A former Mercedes city attorney has been sanctioned by the State Bar of Texas after he admitted to professional misconduct earlier this month.
Juan R. Molina, who served as Mercedes’ city attorney for 14 years until his resignation in January 2019, admitted to professional misconduct during a hearing held before a grievance committee investigatory panel on Jan. 6.
Through his admission Molina was able to reach an agreement with the bar’s Chief Disciplinary Counsel: a three-year probated suspension of his law license beginning Feb. 7 and ending Feb. 6, 2024. The grievance committee announced the agreed judgment on Jan. 8.
Under the agreement, Molina will continue to be able to practice law, but will be required to meet certain conditions of probation, including providing the bar with quarterly reports regarding the finances of his attorney trust accounts.
Those accounts — known as interest on lawyers’ trust accounts, or IOLTA — are used by attorneys to maintain funds received from or on behalf of clients. And it’s those accounts that were the primary focus of the grievance filed by the city of Mercedes and led to Molina’s public sanction.
According to the agreed judgment, Molina admitted that he “failed to keep money owed to the City of Mercedes in (a) trust account separate from the Respondent’s property,” and that, “Upon receiving funds for the City of Mercedes, Respondent failed to timely disburse money to the City of Mercedes.”
“Those allegations stem from the transactions involving the six acres and the Guadalupe Fujarte case,” explained current Mercedes City Attorney Anthony Troiani, who filed the complaint against Molina.
“The city still has complaints against Mr. Molina for other actions that are still outstanding,” he added a moment later.
Those complaints are laid out in a trio of lawsuits the city launched against Molina and various other defendants last spring. Two of the suits involve land deals Mercedes alleges Molina spearheaded to defraud the city.
In the third suit, the city alleges that Molina — in breach of his contract — failed to turn over city records after his 2019 resignation.
THE FIRST SUIT
Mercedes filed the first lawsuit last April. It involves the sale and subsequent change of hands of a 12-acre property worth $925,000 and located on the city’s east side just north of the expressway.
The city purchased the land in 2011, in part, using grant funds from the USDA.
However, those federal funds came with strings attached which prohibited the city from selling the property or using the land for purposes other than for the stated benefit of a nonprofit institute of higher learning.
At the time, city leaders had hoped the land would be used by the Texas Polytechnic Institute, a nonprofit organization which they believed had proposed to operate such an institution in Mercedes.
Instead, the city sold that land for $10 in 2012, transferring ownership to Texas Valley Communities Foundation doing business under the trade name, Texas Polytechnic Institute.
Mercedes alleges that the institute which had incorporated as a nonprofit in 2011 was not the same then operating as an arm of the foundation. Not only were the two institutes separate entities, the city alleges that the foundation’s institute never existed in the first place.
“Texas Polytechnic Institute (the trade name) is not Texas Polytechnic Institute (the nonprofit corporation) and has no legal existence,” the lawsuit reads.
A four-acre portion of the property went on to change hands two more times after the city sold it to the institute.
THE SECOND SUIT
In the second suit, which Mercedes filed last May against Molina and a man named Guadalupe Fujarte, the city alleges Molina acted to defraud Mercedes in a land deal whose manner of sale was then illegal, and that he kept the sale proceeds for himself.
The sale involved a 6-acre piece of property located in Alamo that had been awarded to Mercedes as part of a forfeiture proceeding in April 2011. The land was valued at about $105,000, according to Hidalgo County tax records.
The lawsuit alleges that Molina hired a real estate broker to advertise the property for $100,000.
Instead, however, the city alleges Molina himself secured a buyer in Fujarte and accepted a $3,000 good faith deposit from the man. The following day, Molina emailed then-City Manager Richard Garcia to recommend the city accept Fujarte’s offer to buy the property for $65,000.
But at the time, it wasn’t lawful for a city to employ a real estate broker to sell city-owned property, nor was it lawful for such property to be sold below fair market value.
The city alleges that Molina deposited both the good faith deposit and the $62,000 balance of the sale into his IOLTA account, where the money remained even after his 2019 resignation.
The city contends Molina’s actions amounted to felony theft.
“Juan Molina resigned as City Attorney six (6) years later. Defendant turned the sale proceeds over to the City of Mercedes only after his theft was uncovered and demand was made for its return,” reads the city’s second amended petition.
“The City of Mercedes’ injury resulted from Defendant’s felony theft in the third degree or higher under the Texas Penal Code,” it further reads.
FALSE REPRESENTATIONS
In all three suits, the city alleges that Molina acted dishonestly and deliberately attempted — both alone and with others — to obfuscate that dishonesty.
In some instances, that took the form of not informing Mercedes of vital information that could have changed decisions made by the city commission.
For instance, the first suit alleges Molina failed to notify Mercedes that the Texas Valley Communities Foundation’s version of the Texas Polytechnic Institute was not the same as the nonprofit.
Molina also later allegedly authored changes to the warranty deed for the 12-acre plot of land in Mercedes in an attempt to divest it from the restrictions that prohibited its sale, and would have required ownership of the property to revert back to the city if such a sale was attempted.
In other instances, Mercedes alleges that Molina’s obfuscation took the form of remaining silent when he had a duty to disclose facts to the city, such as when he failed to inform city leaders that Mercedes could not sell property below fair market value.
Garcia, who was then city manager and has since been named a defendant in the lawsuit, had relied upon Molina’s expertise and opinion in regard to the Alamo land deal.
“Defendant deliberately remained silent and did not disclose information to the City Manager. By deliberately remaining silent, Defendant Molina intended for the City Manager to act without the information,” it further reads.
During the state bar’s investigatory hearing earlier this month, Molina admitted that he had “failed to fully explain a matter to the extent reasonably necessary for the City of Mercedes to make an informed decision.”
He further admitted that he failed to provide the city with records in a timely fashion.
“Upon receiving a request, Respondent failed to promptly provide a full accounting to the City of Mercedes,” the agreed judgment reads.
Troiani, the current Mercedes city attorney who filed the complaint against Molina, and who has been litigating the three lawsuits against him, declined to comment on how the probated suspension of Molina’s law license would affect progress in the lawsuits.
But Troiani did say that some of Molina’s admissions before the investigatory panel line up with allegations the city has outlined in its lawsuits.
“He admitted in the agreed order to the conduct,” Troiani said.
Molina did not return a message seeking comment.
