Feds officially link Weslaco schemes

Court docs: Water plant, hotel bribery schemes are connected

Ricardo Quintanilla (Courtesy of CBS 4)

McALLEN — On the same day a Weslaco businessman appeared in federal court to face charges that he participated in a bribery scheme with a McAllen hotelier to build a Motel 6, prosecutors formally linked the case to an ongoing bribery case regarding the Weslaco water plant.

Ricardo Quintanilla, 52, was arraigned before U.S. Magistrate Judge Juan Alanis on Thursday afternoon after surrendering to federal agents Thursday morning. “We walked into the FBI today at 7:30,” Quintanilla’s attorney, Robert Steindel said during the arraignment hearing.

Quintanilla surrendered after learning a warrant had been issued for his arrest on charges tying him to a bribery scheme with hotel owner and operator Sunil Wadhwani, 56, who himself had appeared in Alanis’ court for an initial appearance Wednesday.

Court documents unsealed late Wednesday detail the scheme, alleging that starting in 2013 Wadhwani conspired to pay bribes to several individuals in exchange for a favorable business incentive agreement with the Economic Development Corporation of Weslaco.

With the aid of those individuals — identified in a criminal complaint unsealed Wednesday as Person A, Person B, Person C and Commissioner A — Wadhwani sought $300,000 from the EDC to build and operate a Motel 6 in Weslaco. Commissioner A was also a member of the EDC board of directors.

After several months of back-and-forth negotiating — during which the Weslaco City Commission restructured the EDC board of directors to include four commissioners, forced the resignation of one longtime EDC executive director, and later removed an interim executive director — the EDC and the commission ultimately approved the $300,000 incentive to Wadhwani.

Wadhwani signed the agreement in early December 2013 on behalf of a company called “Nolana Self Storage LLC.” By the end of the month, the EDC had issued the first of two $150,000 checks.

Federal prosecutors allege the hotelier used thousands of dollars from that incentive to pay bribes to “Person C and Commissioner A through Person B,” the criminal complaint reads. The complaint also reads that Person B is currently “under indictment for another bribery scheme occurring with other Weslaco City Commissioners…”

CONNECTED CASES

But Person B’s alleged involvement in the two different bribery schemes is not incidental. Indeed, prosecutors officially linked the two schemes Thursday when a “notice of related cases” was filed in the ongoing proceedings against Wadhwani and Quintanilla.

The one-page notice does not reveal how the cases are related.

However, a 14-page indictment released Thursday sheds new light on how Wadhwani and Quintanilla allegedly carried out the bribery scheme, and lists the two charges being laid against the two men: conspiracy to commit honest services wire fraud, and honest services wire fraud.

According to the indictment, Quintanilla allegedly paid bribes on behalf of Wadhwani to Person B and Commissioner A. The indictment also alleges that Quintanilla himself profited from the scheme “by keeping a portion of the bribe funds paid to him by Wadhwani” before paying the remainder to Person B and Commissioner A.

A co-conspirator listed as Person A also allegedly took part in the scheme by participating in conversations about the scheme with Wadhwani, Quintanilla, Persons A and B, and Commissioner A. The group is alleged to have communicated in person, and via phone calls, emails and other “mobile messaging applications,” the indictment reads.

Both the indictment and the criminal complaint list Person A as a business associate of Wadhwani. Person A allegedly emailed Quintanilla, requesting that he review a letter Wadhwani wanted to send to the Weslaco EDC notifying them of the hotel project.

Person A was also integral in communicating with the EDC — emailing the EDC executive director about the incentive payout on multiple occasions, and helping Wadhwani deliver a presentation to the EDC about the hotel project in May 2013, the indictment reads.

The five co-conspirators allegedly tried to conceal the bribery scheme by creating a “fictitious consulting services agreement” between Wadhwani and Person B.

Wadhwani’s alleged use of Quintanilla to distribute the bribes was also meant to obscure the bribery scheme. “Wadhwani paid thousands of dollars to Quintanilla, who would then funnel bribe payments to Person B and Commissioner A in efforts to conceal the nature and source of the bribes,” the indictment reads.

CASE PARALLELS

Quintanilla’s alleged role in the Weslaco water plant bribery scheme also appears to be that of a bribe facilitator, according to the 74-count superseding indictment unsealed in that case this April. And like the hotel scheme, the water plant scheme involves multiple people — including elected officials — and bribe payments obscured as payments for consulting services.

Quintanilla’s three co-defendants in that case include former District 2 Weslaco Commissioner John Cuellar, former Hidalgo County Precinct 1 Commissioner A.C. Cuellar, and Rio Grande City school board trustee Daniel Garcia. The two Cuellars are cousins.

All four men originally pleaded not guilty to the dozens of charges this spring, though John Cuellar later reached a plea deal with prosecutors, pleading guilty to one count of conspiracy to commit honest services wire fraud in August.

Tafolla, who was also implicated in the water plant scheme, pleaded guilty to one count of federal programs bribery just days before the superseding indictment against the other four men was unsealed. Now-former Rio Grande City municipal judge Leonel Lopez Jr. also pleaded guilty to federal programs bribery before the superseding indictment was revealed.

As with the allegations in the hotel scheme, Quintanilla is accused of keeping a portion of bribe funds for himself before using the rest to pay bribes to then-District 4 Weslaco Commissioner Gerardo “Jerry” Tafolla in exchange for favorable votes regarding the water plant.

Lopez allegedly wrote out nearly $90,000 in checks to Quintanilla, who allegedly cashed them before giving Tafolla approximately half of the proceeds in turn.

The Weslaco water plant scheme spanned several years — from March 2008 through December 2016 — and involved at least $4.1 million in bribes, according to the indictment.

It started in 2008 as a plan for Weslaco to award two companies the water plant construction contracts thanks to the favorable voting of John Cuellar. By 2011, John and A.C. Cuellar had enlisted Quintanilla’s help to solicit another Weslaco commissioner’s votes, according to the indictment.

Quintanilla allegedly recruited Tafolla for that purpose.

Quintanilla’s involvement in the scheme allegedly continued as late as 2016, when he was given a set of questions to pass on to Tafolla for use during city commission meetings.

At the time, the city was in a payment dispute with one of the two companies, Company B. The city had stopped paying the company, and the questions given to Tafolla were meant “to benefit Company B in its attempts to recover payments,” from the city, the indictment reads.

Meanwhile, portions of the Weslaco water plant bribery scheme timeline overlap with the hotel bribery scheme, as do some of the figures associated with the two schemes.

Wadhwani’s associate, Person A, is alleged to have started communicating with Quintanilla by at least April 25, 2013. The back and forth between Wadhwani, his alleged co-conspirators and the Weslaco EDC continued for months before the EDC wrote a $150,000 check on Dec. 31, 2013. And the check for the final half of the incentive wasn’t issued until the following year, in November 2014.

During the course of the scheme, the Weslaco EDC underwent several shakeups, including the city commission replacing members of the EDC board of directors with commissioners, twice.

The first board shift came in February 2013, before Wadhwani’s associate’s first known alleged communication with Quintanilla. One of the commissioners appointed to the board of directors was the Commissioner A listed in the indictment against Wadhwani and Quintanilla.

According to the minutes of a Feb. 19, 2013 commission meeting, the commission appointed Commissioners Gerardo “Jerry” Tafolla, Joe A. Martinez, Lupe V. Rivera and David R. Fox to the EDC board.

The commission shifted the board again that fall, this time reducing the board from seven directors to five and appointing then-Mayor Pro-tem John Cuellar, Commissioners Tafolla and Fox, and residents Adrian Farias and Rob Peterson.

Fox has since been drawn into the scandal, pleading guilty to perjury on Monday. The former commissioner admitted to accepting at least $2,000 in bribes in exchange for his commission votes.

THURSDAY’S ARRAIGNMENT

Quintanilla pleaded not guilty to the two new charges levied against him during Thursday’s arraignment. Magistrate Judge Alanis set his bond at $50,000 unsecured, and denied a request from prosecutors to have Quintanilla wear a GPS monitor.

Alanis also assigned the case to U.S. District Judge Ricardo Hinojosa. The final pre-trial hearing is set for Dec. 2, with jury selection slated to begin the following day.

Jury selection in the Weslaco water plant bribery case was previously set to Dec. 2 by U.S. District Judge Micaela Alvarez this summer.

Meanwhile, Wadhwani is expected back in court next week for an arraignment hearing on Wednesday.