$2.1 billion in contracts involved in FBI inquiry
By Ramon Bracamontes / El Paso Times, 11/23/2008
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More on public corruption

EL PASO -- The government contracts at the center of the FBI's public corruption investigation add up to slightly less than $2.1 billion, according to an El Paso Times review of public records in the case.

"Don't forget tax dollars come out of people's pockets," said Peter Henning, a law professor at Wayne State University Law School. "The national value is over $2 billion, but the real cost comes in the reputation suffered by the government."

The public corruption investigation began in 2004 and has branched into 12 separate investigations, according to court documents. So far nine people have pleaded guilty to various public corruption and fraud charges. Four others have been indicted on fraud and bribery charges, and are awaiting trial.

In every case so far, those implicated were working with government contracts.

A review of public records in this case shows that:
# The investment firm Bear Stearns was doing $1.5 billion worth of work for El Paso governments when two of its investment bankers pleaded guilty to bribing elected officials in exchange for contracts.
# Access HealthSource lost three government contracts totaling $332 million after its offices were searched by the FBI and its former president was implicated in the case.
# A former county commissioner pleaded guilty to accepting
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$10,000 in exchange for her vote on a $20 million parking garage contract. "The parking garage might have only cost $19 million if it wasn't for what was going on," said Henning, who specializes in public corruption cases.

In regard to the FBI investigation, County Attorney José Rodríguez responded to inquiries from the El Paso Times by saying, "During the past 18 months, the County Attorney's Office has been reviewing all the transactions and contracts that we believe have been implicated in the FBI corruption investigation, and we have filed litigation related to some of those contracts with the purpose of recovering funds that should be returned to El Paso taxpayers. However, due to the fact that the litigation is pending, it would be inappropriate to disclose more details. El Paso residents should rest assured that we are aggressively pursuing all legal recourses to protect the interests of the County of El Paso."

FBI officials will not comment on the status of the investigation, other than to say that it is continuing and that there is no timeline.

The only insight as to the scope of the investigations and the amount of people being investigated was provided by U.S. District Court Judge Frank Montalvo (see below - Ed.) In an court opinion Montalvo revealed that:
# The investigation began in 2004.
# 12 different investigations are in progress.
# Of the 80 persons of interest implicated, 35 are past or present elected officials, 13 are lawyers and three are former or current judges.
# 2,300 boxes of evidence have been seized by the FBI.
# 154 people were told their telephone conversations were intercepted.
# And thousands of dollars have been seized from several El Paso businessmen.

Among the nine who have pleaded guilty were former Bear Stearns investment bankers Roberto "Bobby" Ruiz and Christopher Chol-Su Pak. Both pleaded guilty Dec. 21 in U.S. District Court in El Paso to conspiracy to commit mail fraud, wire fraud and the deprivation of honest services.

Ruiz, through his plea, admitted being part of bribery schemes involving El Paso Independent School District trustees, El Paso Community College trus tees, El Paso City Council representatives and El Paso County Commissioners Court members. The plots called for exchanging votes for money.

Chol-Su Pak, better known in El Paso as Chris Pak, admitted, as part of his plea, that he and others agreed to give an El Paso County commissioner money in exchange for the commissioner's vote on a contract.

Bear Stearns helped several government entities in El Paso sell more than $1.5 billion in bonds.

"How much of that money was misused or how much of that was going to be sold anyway, we will never know," Henning said. "But there were additional cost involved because of what was happening."

Former FBI Special Agent- in-charge Richard Schwein, said the investigation is crucial to the community because it involves taxpayer money..

"It has cost us, the taxpayers, a lot of money," Schwein said. "And from what I understand, there is a lot more to come, with a lot more taxpayer money at stake."

Among the other government contracts that have been implicated in the case are:
# A $9 million contract to provide professional services for the Border Children's Mental Health Collaborative, a federal grant program.
# The $235 million worth of contracts the National Center for the Employment of the Disabled had with the federal government.

Ramon Bracamontes may be reached at rbracamontes@elpasotimes.com; 546-6142.

Judge Frank Montalvo takes position in Western District
Kiko Martinez, La Prensa de San Antonio, August 10, 2003

Judge Frank Montalvo of the 288th Judicial District Court of Texas is making his way to El Paso, TX. He, along with Judge Xavier Rodriguez was chosen by the U.S. Senate to be District Judges for the Western District of Texas. The new bench was created by the legislature in November 2000.

Montalvo, who was recommended by Senator John Cornyn and Kay Bailey Hutchison for the position, is excited about his new venture. He was surprised this past Wednesday night by friends and colleagues who threw a surprise going away party to wish him well in his move.

"Here is a man who has been able to represent not only in his constituency but also the portion of our population that is Hispanic and feels pride in him," said Roger Flores Jr., city councilman. "It is going to be sad to see him go but exciting to see him move on to bigger and better things. He is a man of principal and strong ethics. I hope that is a part of what he takes with him."

Along with taking his principals and ideals to West Texas, Montalvo said he'll never forget what San Antonio has taught him about working together as a community.

"The most remarkable thing about San Antonio is the great human relations that it has," Montalvo said. "We do not break down by ethnic or religious groups. We all work together to improve the community and we embrace whoever comes to this city, regardless of where they come from, to help us.
I am living proof of this. I will carry this affection, support and desire in my heart when I leave San Antonio."

In El Paso, Montalvo will take some of the workload off the judges and quickly become a commodity to the Western District.

"The El Paso division is the busiest division of all the Federal courts in the country," Montalvo said. "The two judges there right now are great guys, but the amount of work that they have is so overwhelming. I am going to go and carry the load and improve the community. What I will bring from here is my experience in community work. This will be my contribution when I get there."

Article copyright La Prensa de San Antonio.

Former National Center for the Employment of the Disabled Executives ROBERT EDWARD JONES, ERNESTO ALONZO LOPEZ And PATRICK WOODS Arrested On Embezzlement Charges
Oct 17th, 2008
by admin.
LINK

The former CEO and President of National Center for the Employment of the Disabled (NCED) ROBERT EDWARD JONES, a.k.a., Bob Jones; former NCED Chief Operations Officer ERNESTO ALONZO LOPEZ, a.k.a. Ernie Lopez; and former NCED Officer and member of the NCED Board of Directors PATRICK WOODS, a.k.a., Pat Woods, were arrested without incident this morning on federal charges related to embezzling millions of dollars in government program funds. The arrests stem from two separate federal grand jury indictments returned in El Paso–a thirty-seven count superseding indictment on October 9, 2008, and a five-count indictment on September 25, 2008.

The charges in the superseding indictment arise from actions on the part of the defendants while they were employed by NCED. The allegations detail schemes to lie to the Committee for Purchase from the Blind and Severely Disabled, falsely claiming NCED was in compliance with the Javits -Wagner-O’Day Act (JWOD), thus entitled to receive no-bid contracts from government agencies, which contracts are set aside for not-for-profit organizations who employ blind or other severely handicapped individuals for not less than 75 percent of the man-hours of direct labor required for the production or provision of the goods or commodities required on the government contract. According to the indictment, NCED never employed sufficient numbers of blind or severely disabled workers to qualify for JWOD contracts. The indictment further alleges that the defendants stole or embezzled at least $5,000 from NCED, an organization that received at least $10,000 in federal government program money in each year charged and, without authorization of the NCED Board of Directors, directed the money for the use of themselves or others. Finally, the indictment alleges that certain defendants lied to federally insured financial institutions to obtain loans and other forms of credit to further their personal use of NCED funds.

In the superseding indictment, Jones is charged in all thirty-seven counts including charges of conspiracy to commit theft or embezzlement of government program funds; theft or embezzlement of government program funds; conspiracy to make false statements to a federally insured financial institution to obtain credit; false statements to a federally insured financial institution to obtain credit; conspiracy to commit bank fraud; conspiracy to make false statements and defraud the United States; false statements and defrauding the United States; conspiracy to commit mail and wire fraud; mail fraud; and wire fraud.

Lopez is charged in seventeen counts including conspiracy to make false statements and defraud the United States; false statements and defrauding the United States; conspiracy to commit mail and wire fraud; mail fraud; and wire fraud. Woods is charged in seven counts including conspiracy to commit theft or embezzlement of government program funds; theft or embezzlement of government program funds; conspiracy to make false statements to a federally insured financial institution to obtain credit; false statements to a federally insured financial institution to obtain credit; and conspiracy to commit bank fraud.

The superseding indictment also includes a Notice of Forfeiture in which the Government requests that money and/or assets be forfeited from each of the charged defendants in the following amounts: Jones-$58,950,526.50; Lopez-$51,215,526.50; and Woods-$4,235,000.

In the indictment returned on September 25, 2008, Jones and Woods are charged with one count each of conspiracy to make false statements to a federally insured financial institution to obtain credit, conspiracy to commit mail and wire fraud, false statements to a federally insured financial institution to obtain credit, mail fraud and wire fraud. According to the indictment, in 2003, Jones and Woods made false statements to a federally insured financial institution that Jones owed Woods $975,000 as a result of Woods’ construction of Jones’ home in 2001, so that the financial institution would approve and fund a $975,000 mechanic’s lien on Jones’ house, when no money was actually owed to Woods by Jones.

An indictment is a formal accusation of criminal conduct, not evidence of guilt. The defendants are presumed innocent unless and until convicted through due process of law.

Public corruption investigation timeline
El Paso Times Staff
Posted: 10/14/2008 11:54:17 PM MDT
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More on public corruption

The FBI's public corruption investigation reportedly began at the National Center for Employment of the Disabled, or NCED, now known as ReadyOne Industries. Here is how it has unfolded:
# Federal court documents show the investigation began in the summer of 2004.
# November 2005: U.S. Senate opens an investigation into NCED and alleged abuses by government contractors, and it is cited as one of the worst examples in the nation.
# November 2005: The Committee for Purchase from People who are Blind or Severely Disabled opens a new investigation into NCED's operations.
# January 2006: A team of federal investigators arrives in El Paso to begin a review of employment records at NCED to determine whether the company meets federal labor requirements for government contracts.
# March 2006: Robert "Bob" Jones, president and CEO of NCED, resigns after a new federal investigation finds the city's last major garment manufacturer violated labor requirements for disabled workers on federal contracts.
# May 9, 2006: About 65 agents from the FBI and three other federal agencies search the main offices of NCED.
# May 10, 2006: FBI searches continue at NCED offices; NCED-owned offices of Physicians Healthcare Management are also searched. More than 1,000 boxes of documents and computer information are taken.
# September
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2006: Fifty FBI agents and investigators search the offices of Access HealthSource and several other companies with ties to ReadyOne Industries, formerly NCED. Agents also search the condominium home and office of lawyer Luther Jones, a former El Paso County judge and county attorney, and the home of Access President Frank Apodaca.
# October 2006: FBI questions members of the Ysleta Independent School District Board of Trustees, possibly about the controversial multi-million-dollar contract the district awarded to Access HealthSource.
# November 2006: YISD Superintendent Hector Montenegro is subpoenaed by a federal grand jury meeting in San Antonio.
# December 2006: EPISD Superintendent Lorenzo García says the FBI asked for paperwork concerning both Access and Strategic Governmental Solutions Inc. -- a contractor that provides Medicare-Medicaid reimbursement services and other special-education services for the district.
# December 2006: FBI searches the Montana Avenue offices of El Paso Independent School District board member Sal Mena Jr.
# May 2007: FBI searches the offices of County Judge Anthony Cobos, County Commissioners Miguel Terán and Luis Sariñana and Thomason Hospital board member Arturo Duran.
# June 2007: Former El Paso County chief of staff Travis Ketner, who worked for Cobos, pleaded guilty to three counts of conspiracy to commit mail or wire fraud and one count of conspiracy to commit bribery in attempts to manipulate district courts. He was released on $5,000 bond and has not been sentenced. In the "information" document used to charge him, he identifies more than 20 co-conspirators.
# June 2007: The U.S. attorney's office, in an attempt to disqualify an El Paso lawyer from representing three men implicated in the case, filed a federal court motion naming school board members Charles Roark and Milton "Mickey" Duntley as targets, along with Ernie Lopez, former CFO at NCED.
# July 2007: Former County Commissioner Elizabeth "Betti" Flores pleaded guilty to six counts of mail and wire fraud and admitted trading her votes for money.
# August 2007: El Paso architect Bernardo Lucero Jr. pleaded guilty to one count of conspiracy in getting an elected official a $25,000 loan.
# Nov. 2007: Carlos "Coach" Cordova, former El Paso Independent School District trustee, pleaded guilty in federal court, admitting he exchanged his vote for money.
# Dec. 2007: Two Dallas investment bankers pleaded guilty to four counts of conspiracy to commit mail fraud, wire fraud and a scheme to bribe elected officials.
# March 2008: Raymond Telles, an El Paso lawyer and former city representative, pleaded guilty to two counts of mail and wire fraud for attempting to bribe El Paso County commissioners and Socorro Independent School District trustees.
# June 2008: El Paso lobbyist and political consultant Antonio "Tony" Dill pleaded guilty to conspiring with others to bribe a current member of El Paso County Commissioners Court.
# August 2008: Former El Paso Independent School Board District trustee Salvador "Sal" Mena Jr. was arrested by the FBI and charged with six counts of accepting bribes and bribing others. He has pleaded not guilty.
# October 2008: Two former NCED officers, Robert "Bob" Jones and Ernie Lopez, are arrested along with NCED board member Patrick Woods by the FBI.

Information compiled by Ramon Bracamontes

The Martie Jobe File: Recusal Request Denied

August 17, 2007
Another Public Corruption Guilty Plea
by NPT Staff
LINK

Architect Bernardo Lucero Jr. pleaded guilty to two counts of conspiracy to defraud the El Paso Independent School District and the citizens of El Paso. Count one is conspiracy to commit mail fraud and the deprivation of honest services and count two is conspiracy to make false statements to obtain credit.

The plea came this morning before U.S. District Judge Frank Montalvo, U.S. Attorney Johnny Sutton announced in a news release.

"By pleading guilty, Lucero admitted that from January 2002 to July 24, 2007, he agreed to assist an elected official secure a $25,000 home improvement loan from United Bank of El Paso Del Norte by providing false and fraudulent information," stated the news release. "In addition, Lucero admitted to conspiring to provide and help others provide money to an elected trustee of the EPISD in exchange for acts on the part of the official in his or her official capacity."

From the web page of the company: "The firm was founded in 1988 as Lucero / Melendez Architects combining the firms of B. Lucero Architects and Jose Melendez Architects. Since then, the Firm has grown from a four-person firm to a team of twelve; licensed architects, graduate architects, CADD technicians, and administrative personnel. All contribute to provide quality architectural services to the community.

"Lucero / Melendez has maintained its excellent reputation by consistently providing architectural design services in the highest tradition of the profession." (link)

The plea document states that Lucero "conspired to submit a letter and a mechanics lien to United Bank of El Paso Del Norte ... for the purpose of influencing the bank to fund a $25,000 loan which purported to be a home improvement loan for the remodeling of the residence of a family member of an elected official, when the defendant knew the money was not intended for that purpose."

The El Paso Times reported that the a mechanics lien contract filed by by United Bank of El Paso Del Norte in February 2006 "shows that Lucero worked on a $25,000 project at the home of Katherine E. Mena in the 3200 block of Altura Avenue.

"Katherine Mena is the daughter of EPISD Trustee Sal Mena Jr. ... whose offices were searched by federal investigators in December 2006," reported the El Paso Times.

El Paso Independent School District minutes indicate that Lucero received a contract worth about $1 million for profesisonal services in relation to the Northwest Middle School on June 8, 2004. The item was on the consent agenda.

Lucero also was a consultant on the Aoy Elementary School project.

Lucero is the third person to plead guilty to a crime in connection with the wide FBI public corruption investigation.

Travis Ketner, former chief of staff for County Judge Anthony Cobos, was the first person to plead guilty. His plea came in June, in a detailed document that gave information but did not name multiple unindicted co-conspirators. The information was detailed enough that the identities of many of the co-conspirators could easily be guessed. (ketner plea)

Ketner's guilty plea and the events that followed have implicated leaders of El Paso's political, legal and business communities in a web of backroom dealings that resulted in govrnment contracts and personal favors. However, because of the volume of information being processed by investigators, it has been difficult for the public and for those involved to assess who is part of the web, and who is merely caught in the second-hand smoke.

Former County Commissioner Betti Flores pleaded guilty (see below - Ed) in early July to various charges of public corruption. (story) (plea document)

In addition to the guilty pleas, several high-ranking officials of various companies that do business with governmental entities in El Paso have left their companies.

On Thursday (Aug. 16, 2007), The Bond Buyer, which tags itself as "The Daily Newspaper of Public Finance," reported in a story datelined out of Dallas that RBC Capital Markets managing director Mel Schonhorst and vice president Steven Fuller no longer were with the company. "It is our policy not to comment on personnel matters," the company stated, also noting that it "understands that it is not a subject or target of the investigation."

According to the article, Schonhorst previously worked for First Southwest. That company has represented most of El Paso's major government institutions. The article also noted the recent departures of Hector Zavaleta, a vice president of First Southwest who said through his lawyer he is cooperating in the investigation, and Roberto "Bobby" Ruiz, managing director of Bear, Stearns & Co.

In addition, the El Paso Times reported that Frank Apodaca, president and CEO of Access HealthSource, was fired, according to the company's quarterly report filed this week.

There also has been legal action surrounding the FBI investigation.

Mary Stillinger, who represents three people named as targets in the investigation, was ruled to have a conflict in representing all three. She has appealed. (background)

And Martie Jobe, who has said in court filings that she is one of the co-conspirators name din Ketner's plea, has filed a defamation lawsuit against Ketner and has asked Judge Montalvo to recuse himself from hearing any issues related to her. (background)

August 8, 2007
Judge Releases Order on Stillinger Motion
by NPT Staff, LINK

Judge Frank Montalvo replied to lawyer Mary Stillinger's request for clarification of his ruling disqualifying her from representing three potential targets of the FBI public corruption investigation. [background]

Read his four-page order here.

July 6, 2007
Betti Flores Pleads Guilty
by NPT Staff
LINK

Former County Commissioner Betti Flores pleaded guilty Friday afternoon (July 7, 2007) to multiple charges of trading votes for cash. Hers was the second plea in what the FBI and federal prosecutors have called a widespread public corruption case involving the business community, the courts and politicians.

Filed Friday, the "Information," a charging document similar to an indictment, includes six counts in which Flores pleads guilty to a variety of crimes. The six counts involve conspiracy to commit wire fraud and the deprivation of honest services, and carry a possible sentence of 20 years and a $250,000 for each count. No sentencing date has been set. Flores pleaded in front of U.S. District Judge Frank Montalvo in El Paso.

The information carries the same case number as that used in the Information document charging Travis Ketner, whose guilty plea to charges of bribery and mail fraud, released June 8, made public the FBI public corruption case. (ketner plea)

A brief summary of the Flores charges, along with some background based on news reports and public records:

COUNT 1
-- Flores pleaded guilty to arranging with others, who are not named, to receive payments disguised as campaign contributions in exchange for extending the healthcare benefits administration contract with the County of El Paso.

Access is the administrator for the county. The CEO of Access, Frank Apodaca, recently was placed on paid leave by the parent company of Access, which cited the investigation in an SEC filing. (link)

“Although no indictments have occurred and no definitive allegations have been made or presented to us or Mr. Apodaca, we believe that the investigation involves allegations of official corruption relating to contract procurement by Access Healthsource and other companies from these local governmental entities,” stated the filing. “We are conducting our own independent investigation into those matters and are fully cooperating with the officials conducting the investigation. Mr. Apodaca is on paid leave pending the results of the investigation, allowing him time to address the issues he faces personally.”

Apodaca could not be reached late Friday. The FBI has searched his office and home, and seized some of his assets.

The court voted unanimously Feb. 13, 2006, to extend the Access contract for two years, from Jan. 1, 2007 to Dec. 31, 2008. Commissioner Miguel Teran made the motion, with Flores seconding.

COUNT 2
-- Flores pleaded guilty to accepting cash bribes in exchange for her vote on an underwriting contract for a bond initiative for Thomason Hospital, an underwriting contract for bond issues at the County of El Paso, and financial advisory contracts at the county and for the Thomason bond initiative.

“The County Judge and Commissioners have never been in the habit of telling the Hospital District who or who has not contributed to their campaigns or made other donations to them. So I cannot speak to who may have attempted to influence any individual Court member’s votes,” said Thomason spokeswoman Margaret Althoff-Olivas in a prepared statement. She said Monday morning (July 9) that the hospital would have a news conference Monday afternoon to discuss the issues in more detail.

“I can say that all of the actions taken by the Hospital District’s Board concerning Thomason’s bond initiative were done in open session in committee meetings, and subsequently, by the Board-as-a-whole, in accordance with the law and were conducted fairly and legally.

“If others were engaged in other activities with individual members of the Court, the District was unaware of that,” Althoff-Olivas stated.

“We believe Thomason’s bond initiative was approved on its merits. It was and remains an important community project that will greatly enhance the quality healthcare services the Hospital District makes accessible to all El Pasoans. And I would like to add that it was approved by a unanimous vote of the Court.”

The Court’s approval of the bond project occurred on Nov. 21, 2005.

Thomason Hospital had a news conference Monday to discuss the issues raised by Flores’ plea. Jim Valenti, Thomason CEO, said that the district took every action after extensive review, and the County Court’s approval took place after numerous reports and public meetings of the Hospital District. He also said the district is reviewing its actions, as are the companies involved, something he called “standard procedure” whenever serious allegations are raised.

The bond underwriters for the $120 million, 2005 bond issue were UBS and Bear Sterns as the principal underwriters, and Wells Fargo and Chase as local underwriters, Valenti said.

COUNT 3:
-- According to the plea, Flores stated that unnamed co-conspirators paid her $10,000 in exchange for a vote in favor of the El Paso County Parking Garage Annex and to advocate change orders to the contract.

The contractor on the County Parking Garage Annex was CF Jordan. Flores made a motion to approve change orders to the contract on Feb. 7, 2005, according to the county minutes. Commissioner Dan Haggerty seconded the motion. The minutes do not indicate the amount of the change order. The item was posted as an addendum to the agenda, and was posted as “discuss and take appropriate action on issues pertaining to the status and progression of the new parking garage currently under discussion.” No backup information was included.

According to a document filed as an attachment to an item for the June 12, 2006 meeting, the contract was $7.598 million, with $175,000 in change orders. [link] Flores made the motion to approve the item at the June 12, 2006 meeting. The motion was seconded by then-County Judge Dolores Briones.

A representative for CF Jordan could not be reached late Friday. The company has not been charged with any wrongdoing.

COUNT 4:
-- Flores pleaded guilty to conspiring with others to benefit herself in her misdemeanor case in exchange for her vote to settle a lawsuit.

Flores was indicted on 18 counts of filing late or incomplete political reports in 2005. She eventually was acquitted of the charges. Lawyer Martie Jobe, who represented the El Paso County Sheriff’s Department deputies in a lawsuit to force overtime pay, recently filed a lawsuit against Ketner.

In his plea, Ketner claims someone conspired with a County Commissioner to exchange the commissioner’s vote for representation in a personal matter. The El Paso Times identified the commissioner as Flores and wrote that the other person “appears to be” Martie Jobe, who has not been named by the FBI or charged with any crimes. Jobe filed a defamation lawsuit against Ketner, noting, among other arguments, that the settlement with the Sheriff’s deputies took place before the indictment against Flores.

COUNT 5:
-- Flores pleaded guilty to taking money in exchange for a vote to settle a lawsuit against the County over a tract of land owned by the county and then to sell that land to “clients of another known but not named herein.”

Catalina Development, represented by Luther Jones and David Escobar, sued the county to enforce a sale of 302 acres of land in East El Paso. The county initially had agreed to sell the land, and took steps to sell, but stopped short of executing the contract. The lawsuit, titled Gregory W. Collins v. County of El Paso, was settled by the county at a special meeting Dec. 22, 2003. Although the county had won the lawsuit with a decision by the Texas Supreme Court that it was not bound to sell the land, the county agreed on a motion by Flores, and seconded by Haggerty, to sell the land for $3.04 million.

For background on the Catalina lawsuit, check this NPT file. (link)

The only commissioner to vote against the sale was former Commissioner Charles Scruggs. Read this interview from the NPT files. (link)

He said Saturday that he thought the sale “was a mistake.”

“It didn’t make any sense to me. We fought for 10 years to keep it, we win, then a few months later we sell it,” Scruggs said.

COUNT 6:
-- Flores pleaded guilty to conspiring with others to make payments to her in the form of campaign contributions in exchange for a vote to secure a contract for digitization of court records for the District Clerk’s office.

Commissioner Haggerty, who served with Flores on the court, said he was surprised at Flores’ guilty pleas on a variety of issues.

“I like Betti. I thought she was a lot of fun, we had some good discussions,” Haggerty said. “I’m shocked, I really feel bad for her, I feel bad for her family.”

Haggerty said he never has been offered a bribe, “but I made it know if anyone ever did offer me that I’d go right out and say ‘guess who offered me $10,000, $20,000.’”

In addition to the two guilty pleas, other action in the case involves the federal government filing a motion to disqualify lawyer Mary Stillinger, who represents three clients the government has said are potential “targets” of the investigation. (story)

July 5, 2007
Document Review: U.S. Attorney Attempts to Disqualify Stillinger
by NPT Staff
LINK

One battle in the FBI public corruption investigation is the government’s motion to disqualify noted El Paso attorney Mary Stillinger from representing three clients, named in the government motion as Ysleta School Board Trustee Milton “Mickey” Duntley, El Paso School Board Trustee Charles Roark, and former NCED Chief Operating Officer Ernie Lopez.

The government motion filed June 4 in U.S. District Court, Western District of Texas, calls them “targets,” although in a June 20 El Paso Times story (link) Stillinger denied that her clients have received notification from the government that her clients are “targets.” Stillinger filed two responses to the government motion, one a response filed June 18, and the other a motion to strike the government’s motion, filed June 19.

Interestingly, Stillinger’s first response contains a footnote stating that “the prosecutors have indicated that they will be filing similar motions with respect to other attorney’s multiple representations.”

The most recent documents available on the government document storage and retrieval system, called PACER, are the government’s June 28 response to Stillinger’s first motion, and a July 3 motion asking for more time to assess Stillinger’s second motion.

This series of documents presents only a tiny fraction of the paper that certainly will be generated as this case develops, and the issues that most observers believe will engulf El Paso’s political, business and legal communities. This could happen by this week, as the buzz is growing louder that indictments and/or plea agreements will become public.

Meanwhile, Newspaper Tree presents a summary of the documents thus far, and links to the original documents, as a matter of public record:

JUNE 4, 2007: THE BEGINNING (link)

The government’s original filing, on June 4, 2007, is titled “Motion to Disqualify Counsel for Conflict of Interest, and Brief in Support Thereof.”

The Cause Number is given as EP-06-CR-1369FM, the same number assigned to the “Information Document” – a charging document similar to an indictment -- describing Travis Ketner’s guilty plea. The Information was filed June 8, while the motion to disqualify Stillinger was filed June 4.

The June 4 filing opens with a “Statement of Facts” – that the FBI and the U.S. Attorney’s office have been investigating white collar crime and political corruption in El Paso for approximately three years. The investigation included intercepting electronic and wire communications.

Part 2 of the document is titled “Duntley/Lopez Conflict.” It alleges that in 2004, while Lopez was at NCED, the health care services company Access was seeking a contract with the Ysleta School Board, of which Duntley was a trustee. The national company Precis merged with Access, and NCED CEO Bob Jones because a Precis board member, NCED became a major shareholder in Precis, and Access president Frank Apodaca became President and CEO of Precis.

On Sept. 8, 2004, according to the government, Apodaca sent emails to three people, including Lopez, seeking “employment with any NCED related company for Duntley’s son.” The emails were copied to eight others, according to the government’s filing.

Duntley’s son was fired, according to the filing. On Oct. 11, 2005, Duntley and someone identified as “Schwartz” (no first reference is given) discuss the issue in an intercepted communication. According to the government, Schwartz told Duntley that Jones would ensure Duntley’s son had a job: “Bob said, I just want you to let the young man know he’s in our plans,” the government alleges Schwartz told Duntley.

“If LOPEZ wanted to cooperate, he would be placed in the position of addressing this issue,” the government document states.

Part 4 of the document is titled “Lopez/Roark Conflict.” The government states that Roark was not intercepted on wire tap, but that his position as a trustee on the El Paso School Board and as executive director of Hospice of El Paso presented a conflict. Hospice was run by a board of directors, with Bob Jones, NCED CEO, on the board. Hospice was located in an NCED building, according to the government.

NCED, Jones, and Roark are the focus of investigators in a wire fraud investigation regarding a Chicago-based charity, according to the government document. On July 25, 2003, the subject of Hospice came up at an NCED board meeting, at which Lopez appears as present in the minutes. “Clearly, Lopez is a potential witness in a case against Roark, if one should be filed,” states the government’s motion to disqualify Stillinger.

The government’s motion ends with a section titled “Law and Argument,” in which the basic thrust of the argument is that if Stillinger’s clients are indicted in the same case, their interests may conflict if one offers testimony against another. The government cites the Federal Rules of Criminal Procedure, Rule 44(c), which addresses clients who have been charged. However, the government argues that the intent of the rule “places the instant situation squarely within the Court’s responsibilities.” The government also cites Rule 1.06 of the Texas Disciplinary Rules of Professional Conduct.

If Stillinger’s clients are charged in separate indictments, the government argues, “disqualification is required where successive representation involves ‘substantially replated matters.’”

JUNE 18, 2007: STILLINGER’S FIRST RESPONSE (link)

First, Stillinger notes that Rule 44(c) pertains only once a client has been charged. She acknowledges that Rule 1.06 applies, but states that “those rules do not give the Government a cause of action to interfere with counsel’s relationship with her clients. … Short of an allegation that counsel is obstructing justice, the Government has no ability to bring an action before the Court to disqualify counsel.” Stillinger suggests that the government file a grievance with the State Bar, “as this is the appropriate forum to hear such a concern.”

She also argues that it is speculative to assume that her three clients will be charged together.

Further, Stillinger challenges the notion that one client may be in conflict with another. For example, in the government’s allegation of a conflict between Lopez and Roark, the evidence is board minutes. “(Lopez) typically stayed for his own presentation and left,” Stillinger states. “There is no allegation Mr. Lopez ever discussed Hospice, was actually present when Hospice was discussed, or participated in any correspondence or documentation of any kind regarding Hospice.”

Stillinger claims the government is attempted to coerce her clients into giving information.

“The Government is fishing for information to which it is not entitled at this time, and is further attempting to interfere in the highly protected attorney-client relationship of these three individuals,” she writes.

As a footnote, she adds that “the prosecutors have indicated that they will be filing similar motions with respect to other attorney’s multiple representations.”

JUNE 19, 2007: STILLINGER’S SECOND RESPONSE (link)

Stillinger filed this document June 19, asking that the Court throw out the government’s motion because it was improperly filed. The government filed its motion with the Ketner case number, and her clients have nothing to do with Ketner and are not among the unindicted co-conspirators mentioned in the Information document that laid out the charges against Ketner.

She also notes problems with the electronic filing system for filing her motion, which included the filing system’s failure to recognize her because she is not an attorney either for the United States or Ketner. Stillinger notes that she filed as an attorney for the U.S.A., and “included a lengthy note” indicating it was her, not the U.S.A., filing her motion.

She suggests the government allow its initial motion to be struck as improperly filed, and re-filed under its own case number, “if the Government should choose to do so.”

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JUNE 28, 2007: GOVERNMENT RESPONSE TO STILLINGER’S FIRST RESPONSE (link)

The government argues that there is precedent for finding a conflict of interest at the grand jury stage, even when clients have not been charged. The government also cites a previous ruling that did not find a conflict, but that suggested a conflict could exist if “a grant of immunity was offered in exchange for a client’s testimony” or if a lawyer might receive “witness A information that was detrimental to the interest of witness B.”

The government also argues that the e-mail sent to Lopez on Sept. 8, 2004 regarding employment for Duntley’s son is sufficient to establish a connection between the two. The government states that Stillinger’s claim that Lopez likely wasn’t present at the NCED board meeting of July 25, 2003, in which the board discussed the Hospice lease, “does not negate the connection between the Chief Operating Officer of NCED and the Executive Director of Hospice’s connection to a rent free scheme provided by NCED for Hospice.”

JULY 3, 2007: GOVERNMENT RESPONSE TO STILLINGER’S MOTION TO STRIKE (link)

The government asks to have until July 13 to respond to Stillinger’s Motion to Strike.