For his role in an alleged Ponzi scheme and a separate money laundering conspiracy, State Senator Carlos Uresti (D-San Antonio) is now facing 13 counts of fraud, and is accused of misleading investors, which caused them to lose millions of dollars. One investor was a woman who lost her children in a car accident, and whom Uresti represented in a wrongful death lawsuit — then later convinced her to invest the money he helped her win into his now-bankrupt company.
Uresti faces federal charges of wire fraud, conspiracy to launder money and to commit bribery; failing to register as a securities broker; and engaging in monetary transactions in property derived from specified unlawful activity.
All of this occurred, the government alleges, while Uresti was a member of the Texas Legislature.
The two different schemes involve a company called Four Winds, which purported to sell sand used in hydraulic fracking to produce oil, and in which Uresti held a 1 percent ownership stake; and then also a company that contracted with a Reeves County detention facility to provide medical services. Uresti was paid as a "consultant."
In the latter Four Winds scheme, Uresti is accused of misleading investors to invest money in Four Winds without disclosing that he would profit from those investments. He not only was paid a commission to recruit investors, but also was paid 10 percent of the profits generated by their investments, according to the federal indictment. But the investors apparently lost millions of dollars because their investments were not used to generate profits later returned to them, but according to federal prosecutors were actually used to pay Uresti and his associates and for business expenses.
The first victim listed is Diane Cantu, who, according to the San Antonio Express-News, lost her 13-year-old son, four-year-old daughter and their two friends in a car wreck after a tire blew out on her SUV, causing the car to flip. Cantu received a $900,000 settlement in the wrongful death lawsuit in which Uresti was her lawyer — but she lost most of that money to Uresti after he allegedly cajoled her into investing the money in Four Winds.
Cantu first invested $25,000 into Four Winds, but that money was actually used to pay Uresti's personal and business expenses, according to the indictment. To convince her to invest, Uresti allegedly made it sound like he, too, was considering investing, and he gave her "legal advice" about the investment without disclosing that actually he benefited from her investment. He was allegedly not registered with the Securities and Exchange Commission to act as a securities broker anyway. She ultimately invested the majority of remaining settlement money into Four Winds, and some money that was returned to Cantu was not profit that her investment generated, but was actually just her own money, prosecutors claim.
In the second scheme, a man named Vernon Farthing convinced Reeves County Commissioner Jimmy Galindo to award Farthing's company a contract to provide medical services to inmates allegedly in exchange for returning some of the profits back to Galindo. Prosecutors say Uresti was the "conduit" that allowed this bribery and money laundering conspiracy to work. For ten years, Vernon paid Uresti $10,000 per month for "marketing services." Uresti would deposit the money into his law firm's operating expense account or into his other company, Turning Point Strategies. Then, prosecutors say he wired half of his earnings from Vernon over to Galindo from these accounts in order to "cover up the conspiracy from taxpayers."
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In a statement, Uresti said he was innocent of the charges.
"I am hard at work representing District 19 in the 85th Legislative Session," he said. "The charges against me are groundless and I look forward to proving my innocence in a court of law at the appropriate time."
Uresti faces up to 20 years in federal prison on most of the charges.
His case echoes that of another Texas public official, Attorney General Ken Paxton, who is also accused of misleading investors by not disclosing he would profit from their investments. Both of these embattled public servants have court hearings in their respective criminal cases tomorrow.