FBI hauls in current, former RGV officials in complicated bribery case

RGC school trustee, former Weslaco and county commissioners among arrested

John Cuellar, Daniel Garcia and A.C. Cuellar Jr. were arrested by the FBI on the morning of Friday, April 5, 2019, believed to be in connection with a bribery investigation in Weslaco.

One current and two former public officials were arrested Friday in connection with a federal investigation into a bribery scheme related to the construction of Weslaco’s water treatment facilities.

Former Precinct 1 Hidalgo County Commissioner A.C. Cuellar Jr., Rio Grande City school board trustee Daniel Garcia, and former District 2 Weslaco City Commissioner John Cuellar were arrested by federal authorities Friday morning on charges of conspiracy to commit honest services wire fraud and conspiracy to commit money laundering, according to a news release issued by the U.S. Attorney’s Office.

John Cuellar, 56, along with another unnamed Weslaco city commissioner, is alleged to have accepted bribes from three companies that were funneled through A.C. Cuellar, 65, and others.

In exchange, John Cuellar and the other Weslaco commissioner allegedly voted in favor of awarding contracts to those three companies for work on water treatment facilities.

Garcia, 40, is accused of helping to funnel the bribes through his Rio Grande City-based practice to John Cuellar.

The alleged transactions were part of a larger scheme that prosecutors believe was orchestrated by Leonel Lopez Jr., the former municipal judge for Rio Grande City.

On March 22, Lopez pleaded guilty to a charge of bribery involving federal programs for his role in the alleged conspiracy.

From approximately April 2008 to December 2015, Lopez received about $3.7 million from two engineering companies, identified as Companies A and B in the criminal complaint.

Company A is described as an international engineering and construction company while B is described as an engineering company based in San Antonio.

Company B began paying Lopez about $17,000 per month; however, around the time that John Cuellar voted to approve a contract with Company A in February 2011, the payments from Company B to Lopez increased to about $25,000 to $40,000 per month.

The owner of Company B, Person B, paid Lopez a total of $300,000 in four installments of about $75,000, under the pretense that Person B was leasing hunting equipment from Lopez.

Altogether, Company and Person B paid Lopez about $2.5 million from April 2008 to December 2015, according to the complaint.

Then in 2012, Person B recruited the owner of the third company, Company C, to funnel bribe payments to Lopez. In exchange, Company C was awarded a subcontract for the project.

Around April 2012, when Company A was awarded a $38.5 million contract for the project to overhaul the water treatment facilities, the owner of Company C made an $85,000 payment to Lopez.

The owner since continued to make payments to Lopez ranging from $75,000 to $150,000 until about July 2014.

Of the nearly $4 million he received, Lopez allegedly gave $1,398,000 to A.C. Cuellar in monthly installments of about $5,000 beginning in March 2008. However in May 2011, those payments increased to range from about $10,000 to $60,000.

A.C. Cuellar then allegedly used a company he controlled, Company D, to pay John Cuellar $405,000 disguised as legitimate legal expenses. According to the complaint, A.C. Cuellar directed his employees to make semi-monthly payments of about $5,000 to $7,500 to John Cuellar, even though he was not actually providing services to the company.

The payments from Lopez to A.C. Cuellar and the payments from A.C. Cuellar to John Cuellar “promptly” stopped in November 2014, when John Cuellar lost his re-election bid to the city commission.

Lopez and A.C. Cuellar also allegedly enlisted Garcia to launder about $90,000 in bribe payments to John Cuellar through an interest on lawyers trust account.

In December 2012, Garcia began assisting them and in exchange, Lopez and A.C. Cuellar agreed to help Garcia’s friend, identified as Person D, obtain a job.

Person D, listed in the complaint as a Houston-based attorney, confirmed in an interview with FBI agents that A.C. Cuellar helped him find employment around August 2014.

Lopez also worked with Ricardo Quintanilla, a Weslaco businessman who was arrested last week, to allegedly bribe the other Weslaco commissioner who is still in office.

Beginning in 2011, Lopez allegedly wrote 41 checks to Quintanilla, who would allegedly cash those checks and then split about half the funds with the current city commissioner.

Those checks, which Lopez gave Quintanilla between August or September 2011 and about October 2014, were approximately $85,950.

The investigation into the scheme was conducted by agents with the FBI and the IRS Criminal Investigation Division.

In an interview conducted in February 2018 as part of the investigation, A.C. Cuellar said he was good friends with Lopez and that he had performed contract work for him for two to four years. Cuellar, however, did not have a written contract for that work and was unable to explain what type of work he did for Lopez for the water treatment facilities, according to the criminal complaint.

When asked if the payments A.C. Cuellar’s company made to John Cuellar were meant to have the latter vote a certain way, the former responded, “well that makes sense what you’re saying,” the complaint states.

The company A.C. Cuellar controlled, Company D, was unable to produce any documents relating to any work performed by John Cuellar, who was also unable to produce such documents.

When Garcia spoke to investigators in March 2016, he said he first met Lopez and John Cuellar at a Mission restaurant where he was paid a $75,000 to $85,000 retainer to do work on Lopez’s behalf.

After the meeting, Lopez then allegedly asked him to write a check in the same amount to John Cuellar as a retainer.

When Garcia was interviewed again in May 2017, he said he received approximately $85,000 from Lopez to do title work even though he typically only charged $150. He also told investigators he wrote a check to John Cuellar at Lopez’s direction, the complaint states.

In a later interview, Garcia is said to have told the investigators he believed the money Lopez gave him to pay John Cuellar was for illegal purposes.

Neither Garcia nor John Cuellar were able to provide documents establishing an attorney-client privilege between Garcia, Lopez and John Cuellar. They were also unable to provide any legal documents prepared for Lopez.

On Friday, Rio Grande City school board President Eduardo “Eddie” Ramirez confirmed news of Garcia’s arrest but said the school district was only aware of details relayed through news reports.

“The school board will continue to diligently move forward with its duties and obligations to the community, and in the best interests and overall well-being of its students and employees,” Ramirez stated.

Weslaco Mayor David Suarez also issued a statement Friday in a news release issued by the city.

“We have directed staff and our attorney to prioritize and do anything necessary to assist the FBI and respond to their requests for information,” Suarez stated. “We have provided any and all documents requested and have left no stone unturned in our attempt to assist in the investigation.”

Suarez also noted the city’s continuing litigation against the companies involved in the construction project for the water treatment facilities.

“Apart from the criminal investigation we have sued the engineer and recovered $1.9 million dollars for the city,” he added. “We are currently in litigation against CDM, the company that constructed the water plant, in an attempt to recoup additional taxpayer funds used to construct the plant.”

District 2 Weslaco City Commissioner Greg Kerr, who defeated John Cuellar in the November 2014 election, said the situation with the water treatment facilities is what prompted him to run in the first place, and said he found it “devastating” that residents are still affected today.

“We’re hindered with this debt until 2032. It’s so unfair to so many people (who) at one time probably voted for some of these very people that rammed this water plant down our, down the citizens’ throats,” Kerr said. “That’s the biggest way that it affects people that the water bills are out of control, and it’s just not fair.”

Kerr added, “I just hope people remember what happened with this water plant and remember when you go vote that these things happen and you really need to be cognizant of who you’re putting into office.”

Monitor staff writer Dina Arévalo contributed to this report.