Posts Tagged ‘FourWinds’

Carlos Uresti’s Fraud Trial: Turn Down For Watt?

Wednesday, July 12th, 2017

Remember Democratic State Senator, the man charged with Carlos Uresti, charged with 11 federal counts of “securities fraud, wire fraud and acting as an unregistered securities broker”? There’s been an odd turn to his case:

A federal judge disqualified San Antonio attorney Mikal Watts from defending state Sen. Carlos Uresti in a criminal fraud case, saying the lawyer was too conflicted to represent the Democratic lawmaker.

U.S. Magistrate Judge Henry Bemporad on Monday granted a request from federal prosecutors to remove Watts, saying the lawyer had a conflict of interest because he previously represented a Harlingen woman identified as a victim in the case against Uresti. Bemporad said the conflict outweighed the senator’s Sixth Amendment right to choose his own legal counsel.

Snip:

The lawmaker had various roles with FourWinds, including serving as its lawyer and outside general counsel for a short time in 2014. He also helped recruit investors, including Denise Cantu of Harlingen, a one-time client whom he represented in a lawsuit over the deaths of her two children. The children were killed in 2010 after a rear tire on her Ford Explorer blew out.

Uresti referred Cantu’s civil case to Watts’ law firm in return for a cut of the legal fees if they prevailed. Watts’ law firm handled numerous defective tire cases. Uresti obtained a $200,000 loan from Watts against fees Uresti expected to receive from Cantu’s settlement, Blackwell said.

Cantu ultimately received a substantial out-of-court settlement, the bulk of which she invested with FourWinds at Uresti’s suggestion. She lost all but $100,000 of her $900,000 investment. Uresti received a $27,000 commission on her investment. Cantu is identified as “Victim 1” in the indictment.

Prosecutors allege Uresti had financial difficulties that drove him to to exploit and defraud Cantu, whom they described in a court filing as a “mentally and emotionally vulnerable” client.

A “quick settlement” was “financially advantageous” for the senator, prosecutors have alleged. Uresti also borrowed $25,000 from Cantu, which he later paid back.

How many trial lawyers borrow money from their clients? I can’t imagine that this is a normal arrangement. Then again, very few of the transactions between Uresti and Cantu described here seem “normal.”

At a June 30 hearing, Bemporad ruled that Watts had a conflict of interest because of Watts’ prior representation of Cantu. The judge said the criminal case against Uresti is “substantially related” to Cantu’s wrongful-death case.

Also note this interesting tidbit: “Uresti already has been billed several hundred thousand dollars for his legal defense by Watts but has not paid for those bills, Watts said.”

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Posted in Crime, Democrats, Texas, Waste and Fraud | No Comments »

Arrest Uresti

Tuesday, May 16th, 2017

Democratic State Senator Carlos Uresti’s offices were raided by the FBI and IRS in February. Today, the other shoe finally dropped:

A federal grand jury has indicted Texas state Sen. Carlos Uresti, D-San Antonio, on charges of conspiracy to commit wire fraud, conspiracy to commit bribery, conspiracy to commit money laundering, and two counts of securities fraud, among other charges, the U.S. Department of Justice announced Tuesday.

There were 13 charges in all, stemming from two separate corruption cases:

The Four Winds indictment

Uresti served as general counsel in 2014 for the now-defunct San Antonio company Four Winds Logistics. Investors have claimed that company CEO Stan Bates wasted their money on personal expenses and vacations, and the investigation has so far led to at least three guilty pleas from officials at Four Winds.

The grand jury also indicted Bates and Four Winds consultant Gary L. Cain, federal investigators said.

Bates founded the company to trade “frac sand,” which is used in hydraulic fracturing to extract oil and gas from shale rock. Documents filed months ago that outline the investigation claim that company officials in 2014 wired money from the company to personal bank accounts controlled by conspirators or their spouses; sent altered bank statements for the Four Winds’ general operating account to potential investors; and emailed an investor a spreadsheet that falsely showed the investor’s investment was used to buy fracking sands.

“The indictment alleges that the defendants’ scheme developed an investment Ponzi to market hydraulic fracturing (a.k.a. fracking) sand for oil production,” federal officials said in their statement Tuesday. “It further alleges that the defendants made false statements and representations to solicit investors in Four Winds. The defendants allegedly used funds from more recent investors to pay earlier investors and for personal expenses.”

Uresti, Bates and Cain face the following charges in this indictment:

  • Uresti: One count of conspiracy to commit wire fraud, one count of conspiracy to commit money laundering, five substantive counts of wire fraud, two counts of securities fraud, one count of engaging in monetary transactions with property derived from specified unlawful activity, and one count of being an unregistered securities broker.
  • Bates: One count of conspiracy to commit wire fraud, one count of conspiracy to commit money laundering, one count of wire fraud, two counts of securities fraud, and three counts of engaging in monetary transactions with property derived from specified unlawful activity.
  • Cain: One count of conspiracy to commit wire fraud, one count of conspiracy to commit money laundering, and seven counts of engaging in monetary transactions with property derived from specified unlawful activity.

    • Uresti would face up to 20 years in prison if convicted of being an unregistered securities broker. Additionally, each man could face up to 20 years in prison for each fraud charge and up to 10 years in prison for each money laundering charge.

    The Reeves County indictment

    This indictment alleges that, from January 2006 to September 2016, Uresti and Vernon C. Farthing III, of Lubbock, conspired with others to pay and accept bribes in order to secure a Reeves County Correctional Center medical services contract for Farthing’s company, federal officials said.

    The indictment specifically alleges that Farthing paid Uresti $10,000 a month as a marketing consultant and that half of that sum was then given to a Reeves County official for his support and vote to award the contract to Farthing’s company, federal officials said.

    Uresti and Farthing face the following charges in this indictment:

  • Uresti: One count of conspiracy to commit bribery and one count of conspiracy to commit money laundering.
  • Farthing: One count of conspiracy to commit bribery and one count of conspiracy to commit money laundering.

    • If convicted of both charges, both men would each face up to 25 years in prison.

    (Hat tip: Dwight.)

    The post title is mainly there for the alliteration, as Uresti is expected to appear before U.S. Magistrate Judge Henry Bemporad at 11 AM in San Antonio.

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    Posted in Crime, Democrats, Texas | 1 Comment »

    Democratic State Senator Carlos Uresti’s Offices Raided by FBI, IRS

    Thursday, February 16th, 2017

    Via Dwight comes word that the offices of Democratic State Senator Carlos Uresti have been raided by the FBI and the IRS:

    Agents have been confiscating documents from the office of the Democratic lawmaker.

    “I can confirm the FBI and IRS are lawfully present and conducting a lawful law enforcement activity,” FBI spokeswoman Michelle Lee told the Express-News.

    Lee also said no arrests have been made so far.

    Uresti is currently facing a grand jury investigation into possible public corruption charges related to his involvement with FourWinds, a San Antonio oil-field services company accused of defrauding investors.

    While Uresti is “innocent until proven guilty,” having both the FBI and IRS lawfully conducting lawful law enforcement in your office is not a good sign.

    When last we checked on Sen. Uresti, he was sharing a bathroom with a female staffer not his wife and involved in the UT admissions scandal.

    Here’s more on the FourWinds story, which I had not been previously following:

    The one-time marketing director for a bankrupt San Antonio frac-sand company with ties to state Sen. Carlos Uresti has been criminally charged in an alleged scheme to defraud investors.

    On Wednesday, Eric Nelson was charged in an information with conspiracy to commit wire fraud for allegedly altering a FourWinds Logistics’ bank statement to inflate the amount of money in the account. The bank statement was then mailed by an unnamed co-conspirator to prospective investors, according to the charging document.

    Nelson has agreed to a plea deal, according to sources, but records show that it is sealed. His attorneys declined to comment.

    The San Antonio Express-News in August chronicled the demise of FourWinds, which had more than $14 million in claims against it. Investors have alleged that CEO Stan Bates wasted their money on personal expenses, expensive gifts, exotic car rentals and lavish vacation, according to a court document. Bates has denied the allegations.

    Uresti provided legal services for FourWinds and served as its outside general counsel for four or five months in 2014, he said in an interview this summer. He received FourWinds shares, as well as a $40,000 loan from the company that he failed to disclose initially. He also collected a $27,000 commission on a Harlingen woman’s $900,000 investment in a joint venture with FourWinds. The woman ended up losing about $800,000.

    Really, who of us hasn’t forgotten a $40,000 loan? “Oh yeah! That little thing! Sorry, totally slipped my mind!”

    Uncle Sam’s mills grind slowly, but exceedingly fine. One way or another, I suspect Republicans will view Uresti’s west Texas District 19 as a pickup target in 2020…if not sooner…

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    Posted in Democrats, Texas, Waste and Fraud | 3 Comments »