Criminal fraud trial puts San Antonio Democrat Uresti’s career on the line

Carlos UrestiPhoto: John Davenport /San Antonio Express-News
State Sen. Carlos Uresti is facing 11 felony charges, including conspiracy to commit wire fraud, securities fraud and money laundering over his involvement in now-defunct oil field services company FourWinds Logistics.

 

A lot is on the line for state Sen. Carlos Uresti as his criminal fraud trial commences with opening statements this morning in U.S. District Court in San Antonio.

“This is about a person’s life, a person’s career and a person’s family,” Tab Turner, one of Uresti’s lawyers, told jurors Thursday. “I’m holding his life in my hands.”

The San Antonio Democrat is facing 11 felony charges, including securities fraud and money laundering, over his involvement in now-defunct San Antonio oil field services company FourWinds Logistics. Gary Cain, who stands trial with Uresti, is charged with nine felony counts. Uresti, 54, and Cain, 61, both have denied the charges.

Uresti is facing years in prison and millions in fines. Perhaps just as significantly, Uresti, an attorney, would in all likelihood lose his license to practice law if found guilty. A conviction doesn’t necessarily mean he’ll lose his seat in the state legislature. He could remain in office, even if he’s convicted, until he exhausts the appeals process. However, there likely would be renewed calls for him to end his nearly 21-year political career if he’s found guilty.

The trial, anticipated to last about three weeks, has drawn together an unlikely and eclectic cast of characters.

Uresti submitted a list of more than 200 potential witnesses in a December court filing, including judges, politicians and lawyers. Chief U.S. District Judge Orlando Garcia and Democratic state Sen. José Menéndez are among 38 who are expected to be called on Uresti’s behalf. Those who “may be called” include Republican Lt. Gov. Dan Patrick, former San Antonio Mayors Julián Castro and Henry Cisneros, and Bexar County Judge Nelson Wolff.

Also named was Bexar County District Attorney Nico LaHood, business partners with Cain when Cain worked as a FourWinds consultant. While in private practice, LaHood successfully defended Cain against criminal charges that he swindled Rackspace Hosting Inc. in a 2007 land deal in Windcrest. Cain got involved with FourWinds in 2014 not long after he was acquitted by a Bexar County jury.

Whether Uresti will actually call any of those individuals remains to be seen. Attorney Michael McCrum, who also represents Uresti, declined to say whether anyone might testify for the senator. Charles “Chad” Muller, Cain’s lawyer, also didn’t provide any witnesses Thursday.

Potential witnesses for the government aren’t nearly as high-profile, but could provide compelling testimony. Heading the list is Denise Cantu, 38, a Harlingen woman who was represented by Uresti in the wrongful-death case of two of her children in 2010 and said she had a sexual relationship with Uresti at that time, according to reports from the FBI that were provided by Uresti’s legal team to the San Antonio Express-News.

Her credibility may be questioned as she initially lied to investigators about her relationship with Uresti. He’s disputed Cantu’s allegations.

Uresti helped obtain a large legal settlement for Cantu and then recommended she invest some of the proceeds with FourWinds. Uresti received a $27,000 commission on her $900,000 investment and stood to share in the profits. In addition, he served as FourWinds’ outside general counsel, a 1 percent owner and an escrow agent, prosecutors have alleged. Cantu lost all but $100,000 on her investment.

Three FourWinds officials who entered into plea deals in 2016 are expected to testify for the government. They are Shannon Smith, chief operating officer and a 48 percent owner, comptroller Laura Jacobs and marketing director Eric Nelson. They each pleaded guilty to one count of conspiracy to commit wire fraud and are slated to be sentenced later this year.

Also on the government’s list of potential witnesses is Stan Bates, FourWinds CEO, an indicted co-conspirator who pleaded guilty to eight felony charges two weeks ago rather than stand trial with Uresti and Cain.

Even Herman Munster — a former sales director for FourWinds, not the Frankenstein-like character on “The Munsters” — could be called to testify.

FourWinds bought and sold sand used in fracking to extract oil and gas from shale rock. It went bankrupt in 2015. The San Antonio Express-News chronicled FourWinds’ collapse and Uresti’s involvement in the company in 2016. Prosecutors have said FourWinds was a Ponzi scheme, an investment fraud that involves the payment of purported returns to existing investors from monies contributed by new investors.

Uresti, Bates and Cain are accused of conspiring to “enrich” themselves by “inducing individuals in investing money” and then “providing false and misleading information and omitting material facts” regarding FourWings, according to a grand jury indictment in May.

Uresti never disclosed to Cantu and other investors that he would receive a commission and share in the profits on their investment, the indictment said. The investors and FourWinds entered into joint ventures, which the indictment says were securities. As such, prosecutors say Uresti should have been registered as a securities broker to recruit investors. Uresti told the Express-News in 2016 that he consulted with an attorney who told him he didn’t need to register.

Financial fraud cases can be difficult to win convictions on because they often involve complicated issues that jurors aren’t familiar with, such as rules regarding who must register as a securities broker, according to a lawyer familiar with the case who didn’t want to be identified.

Prosecutors will have to show that Uresti had knowledge of wrongdoing at FourWinds.

Uresti testified at a U.S. Bankruptcy Court hearing in September that he and his legal team conducted an investigation into FourWinds after his arrest and learned that it “might have been a Ponzi scheme.”

“I was not aware until recently from our investigation, that it appears that it might have been a Ponzi scheme,” Uresti said on the witness stand.

Before Bates pleaded guilty two weeks ago, he was seeking to be tried separately from Uresti and Cain because he said they planned to blame him for allegedly defrauding investors. Prosecutors said in an October court filing that Bates misused “investors funds to purchase and distribute gifts and controlled substances, and to hire prostitutes.”

Leading the government’s case against Uresti and Cain is Assistant U.S. Attorney Joseph Blackwell. The Baton Rouge, Louisiana, native graduated from Louisiana State University in 2000 and spent four years as a Judge Advocate General in the Air Force.

He has been an assistant U.S. attorney since 2006, first in Baton Rouge before transferring to El Paso in 2012 and then San Antonio in 2015. He has prosecuted offenses that include money laundering, public corruption, white collar crime, narcotics and organized crime.

McCrum, who represents Uresti, is a former federal prosecutor-turned criminal defense lawyer. He was an assistant U.S. attorney for 11 years leading the Western District of Texas’ major crimes section for some of that time.

McCrum grew up on San Antonio’s Southwest Side and graduated from St. Mary’s School of Law in 1985. He has been part of several high-profile cases. He was named a special prosecutor, obtaining indictments in 2014 against then-Texas Gov. Rick Perry over allegations that Perry abused his power by threatening and then carrying out a veto that defunded a public integrity unit in an attempt to force the resignation of Travis County District Attorney Rosemary Lehmberg. Texas judges later dismissed the charges.

Joining McCrum in Uresti’s defense is Little Rock, Arkansas, trial lawyer Tab Turner, who specializes in civil litigation.

The University of Arkansas School of Law graduate generally represents consumers injured by defective automotive products and handles environmental and commercial litigation. He’s won millions of dollars in lawsuits against major corporations, including a $132 million verdict against Ford Motor Co. over the death of Brian Cole, a player with the New York Mets.

Turner is friends with San Antonio plaintiff’s lawyer Mikal Watts, who was defending Uresti in the FourWinds’ case until a judge barred Watts from the case over a conflict of interest because his firm represented Cantu in her wrongful-death case involving a vehicle roll-over.

Watts continues to represent Uresti in a separate criminal case where the lawmaker is accused of using his consulting business to split $850,000 in bribes with Jimmy Galindo, a former county judge in Reeves County in West Texas. Galindo has pleaded guilty to conspiracy to commit bribery and failure to file a 2013 tax return. That case against Uresti is scheduled for trial in May in San Antonio.

Cain is represented by Charles “Chad” Muller, a former assistant U.S. attorney who represented the government in some of the largest tax prosecutions in the country. He has been in private practice for several years, defending clients accused of tax and fraud-related crimes.

Muller graduated from of St. Mary’s University School of Law in 1969 and earned a master in law degree specializing in taxation from Georgetown University.

 

Article From:- https://www.mysanantonio.com

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