Former DC City Council chairman pleads guilty to bank fraud

WASHINGTON (Reuters) - The former No. 2 official in the Washington city government pleaded guilty on Friday to bank fraud, two days after he resigned his post over the federal charge.

Kwame Brown, 41, a Democrat, who had been the City Council chairman in the U.S. capital, admitted in federal court that he knowingly overstated income on bank loan applications, federal investigators said.

In a separate proceeding in District of Columbia Superior Court, Brown pleaded guilty to a criminal charge of violating D.C. campaign finance laws by allowing a family member to make illegal cash expenditures from his 2008 campaign account, the officials added.

Brown was the second Washington City Council member to step down this year over a financial scandal. Harry Thomas pleaded guilty to stealing city funds and was sentenced to prison in May.

"The people of the District of Columbia deserve better from their elected officials," U.S. Attorney Ronald Machen said in a statement.

Brown's lawyer, Fred Cooke, declined to comment.

A rising star in local politics dominated by Democrats, Brown was elected to the City Council in 2004 and served as its chairman for the past year.

In his federal plea, Brown admitted to falsifying documents in 2005 by overstating his income by tens of thousands of dollars on applications for a home equity loan and financing for a boat, as alleged in a charging document filed in federal court.

Brown will be sentenced on September 20 for both charges. The bank fraud charge carries a maximum of 30 years in prison, but Brown and federal prosecutors agreed to a maximum penalty of up to six months in prison and a possible fine of up to $5,000, the U.S. Justice Department said in a statement.

The campaign finance charge carries a maximum of six months in prison and a possible fine of up to $5,000.

(Reporting by Lily Kuo and John Crawley; Editing by Colleen Jenkins and Peter Cooney)