whom she's been divorced since 2005 -- and also used the Housing Authority's credit card for personal expenses.

She has been ordered to pay $109,000 to the agency, which is funded entirely by the U.S. Department of Housing and Urban Development.

But unlike the checks she wrote to her mother and her brother-in-law, whose signatures she forged to cash them, prosecutors say Donald Dodson willingly endorsed the ones made out to him and then gave her most of the money to make up for his inability to provide proper child support for their two children.

"I involved him by asking him to cash the checks," Libby Dodson testified. "There was never a discussion of 'Let me do this and then you do that.'"

Prosecutors say Libby Dodson wrote 19 checks totaling $64,535 to her ex-husband, of which he kept about $21,000, giving the rest to her.

Defense attorney Justin Eisele contends that Donald Dodson never saw the false invoices that Libby Dodson created to justify the payments to her ex-spouse, a contractor, and didn't know she was committing crimes.

Under questioning by Assistant U.S. Attorney Cameron McCree, Libby Dodson said Donald Dodson had asked her if she could get in trouble for the checks he was signing.

Evan Firmin, a special agent with HUD, testified that when he questioned Donald Dodson about the checks written out to him and the accompanying invoices, he went to great lengths to describe the work he had done for the Housing Authority in return for the payments. Firmin said Dodson described in detail how he did the cabinet, flooring and roofing work, but it turned out that the work hadn't been done, or was done by someone else.

Libby Dodson testified that she drafted the invoices after consulting the Housing Authority's five-year "wish list" of projects, so the invoices would appear to cover legitimate work. She said the authority's board of directors never questioned the expenses.

Before she began her employment at the Housing Authority in 2007 as the assistant director, Libby Dodson testified, she worked as a secretary for the Star City School District and in the financial aid office of a college.

Prosecutors say a co-worker at the Housing Authority discovered the "mysterious payments" and reported them to authorities, prompting the investigation.

The trial will resume at 8:30 a.m. today in the courtroom of U.S. District Judge D. Price Marshall Jr.

Metro on 07/02/2014