Updated 01:05 p.m., Tuesday, May 31, 2011

http://www.mysanantonio.com/news/local_news/article/PEC-attorney-Demond-convicted-1403091.php

BOERNE — Austin attorney Walter Demond today became the second former Pedernales Electric Cooperative official to be convicted of theft, money laundering and misapplication of fiduciary property for misappropriating funds belonging to the utility.

Prosecutors and Demond, 64, declined comment on the guilty verdicts, returned after 11 hours of deliberation by jurors who got the case Thursday.

He faces up to life at the sentencing hearing, which is slated to begin after lunch today.

Jurors convicted him on first-degree felony theft of more than $200,000 over PEC funds that were secretly funneled through Demond's former firm, Clark, Thomas & Winters, to the relatives of two former PEC officials.

The jury also found him guilty of money laundering in excess of $100,000, and misapplying between $100,000 and $200,000, both second-degree felonies.

Defense attorneys had maintained that Demond had acted legally and on instructions from former PEC General Manager Bennie Fuelberg in retaining Lampasas attorney Bill Price, son of then-boardmember E.B Price; and consultant Curtis Fuelberg, Bennie's brother; and then quietly billing the PEC for part of their pay.

“I don't want my brother's name on the bill,” Demond quoted Bennie Fuelberg as telling him. “I don't want every clerk in the accounting department to know that my brother is a consultant for the PEC.”

Citing other instances where lawyers conceal identifies of people retained by them, such as in bankruptcy or acquisitions, Demond said of Fuelberg, "He had special needs and I came up with a solution to meet his needs."

Bennie Fuelberg, 66, of Dripping Springs was convicted of the same charges at trial in December, but they were third-degree felonies. He was sentenced to five years probation and ordered to pay $126,000 in restitution. He plans to appeal.

Assistant Attorney General Harry White said about $700,000 in PEC funds were misused between 1996 and 2007 in paying Curtis Fuelberg and Price.

Bennie Fuelberg testified at his own trial that he wanted the utility to benefit from his brother's expertise as a legislative lobbyist, but didn't think it would look good if he hired his brother directly. So he asked Demond, the PEC's outside attorney, to hire Curtis Fuelberg in 1996 and to bill the PEC for $5,000 of Curtis Fuelberg's monthly salary.

Bennie Fuelberg said at his trial that he wasn't aware that Demond had billed the PEC for Price's $2,000 monthly retainer starting in 203.

But Demond testified last week that Bennie Fuelberg instructed him to quietly include the payments to both men in the PEC's legal bills.

After vowing to take the fifth if put on the witness stand at Demond's trial, Bennie Fuelberg wasn't called as a witness at the two-week trial before state District Court Judge Dan Mills. The trial was moved to Boerne due to publicity about the case in Blanco County, where PEC is based.