Edcouch reels after FBI raid; assistant admin placed on leave

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FBI agents load several boxes of evidence into two vans outside of Edcouch City Hall on Wednesday, Oct. 18, 2023. (Dina Arévalo | [email protected])

EDCOUCH — Less than a week after a swarm of FBI agents raided city hall and paid visits to the city’s top two administrators, officials here are still struggling to recover from the turmoil.

And now one of those administrators — Assistant City Manager Ernesto “Ernie” Rosales — has been placed on unpaid administrative leave in the wake of his arrest earlier this month.

Nowhere was the raid’s chaotic aftermath more clear than during last Thursday night’s Edcouch City Council meeting. There, City Manager Victor Hugo de la Cruz repeatedly gave his apologies for the disarray the federal agents had left in their wake.

“I don’t have a detail, a lot of details on the budget itself,” de la Cruz said, referring to the city’s proposed 2023-24 fiscal budget, which state law mandates should have been passed prior to Oct. 1, but which the council didn’t approve until Thursday’s meeting.

Later, during a discussion about renewing the Edcouch’s contract with the city of Weslaco for animal control services, de la Cruz was again apologetic about the lack of available details.

“It’s just a lot of this information is not with us right now. It was kinda interrupted,” the city manager said, alluding to the prior day’s raid without ever mentioning the FBI outright.


But after the meeting, de la Cruz sat down with The Monitor to talk about what he had encountered once he returned to city hall.

“I really didn’t have time to prepare anything today, or redo anything,” the city manager said of Thursday’s city council meeting, adding that one of the things the agents had taken was the folder staffers had prepared for the meeting.

“Obviously, we have that information on our computers, but all of that was already prepared on that folder,” de la Cruz said.

De la Cruz had been ordered to stay away from city hall while FBI agents conducted their search on city hall — something he learned about during an early morning visit to his home.

“At 6:20 (a.m. Wednesday), I got somebody coming to my door and knocked. My daughter says, ‘Hey, there’s two people out there, two guys out there,” de la Cruz said.

At the time, de la Cruz was helping his children get ready for school. He said he opened the door to two FBI agents who asked if they could speak with him.

De la Cruz said the agents never entered his home, nor did they execute a search warrant. Instead, he sat inside a vehicle, where they questioned him before informing him of the pending raid on Edcouch City Hall, then left.

“As soon as I got to the city, they didn’t let me in. They told me, ‘Get out,’” de la Cruz said with an incredulous chuckle.

“I asked for my staff. They said, ‘Your staff’s not working today,’” de la Cruz added.

What followed was a nearly five-hour long search of the building.

Just after 1 p.m., agents emerged with about half a dozen bankers boxes, full trash bags and other items that they quickly placed inside a panel van and a box truck marked with the words “FBI Evidence Response.”

While one group of FBI agents were busy at Edcouch City Hall, another team had been sent to the McAllen home of the assistant city manager.

They spent several hours inside with Rosales. They confiscated his cellphone, but did not take him into custody. To date, neither he nor de la Cruz have been charged with a crime.


Rosales was back at work by the time of Thursday’s city council meeting, though he did not participate in any of the discussions.

Nor did he speak with the media, citing advice from his attorney.

On Monday, de la Cruz announced that he had placed Rosales on unpaid administrative leave indefinitely.

The suspension stems from Rosales’ arrest earlier this month by Texas Department of Public Safety troopers as he was traveling to a Texas Municipal League conference on behalf of the city.

Rosales was intercepted by U.S. Border Patrol agents at the Sarita checkpoint on Oct. 3, DPS Staff Sgt. Rob Mallory confirmed on Monday.

“He was referred to secondary inspection, where they found the marijuana and the gun, so they called the trooper over to deal with it,” Mallory said.

In all, law enforcement discovered “a green and brown leafy substance wrapped in a clear material designed to be smoked, one handgun, and three vape pens,” allegedly in Rosales’ possession, Mallory said.

The DPS trooper issued Rosales two citations — one for possession of marijuana, and the other for unlawful carrying of a gun, both misdemeanors — before sending the assistant city manager on his way.


But that arrest has since caused problems for the city of Edcouch, namely, the suspension of some federal law enforcement grant funds.

Rosales had been traveling in a city-issued vehicle — one that Edcouch had purchased for its police department using Operation Stonegarden grant funds.

Though administered by the office of the governor, Operation Stonegarden funds ultimately come from the federal government via FEMA.

As a result, there are a number of stringent rules that grant awardees must adhere to, including the prompt reporting of any issues involving grant beneficiaries.

Edcouch failed to notify the office of the governor, or OOG, about Rosales’ arrest, according to a letter the state sent the city this week notifying them of the hold on their 2023 allotment of grant funding.

“(T)he city also agreed to ‘immediately notify OOG in writing if a project or project personnel became involved in any litigation, whether civil or criminal …’” the letter reads, in part.

The letter further states that the $90,000 in funding will remain on hold until Edcouch explains why Operation Stonegarden-funded equipment “was used for unauthorized purposes.”

FBI agents are seen outside Edcouch City Hall on Wednesday, Oct. 18, 2023. More than half a dozen agents executed a search warrant on city hall and at the home of Assistant City Manager Ernesto “Ernie” Rosales. (Dina Arévalo | [email protected])


The federal law enforcement grant also figures prominently in the warrant that the FBI served on Edcouch City Hall.

De la Cruz, the city manager, confirmed that the warrant sought documents related to Operation Stonegarden and other federal funds.

The city manager admits that Edcouch — a small town with limited resources, including a lack of a dedicated finance director — has had issues with its financial recordkeeping.

In particular, the city’s auditors have criticized Edcouch for its failure to timely maintain its revenue and expenditure reconciliation processes.

That lag in reconciliation has made it harder for Edcouch to detect when there are problems, de la Cruz said.

He cited an incident in 2019, when the city fell victim to a ransomware attack. He also spoke of two instances of bank fraud — one where several city checks had been duplicated, and another where a city credit card had been cloned.

But when asked directly if there’s money missing from the city’s coffers, de la Cruz said no.

“Uh, no. No. No,” he said.


As the FBI was conducting its raid last week, Edcouch City Attorney Roel Gutierrez said federal agents had also demanded records about public meetings, purchases, permits and game rooms.

After last Thursday’s city council meeting, de la Cruz also spoke of the role that game rooms may play in the federal investigation.

“I think the obvious is the game rooms. And aside from that, I really don’t know,” de la Cruz said when asked what the FBI was looking for.

The city manager said he had been wary of the idea of allowing game rooms to open in the small Delta city since nearly all forms of gambling are illegal in Texas.

De la Cruz and the city council were sold after Elsa passed a similar ordinance, as well as a snazzy proposal by the local attorney who had helped Elsa craft its ordinance.

“I mean, shoot, they came in with a brochure and they were well-prepared. They had a list of people that were part of their board. I mean, they had a board and everything,” de la Cruz said.

A shuttered game room can be seen on the corner of Southern Avenue and South Hill Street in Edcouch in Wednesday, Oct. 18, 2023. To the left, two FBI evidence vans can be seen parked outside Edcouch City Hall as federal agents executed a search warrant.

Edcouch eventually made plans to allow for six game rooms to operate within the city.

At $50,000 per permit application per year, Edcouch was looking at generating nearly 10% of its $3.5 million annual operating budget by allowing the half dozen game rooms.

“At that point in time, it sounded really good,” de la Cruz said.

But that never happened.

Instead, just one game room opened inside a building catty corner to city hall.

Within weeks, the Hidalgo County Sheriff’s Office had raided and shut down the establishment, along with several others in Elsa, Sullivan City and rural Weslaco.

As night descended upon the Delta last Thursday, the shining, sparkling lights that once announced the location of the game rooms along Texas Highway 107 no longer twinkled.

Even the game rooms that hadn’t been subject to law enforcement raids appear to have shut their doors.

As for de la Cruz, he’s asking the Edcouch community to continue trusting in city officials, despite the pending federal investigation.

“I don’t know a lot. I’m not a seasoned city manager, but one thing I will tell you is my heart’s in the right place and I’m here for the community,” de la Cruz said.

“I just ask them to just trust, trust in the process. And like I said, I welcome any law enforcement agency to come in. And if anything happens or comes out of this, you know what? Let’s face the … music,” he added a moment later.


FBI raids Edcouch City Hall, assistant city manager’s home