Ten Individuals Indicted for Conspiracy to Commit Federal Programs Bribery, Honest Services Wire Fraud, and Extortion
WASHINGTON—Ten Puerto Rico businessmen and government officials have been indicted for their alleged participation in several schemes to corruptly give things of value to public officials within the government of the Commonwealth of Puerto Rico in exchange for favorable treatment and awarding of government contracts to various corporations. The 25-count indictment includes charges of conspiracy to commit federal programs bribery and honest services wire fraud, wire fraud, federal program bribery, extortion through fear of economic harm, money laundering, false declarations before a grand jury and obstruction of justice, announced U.S. Attorney Rosa Emilia Rodríguez-Vélez of the District of Puerto Rico. The FBI is in charge of the investigation.
A federal grand jury in the District of Puerto Rico returned the indictment on Dec. 2, 2015, which includes 25 charges against the following individuals:
- Anaudi Hernández Pérez, businessman and political fund raiser. Although not named in official corporate records, he exercised de facto control over numerous companies doing business with agencies and public corporations of the Commonwealth of Puerto Rico.
- Sally López Martínez, administrator of the Commonwealth of Puerto Rico’s Administración de Desarrollo Laboral (Workforce Development Administration, hereinafter ADL).
- Sonia M. Barreto Colón, purchasing director of the Commonwealth of Puerto Rico’s Autoridad de Acueductos y Alcantarillados (Puerto Rico Aqueduct and Sewer Authority, hereinafter AAA).
- Ivonne M. Falcón Nieves, vice president of AAA. Prior to her position as vice president, Ivonne M. Falcón Nieves served as treasurer of AAA.
- Javier A. Muñiz Álvarez, businessman. Utilized the Company JM Profesional (sic) & Training Group, Inc. to secure contracts from the Commonwealth of Puerto Rico.
- Carlos F. Luna Cruz, businessman. Worked for JM Profesional (sic) & Training Group, Inc.
- Xavier González Calderón, Administrator for the House of Representatives of the Commonwealth of Puerto Rico.
- Victor R. Burgos Cotto, Director of Technology for the House of Representatives.
- Marielis Falcón Nieves, sister of Ivonne M. Falcón Nieves.
- 10. Glenn O. Rivera Pizarro, special assistant for administration at the House of Representatives of Puerto Rico.
According to the indictment, Hernández Pérez utilized his political and personal connections with high ranking members of the current government in order to have “his people” appointed in critical government positions within the new administration which took over after the November 2012 elections. He also provided those individuals with things of value in exchange for government contracts, benefits and preferential treatment for several of his corporations. The indictment focuses on benefits Hernández Pérez, his co-conspirators and corporate entities, obtained from the Commonwealth of Puerto Rico’s ADL, the Commonwealth of Puerto Rico’s AAA and the Puerto Rico House of Representatives. The three schemes detailed in the indictment essentially followed the same modus operandi.
The indictment alleges that beginning in or about late 2012 and continuing in or about early 2013, Hernández Pérez and several unindicted co-conspirators formalized their plans to obtain government contracts with numerous governmental entities. Hernández Pérez utilized his personal friendship with Person B (brother of the governor of Puerto Rico, identified as Person A in the indictment), and the good will generated by his substantial fundraising activities during the 2012 election cycle, to position himself to successfully make recommendations on behalf of individuals seeking government appointments and employment after the election.
Hernández Pérez received numerous e-mails and resumes from individuals seeking his assistance in obtaining positions within the newly elected government. Hernández Pérez, in turn, forwarded many of those e-mails to government officials, and to the governor’s brother, Person B. Many of these individuals ultimately received government employment. Hernández Pérez and his co-conspirators then set out to form and make alliances with various corporations and limited liability companies that would be used to obtain government contracts, proposals and purchase orders. These companies included: 3 Comm Global Inc., Links Group LLC, EKO Technologies LLC, JM Profesional (sic) & Training Group Inc. and Waffler Avenue LLC. Some of these corporations were formed immediately prior to, or after, the general elections of November 2012.
Hernández Pérez and his co-conspirators were careful to ensure that his name did not appear on any official documentation regarding the formation of the corporations, or on any formal request for government contracts, proposals or purchase orders. Hernández Pérez, however, was present in numerous meetings where the proposals were discussed, was included in internal electronic and oral communications regarding these matters, and received payment from the contracts into corporate bank accounts and other suspicious transactions.
Many of the individuals recommended by Hernández Pérez whom obtained the jobs, ultimately had the authority to approve or authorize contracts, purchase orders, and other financial obligations on behalf of their respective agencies, departments or public corporations, and in return for the recommendations for employment, and/or other things of value, authorized contracts, purchase orders, proposals and payments on behalf of the co-conspirators and their corporations.
Hernández Pérez and his co-conspirators offered and gave, and the public officials solicited and accepted from Hernández Pérez and his co-conspirators, things of value, including expensive meals, personal gifts, expensive fountain pens, purses, bags, concert tickets and the payment of certain accrued debts. Hernández Pérez allegedly kept written electronic records regarding the purpose of his government related business meetings, and the things of value provided to each of these individuals.
Hernández Pérez and his co-conspirators utilized their government influence to receive an unfair competitive advantage over their competitors, in that they: a) received preferred opportunities on certain government “request for proposals” (RFPs); b) received guidance from agency employees on the proper format and content of proposals and bids for government contracts; c) had access to speak and meet with critical employees in decision making positions within the agencies, departments and government corporations; d) received guidance on how to structure bids and proposals in order to avoid the formal bidding process required by law; e) demanded and were provided with explanations from agency employees when their proposals or bids were not selected.
Once awarded the government contracts, Hernández Pérez and his co-conspirators would utilize, often without proper contractual authority, subcontractors who would perform the work defined in the contracts. On many occasions, Hernández Pérez and his co-conspirators provided substandard work on their contractual obligations in that they: failed to make the required payments to suppliers, subcontractors and creditors; failed to abide by the terms of the contract regarding performance results/follow up as required under the contract; failed to competently provide the services they were contracted to perform.
Hernández Pérez is also charged, along with defendants Ivonne Falcón and Marielis Falcón, with Hobbs Act extortion under fear of economic harm. Hernández Pérez and unindicted co-conspirators would utilize their contacts and influence within at least one government dependency (the AAA) to secure, for a fee, the release of legitimate payments due to other corporations, which lacked the current connections within the government. In particular, Hernández Pérez and his associates, obtained property not due to them, specifically, $100,000.00 from Contractor A, in exchange for utilizing his connections within AAA in order to secure a portion of the money owed (approximately $1 million) to Contractor A, with Contractor A’s consent, induced through the wrongful use of a fear of economic loss. Moreover, the Falcón sisters aided and abetted each other to commit extortion. Defendant Ivonne M. Falcón Nieves utilized her position at AAA in order to enable her sister, defendant Marielis Falcón Nieves, to obtain property not due to her, specifically, cash payments, check payments, payments to contractors, and the performance of residential tree trimming, from Contractor A, with Contractor A’s consent, induced through the wrongful use of a fear of economic loss.
The 25 counts detailed in the indictment are as follows:
- Count 1: 18 U.S.C. § 371, Conspiracy to Commit Federal Programs Fraud and Honest Services Wire Fraud regarding contracts with ADL and AAA.
- Count 2: 18 U.S.C. § 1349, Conspiracy to Commit Honest Services Wire Fraud for scheme with ADL.
- Counts 3-5: 18 U.S.C. § 343, substantive Wire Fraud counts for e-mails related to the scheme with ADL.
- Count 6: 18 U.S.C. § 1349, Conspiracy to Commit Honest Services Wire Fraud for the scheme with AAA.
- Counts 7-9: 18 U.S.C. § 1343, substantive Wire Fraud counts for e-mails related to the scheme with AAA.
- Count 10: 18 U.S.C. § 666(a)(2), paying a bribe to an agent of an organization receiving federal funds for the scheme with ADL (Sally López Martínez).
- Count 11: 18 U.S.C. § 666(a)(1)(B), receipt of a bribe by an agent of an organization receiving federal funds for the scheme with ADL.
- Count 12: 18 U.S.C. § 666(a)(2), paying a bribe to an agent of an organization receiving federal funds for the scheme with AAA (Ivonne Falcón).
- Count 13: 18 U.S.C. § 666(a)(1)(B), receipt of a bribe by an agent of an organization receiving federal funds for the scheme with AAA (Ivonne Falcón).
- Count 14: 18 U.S.C. § 666(a)(2), paying a bribe to an agent of an organization receiving federal funds for the scheme with AAA (Sonia Barreto).
- Count 15: 18 U.S.C. § 666(a)(1)(B), receipt of a bribe by an agent of an organization receiving federal funds for the scheme with AAA (Sonia Barreto).
- Count 16: 18 U.S.C.§ 1951(a), Extortion Through Fear of Economic Harm (Hernandez Perez).
- Count 17: 18 U.S.C.§ 1951(a), Extortion Through Fear of Economic Harm (Ivonne & Marielis Falcón Nieves).
- Count 18: 18 U.S.C. § 1956(h), Conspiracy to Commit Money Laundering (Hernandez Perez and Muñiz Alvarez).
- Count 19: 18 U.S.C. § 1623(a), False Declarations Before Grand Jury (Carlos F. Luna Cruz).
- Count 20: 18 U.S.C. § 1623(a), False Declarations Before Grand Jury (Carlos F. Luna Cruz).
- Count 21: 18 U.S.C. § 1512(c)(2), Obstruction of Justice (Carlos F. Luna Cruz).
- Count 22: 18 U.S.C. § 1512(c)(2), Obstruction of Justice (Carlos F. Luna Cruz).
- Count 23: 18 U.S.C. § 1512(c)(2), Obstruction of Justice (Carlos F. Luna Cruz and Javier A. Muñiz Álvarez (computer)).
- Count 24: 18 U.S.C. § 1346, Conspiracy to Commit Wire Fraud (money and property) for scheme with PR House of Representatives.
- Count 25: 18 U.S.C. § 666(a)(1)(A), Intentional misapplication of funds by an agent of an organization receiving federal funds for the scheme with House of Representatives (González Calderón, Burgos Cotto and Rivera Pizarro).
“For decades now, political cronyism, favoritism and corruption have robbed the people of Puerto Rico of the right to decent services and unbiased representation, including legally awarded government contracts,” said U.S. Attorney Rodríguez Vélez. “The people of Puerto Rico foot the bill for the underhanded dealings detailed in the indictment. The time for government cronyism that allows some to line their pockets with ill-gotten contracts at the expense of the many, is over. The time for public servants who trade their duty to represent the people of Puerto Rico in exchange for political appointments and gifts, is also over. The people of Puerto Rico deserve the honest services of, not only those in their government, but those who choose to do business with the government. Their violations of the public trust will be prosecuted to the full extent of the law.”
“Unfortunately, this is one more case of graft, greed and corruption that over the last 20 years have contributed to the government of Puerto Rico’s fragile financial condition and on the brink of bankruptcy,” said Special Agent in Charge Carlos Cases of the FBI’s San Juan Division. “It is the responsibility of the leaders of the government of Puerto Rico to ensure this type of reprehensible and corrupt behavior does not occur. The FBI, along with the United States Attorney’s Office, District of Puerto Rico, will always remain vigilant and attack the corruption threat with undeniable and fervent passion. Let there be no doubt this is only the beginning and the investigation will continue. There will be no stone left unturned.”
The case is being investigated by the FBI’s San Juan Division. The case is being prosecuted by First Assistant U.S. Attorney Timothy Henwood and José Capó Iriarte of the District of Puerto Rico, Deputy Chief of the Financial Fraud and Corruption Unit. If found guilty, the defendants are facing possible sentences of up to five years for the conspiracy to commit federal programs fraud and wire fraud, up to 10 years for honest services fraud, up to 20 years for money laundering, Hobbs Act, obstruction of justice and conspiracy to commit honest services fraud.
The charges contained in the indictment are merely accusations. The defendants are presumed innocent unless and until proven guilty.