Indicted Senator Carlos Uresti Exchanged Campaign Funds with Alleged Co-Conspirators

State Senator Carlos Uresti, who recently was indicted on 13 felony fraud and bribery charges, also exchanged almost $25,000 in campaign money with his alleged co-conspirators, the Observer found.

Uresti, a San Antonio Democrat serving his 11th year in the Legislature, was indicted on May 16 by a federal grand jury for his role in a scheme to bribe a Reeves County official to secure a prison health contract. While the indictment does not mention the newly uncovered campaign transactions, an ethics expert says some of them could raise additional legal questions.

The Uresti campaign reported $4,733 of in-kind contributions for flights on a plane belonging to the prison contractor, Physicians Network Association (PNA), soon after prosecutors claim that PNA and Uresti entered into a 2006 bribery pact. The Uresti campaign also paid almost $9,000 to former Reeves County Judge Jimmy Galindo, who is cooperating with prosecutors in a plea deal admitting to a bribery conspiracy. Finally, Uresti’s campaign paid almost $12,000 to a shadowy company operating out of a home that Galindo owns in Pecos.

The indictments allege Uresti and former PNA President Vernon Farthing III hatched a bribery scheme in August 2006 to get then-County Judge Galindo to steer a contract to PNA for health services at the notorious Reeves County Detention Complex. Farthing laundered Galindo’s bribery payments through Uresti, prosecutors allege, paying the lawmaker $10,000 a month for “marketing services.” Uresti forwarded about half of the funds to Judge Galindo, the indictment says, after Galindo helped steer the contract to PNA in 2006. From then through September 2016, PNA and its successors, Correctional Healthcare Companies and Correct Care Solutions, allegedly paid Uresti and Galindo approximately $850,000. At least one Uresti payment to Galindo included the notation “Half of PNA Check,” according to the indictments. Uresti and Farthing have said that they are not guilty of any of the charges.

An ethics expert contends that Uresti may have violated a state law prohibiting officials from using campaign funds for “personal use.”

“We don’t know what these funds were used for because the descriptions are so vague,” said Austin ethics attorney Fred Lewis. “Senator Uresti could have been reimbursing the county judge for legitimate campaign expenditures. It’s also possible that Senator Uresti kept some bribes for his own personal use and paid the judge out of campaign funds instead. We really don’t know.”

Uresti’s campaign provided scant details about the transactions when it first reported them. In the wake of the indictments, none of the parties to the payments agreed to discuss them. Uresti spokesperson Michael Ruggieri told the Observer he was not familiar with the details of the campaign transactions. After the Observer emailed him the details, Ruggieri stopped responding to calls and emails.

The Uresti campaign reported paying almost $9,000 to co-conspirator Galindo in 2010, as Uresti fended off primary and general election challengers. The campaign described the largest payment of $7,914 as a “reimbursement” and “event” expenditure. It reported that another $1,000 in Galindo payments was for “contract labor.”

Uresti’s campaign reported that those payments went to a residence that Galindo has long owned at 2122 S. Eddy St. in Pecos, at the far northwestern extreme of Uresti’s district. Uresti’s campaign reported paying another $11,780 to a mysterious entity called “Municipal Market Strategies” at that same Pecos address. The campaign said those payments were for “campaign services,” “political advertising” and a “yearly storage fee.” No records of a business called Municipal Market Strategies turned up in online searches or in state incorporation records. Texas Ethics Commission records do not list Municipal Market Strategies payments by any other campaign. Given these dead-ends, it is hard to say what Municipal Market Strategies might be except, perhaps, an alter ego for Jimmy Galindo.

None of the alleged co-conspirators would discuss Uresti campaign transactions with the Observer. “Neither Mr. Galindo nor I will be speaking with the press,” Galindo attorney David Botsford wrote in response to Observer inquiries. Federal prosecutors in San Antonio also declined to comment.

Since 2005, Texas PACs and candidates have reported receiving more than $19,000 from former PNA President Vernon Farthing and his wife, Aurora (a past head of the Lubbock Area Republican Women). None of that money benefited Democratic candidates such as Uresti. Yet within two months of when Farthing and Uresti reportedly entered into the alleged bribery pact, Farthing’s company donated $4,773 worth of rides on a company plane to help then-Representative Uresti beat GOP opponent Dick Bowen for a Texas Senate seat. Farthing’s attorney in San Antonio, Gerry Goldstein, declined to comment other than to say, “We’re looking forward to our day in court.”

The San Antonio grand jury also indicted Uresti on separate charges of securities fraud and failing to register as a securities dealer. Those charges involve former Uresti client Denise Cantu, who obtained a legal settlement after her two children were killed in an SUV rollover accident. Cantu alleges that Uresti advised her to invest $900,000, the bulk of her legal settlement, in a risky FourWinds Logistics venture to sell frac sand. The San Antonio Express-News first reported that Uresti did legal work for that company, recruited investors and was given a 1 percent stake in FourWinds before it declared bankruptcy. Prosecutors allege that company officials operated the firm as a Ponzi scheme to enrich themselves at the expense of investors.

Uresti also has denied those charges. If convicted on all 13 counts of bribery and fraud charges, he could face a maximum prison sentence in excess of 200 years.

If any of the alleged conspirators are convicted and sentenced to prison, they could do much better than the Reeves County Detention Complex. In March 2006 — just months before the hatching of the alleged Uresti-Farthing-Galindo conspiracy — Reeves County signed a contract with the federal Bureau of Prisons and GEO Group to add a “Criminal Alien Requirement” facility for non-citizens. The expanded detention complex made Mother Jones magazine’s 2013 list of “America’s 10 Worst Prisons.” Inmates demanding better living conditions, food and medical care revolted there in 2008, 2009 and 2013. Scathing reports by both the ACLU and the U.S. Department of Justice Inspector General found that GEO and PNA were grossly understaffed. They also found that prisoners with varied health complaints often received the same treatments: ibuprofen or solitary confinement.

A new reform bill that Governor Greg Abbott is expected to sign into law soon would remove state officials convicted of a felony from office and strip them of their state pensions. But Senate Bill 500 does not touch the three state officials now under indictment: Senator Uresti, Representative Dawnna Dukes and Attorney General Ken Paxton. If enacted, that law would only affect officials who commit a felony after the law takes effect.