A federal grand jury this week indicted four alleged key conspirators — three of them city officials — for years of bribery, fraud and money laundering involving $50 million in inflated contracts to rebuild the Weslaco water treatment plant in South Texas.
The indictments follow guilty pleas entered last month by two other local elected officials, one of them former Rio Grande City Municipal Judge Leonel Lopez, who FBI investigators say masterminded the bribery and contract scheme.
In the years since the project was begun, water rates for Weslaco residents have nearly doubled and are among the highest in Hidalgo County. Despite the money lavished on the contracts, the Weslaco water treatment plant is still not operating fully.
A criminal complaint details years of alleged illegal dealings that led to a total of 74 felony counts against former Weslaco City Commissioner John Cuellar; his uncle and former Hidalgo County Commissioner Arturo Cuellar Jr.; Rio Grande City attorney Daniel Garcia; and Richard Quintanilla, a business operator in Weslaco.
Lopez, 52, was the funnel through which more than $4 million in bribes was passed along, principally from the construction company, the engineering firm and a subcontractor with ties to the accused, according to the complaint. In his guilty plea, Lopez admitted keeping $2.5 million of the bribe money.
John Cuellar, 56, was the key political operative, according to the complaint. “John Cuellar was the de facto leader of the commission’s majority voting bloc during the vast majority of the charged conspiracy,” the complaint says. “Arturo Cuellar Jr. agreed with the investigating agents that John Cuellar controlled the commission.”
By 2007, Weslaco had been on notice for three years that the Texas Commission on Environmental Quality had found the city’s three water treatment plants to be in violation of state water quality regulations. That year, Weslaco voters approved $28 million in municipal bonds to build a new northwest plant and repair the main plant.
After years of wrangling over how to prioritize the spending of the bond money, Cuellar convinced the commission to declare the treatment system an “imminent threat to public health and safety,” allowing commissioners to award a $38.5 million contract in March 2012 to construction and engineering firm CDM Smith without the usual bidding process.
At the recommendation of Massachusetts-based CDM, the commission hired Briones Consulting & Engineering and brought on J-III Concrete, co-owned by Cuellar’s uncle, Arturo Cuellar, as a subcontractor on the project.
The bribery ensued, prosecutors allege, with payments going from Lopez to Arturo Cuellar and passing to John Cuellar. Between March 2008 and November 2014, Lopez paid Arturo Cuellar almost $1.4 million, according to the complaint.
From April 2011 through November 2014, John Cuellar received an additional $405,000, contributed by an unnamed fourth company paying in $5,000 and $7,500 increments, ostensibly for legal services Cuellar never provided, the complaint says.
Payments “stopped promptly in November 2014 upon John Cuellar’s loss of his re-election bid for the commission,” the complaint says.
The indictment alleges that Lopez used Quintanilla as a go-between to funnel bribe money to another Weslaco city commissioner, Gerardo Tafolla, 52, who pleaded guilty on April 8 to one count of felony bribery.
Garcia, the Rio Grande City lawyer, has been charged with money laundering for allegedly using a trust account to launder bribe money paid to John Cuellar.
While much of the criminal investigation and legal fallout from the scheme has occurred in the past six months, suspicions were aroused publicly at least six years ago when The Monitor, the newspaper in McAllen, reported that Weslaco’s construction and engineering costs were more than twice that of any comparable water plant project in the Rio Grande Valley.
Another area newspaper,the Valley Morning Star, took note of the control that CDM and Briones had over all of the funding for the project. A review of campaign finance records showed the owner of Briones donating $29,000 to Arthur Cuellar during the period when the Weslaco commission was giving final approval to the $38.5 million construction total.
“That’s the way the game plays, I guess,” Cuellar told the Morning Star. “Of course, I have several guys — LeFevre Engineering has probably given me $70,000, Linebarger has given me a bunch of contributions. I guess you invest and maybe you get a job here or there.”
John Cuellar defended the spending in the same story. “Do I think that it was overpriced? I’m standing by the decision that the dollars were used wisely, based on the recommendation of our very conservative city manager,” he said. “I have no reason not to trust what CDM and Briones are doing for the city of Weslaco.”
In September of last year a federal grand jury began viewing video recordings of Weslaco commission meetings going back to 2009 and reviewing conflict of interest disclosure documents from Cuellar and Tafolla. The subpoena for the materials by the FBI confirmed widespread rumors that the entire water plant project was under investigation, according to the Valley Morning Star.
That weekend, all of Weslaco was put under a water boiling order after a ruptured water pipe shut down the water plant.
In October, Weslaco sued CDM for allegedly trying to collect more money than the agreed-to price for its construction work. A month later Briones paid $1.9 million to settle a Weslaco lawsuit alleging the engineering company had vastly overcharged for its services.
“By charging the city more than double the market rate for their services, Briones and Briones Engineering failed to protect the public welfare by depriving the city and its citizens of funds that could have been utilized on additional infrastructure projects,” the lawsuit says.
When the FBI began making arrests last week, Weslaco Commissioner Greg Kerr, who ran on a platform of rooting out water plant corruption in defeating John Cuellar, said Weslaco citizens would bear the debt burden for another 13 years.
“It’s so unfair to so many people [who] at one time probably voted for some of these very people that rammed this water plant down the citizens’ throats,” Kerr told The Monitor. “I just hope people remember what happened with this water plant and remember when you go vote that these things happen and you really need to be cognizant of who you’re putting into office.”
Mark Lisheron can be reached at [email protected].