More Convictions in Relation to Progreso Bribery Case

HOUSTON—Jose Vela, 65, and his Michael Vela, 30, have entered guilty pleas to conspiracy and bribery concerning programs receiving federal funds, announced United States Attorney Kenneth Magidson. Also pleading guilty today in a separate but related case was Orlando Vela, 33.

Jose and Michael Vela were originally charged along with Omar Vela and others based on their alleged participation in a scheme to create a “pay to play” public contracting system in Progreso. Today, they admitted they participated in the scheme from 2004 through 2013. Michael, Omar, and Orlando are brothers, and Jose is their father. Omar is the mayor of Progreso, while Michael was the president of the Progreso Independent School District Board (PISD) of Trustees.

From 2004 through 2013, PISD received more than $1 million per year in federal program grants and funds from the U.S. Department of Education. In order to obtain contracts from PISD or from the City of Progreso, contractors were required to pay bribes to Vela and others.

The Velas were able to extract bribes from contractors as a result of their political control of Progreso and PISD. As government officials, Michael and Omar had a level of control over local government. In addition, Jose Vela controlled the PISD School Board by rewarding board members who voted as he directed with bribe money. Through this control over the PISD Board, Jose Vela caused contracts with PISD to be awarded to contractors who were willing to pay him bribes and kickbacks in return. Omar and Michael Vela assisted their father by gathering bribe payments from contractors and delivering the payments to him. They were then given a portion of those monies.

According to the plea agreement, during the timeframe of the conspiracy, the Velas required a local architect, his firm, a construction company, and the school board attorney to pay bribes and kickbacks to Vela and others in order to obtain work with PISD or the city of Progreso. In total, Jose, Omar and Michael extracted more than $300,000 in bribe payments.

In a separate but related case, Orlando Vela entered a guilty plea to a criminal information charging him with theft from a program receiving federal funds. He is employed by PISD as a risk manager. In this role, he is responsible for directing and managing the school district’s risk management, loss control, and safety programs. On May 11, 2012, Orlando Vela formed a company called Borderline Office Supplies, which purported to be in the business of supplying office and janitorial products to school districts.

Between May 2012 and March 2013, Orlando Vela submitted invoices to PISD for products that Borderline did not actually supply to PISD. The business bank account showed no purchases of the products that it claimed to have resold to PISD. The payments on the fraudulent invoices were approved by PISD’s business manager, Orlando Vela’s wife, and totaled $12,874.42.

On August 12, 2013, Orlando Vela received a subpoena requesting documents related to his business’s alleged purchases of products and subsequent sales to PISD. In response, he provided invoices from a company in Mexico that purported to show that Borderline had purchased the products in Mexico and resold to PISD. However, upon further investigation, agents learned those invoices were in fact fraudulent.

U.S. District Judge David Hittner, who accepted the pleas today, has set sentencing for July 25, 2014. At that time, all face up to 10 years in federal prison for the bribery involving federal programs convictions. Jose and Michael Vela also face up to five years in federal prison for the conspiracy. All convictions also carry as possible punishment a maximum fine of $250,000. All were permitted to remain on bond pending their hearings.

The investigation was conducted by the FBI. Assistant United States Attorney Robert S. Johnson is prosecuting the case.