How Texas paved the way for crooks to make $$$$$
If you have lived in the RGV for any length of time, this will probably surprise you, but the FBI has just captured another close-knit group of local white-collar crooks. They may have missed the news from late 2014, released by the FBI, which said, basically, if you’re a crook, we’re coming after you.
In December 2014, the feds made it known to one and all that they created a new task force led by the FBI, which would focus on local public corruption.
Formally named the Rio Grande Valley Public Corruption Task Force, investigators were spread across multiple agencies.
In a quote given to The San Antonio Express-News (Dec. 12, 2014), the FBI agent in charge at the time said that the newly created RGV task force would have five times the number of investigators compared with years past.
“And we’re going to pursue all of these people: school board, city, county, state, judicial, executive, legislative,” he said. “We’re going to pursue them, and we’re going to lock them up … there is an inherent public trust in those offices and they must be held to a higher standard.”
Based on the latest guilty pleas emanating from the federal courthouse in McAllen, the task force is still operational
Ṫhe U.S. Justice Department created the RGV anti-corruption task force in 2014 on the heels of a record-setting 2013, when more local public officials — 83 — were convicted of federal crimes than in any other part of not only the state but the entire country. In other words, a first-place ribbon no one envies.
Yet, despite the influx of federal agents, with the help of some local agencies, public officials are still hoping to grow rich while escaping prison. If caught, taking a $275k bribe can get you five years in a federal prison. Is it worth the risk?
Peñitas Convictions
There is more to this, but here is the initial press release dated Jan. 21, 2022, issued by the Department of Justice:
McALLEN, Texas — Two local officials have admitted to their respective roles in a bribery scheme and will forfeit a total of nearly $1 million, announced U.S. Attorney Jennifer B. Lowery.
Penitas chief of staff Andres Morales, 41, Mission, and council member Alex Guajardo, 38, Penitas, pleaded guilty today. As part of the pleas, they have agreed to forfeit $739,910.71, and $202,000, respectively, which they retained as proceeds from the scheme. Morales also admitted to making false statements in connection with the purchase of a firearm.
Both men were convicted of participating in a bribery scheme involving the payment of bribes and kickbacks to public servants and officials. The payments were in exchange for official votes or recommendations in support of granting energy savings contracts at various Hidalgo County political subdivisions.
Morales and Guajardo admitted to receiving over $1 million and $275,000, respectively, and to paying thousands in bribe and kickback payments to others. Those included La Joya Independent School District trustees and an administrator in exchange for their official votes and recommendation of the projects.
In addition, Morales also pleaded guilty to making false representations in connection with a purchase of a firearm. Specifically, he falsely claimed on firearms form 4473 that he had not been convicted of a felony, which, in fact, he had.
U.S. District Judge Ricardo H. Hinojosa accepted the pleas and set sentencing for April 6. At that time, each faces up to five years in federal prison for the bribery-related conviction. Morales also a maximum five-year-term of imprisonment for the firearms offense.
Both men were permitted to remain on bond pending that hearing.
The FBI conducted the investigation with the assistance of the Department of Agriculture, Texas Department of Insurance and McAllen Police Department. Assistant U.S. Attorney Roberto Lopez Jr. is prosecuting the case.
Note: There are more arrests tied to this case, which will be included in the story published Friday online at anjournal.com and in next week’s print issue.
How the Deal Worked
Here’s how the so-called energy-savings contract worked, according to a longtime, seasoned, top administrator of one of the county’s public entities. Now retired, he agreed to speak on the record as long as it came without attribution (no name mentioned).
Actually, let’s back up a minute and lay out how this energy-savings contract came to be, which by definition was supposed to save taxpayers money.
We all know that when “saving taxpayer money” is usually mentioned, it turns out to be the exact opposite. The taxpayer gets screwed while the “players” grow richer. So was the case here.
In 1997, the Texas Legislature passed two bills that created Performance Based Contracts. The idea being, when a specific improvement, new light installations, for example, is being made to a particular public entity, it will pay for itself, over time, in the way of reduced energy costs and usage.
In those original bills, however, the need to go out for bids was mandatory.
Then came 2003 and HB 2425, authored by Rep. Brian McCall (Dist. 66–Dallas area) who now serves as chancellor of the Texas State University System (current annual salary $1 million plus). His bill, as introduced, had deleted the requirement to put performance-based work out for bid.
In its final version, as one capital pundit put it, the original house bill ended up being “a Christmas tree with tons of ornaments.”
Appropriately named, HB 2425 in its final version, signed by Rick Perry, was titled: “State and Certain Local Fiscal Matters.”
What does that even, fiscal conservatives might ask, but they were too busy voting in favor of it.
The biggest part of that bill, one might argue, that really opened the door to white-collar criminals was the new no-bid clause added to it.
Thanks to HB 2425, public entities could now award new multi-million-dollar contracts to private contractors to replace lights, for example, without having to bid the work.
According to our un-named source who ran several public entities during his long career, it didn’t take long after the new House bill was passed before someone came calling. He wanted to do a complete analysis of the entire multi-building complex and see where changes could be made to reduce energy costs. The analysis would be free, of course.
“I told the guy that I knew what his analysis would show. I had already changed every building but one, and I told him that. He came back to me and said I was right; but he still wanted permission to do that one building.”
Seriously? Even though you had already proven you could do the job without his help?
“Even then.”
Several times after that, the source said, he had different elected officials who represented the same public entity (political subdivision) for which he worked come to him with a consultant in tow, wanting to sell him on doing business with an outside vendor.
The vendor/company would loan the money needed to change out all the lighting. With interest, of course. Then, the vendor would also be the one selling the equipment and charging to install it.
“I would tell them, ‘why would I do what you’re suggesting instead of simply getting an electrical engineer to write up the specs, and then bid out the work?’”
Because no one can get a kickback doing it that way?
“Some attorneys will tell their clients to get bids even though they’re not obligated to do so; but even then, the vendor (who has the right connections) can help write the requests for proposal in a way that ensures they will get the job. To me, the whole energy thing came across as sleazy.”
How then to really work the problem if it’s centered around energy, or even computers?
“If you’re in charge of many buildings, it’s better if you phase in new things because things are always changing,” said our source. “In the ‘90s, we had fluorescent lights. When LED came along, I started phasing them in, building by building. If you do all of the buildings at once, let’s say you’re looking at new computers, or lights, what’s to say that in three years, something new and better won’t be on the market? Now you’ve just spent millions on something, which some new technology has already eclipsed.”