MERCEDES — The FBI has served the city of Mercedes a subpoena related to an ongoing investigation regarding Juan R. Molina, who served as the Mercedes city attorney until January 2019.
The issuance of the subpoena was confirmed Tuesday night during a Mercedes City Commission meeting when Place 2 Commissioner Leonel Benavidez mentioned the subpoena right before the commission retired to executive session.
“I was just informed by our city attorneys today that the city of Mercedes was served with a warrant by the FBI, a search warrant,” Benavidez said after Mayor Oscar Montoya read the captions for the executive session agenda.
The commission was set to discuss lawsuits it filed against Molina and which have remained pending since last spring.
A city official confirmed Tuesday the subpoena involved the former city attorney.
Reached for comment Tuesday afternoon, a spokesperson for the FBI declined to provide any details.
“Pursuant to FBI policy, we neither confirm nor deny an investigation or comment on whether or not we are involved in any investigative activity,” Special Agent Michelle Lee said via email.
Though it remains unclear why the FBI is investigating Molina and the city, Mercedes has been embroiled in a trio of lawsuits against its former city attorney for more than a year. The suits allege fraud, breach of fiduciary duty, theft and malpractice, among other claims.
Two of the suits involve two plots of city-owned land that the city now says were fraudulently sold — one in Mercedes and the other in Alamo. Molina facilitated the sales on behalf of Mercedes in 2011 and 2012.
It’s the 2012 sale of the plot of land in Mercedes — which the city sold for $10 in 2012 — that may have piqued the interest of federal authorities because that land deal involved government funds.
The city purchased the 12 acres of land from the Mercedes Housing Authority in 2011 with the ultimate goal of opening a school at the site.
The land, which lies along the westbound frontage road of Interstate-2 on the city’s east side, cost Mercedes $925,000. The city obtained a $500,000 grant from the USDA to help bankroll the purchase.
In a notice of federal interest the city filed with the Hidalgo County Clerk’s Office in February 2012, Mercedes promised to never use land for any purpose other than an institute of higher learning, lest it be forced to return the half-a-million dollar grant to the federal government.
It also couldn’t be “sold or transferred to another party without the written permission of USDA-RD,” the notice of federal interest read in part.
“Grant Conditions and requirements may not be nullified or voided through conveyance or change in use,” it further stated.
But that’s precisely what the city is alleging Molina did when he facilitated the sale of the property to a non-existent entity in 2012, which in turn, sold one-third of the land to a commercial developer in 2020.
Mercedes alleges Molina, along with others, concocted a complex scheme to hoodwink the Mercedes City Commission into thinking it was working with a nonprofit organization that had plans to open a school at the site.
But instead, Mercedes sold the land to what it says is a nonexistent entity using the same name as the organization commissioners thought they were dealing with.
The city thought it was entering into an agreement with a nonprofit known as Texas Polytechnic Institute. However, the city had actually sold the land to the Texas Valley Communities Foundation, which was operating under a trade name — Texas Polytechnic Institute — identical to the nonprofit.
Roland Arriola, the president of TVCF, is one of several defendants named in the lawsuit along with Molina.
The city’s fourth amended complaint claims the company commissioners worked with assumed the name “in order to defraud the CITY.”
In 2012, Mercedes sold the land to TVCF for just $10.
The city claims Molina knew Roland Arriola, the president of Texas Valley Communities Foundation, was making false representations about Texas Polytechnic Institute and not only failed to alert city officials, but intended for the city to act on those alleged misrepresentations.
The city also claims Molina in 2015 authored changes to the land’s warranty deed in an attempt to remove a reversionary clause that would force the land to revert to the city’s possession if it was no longer being used for an institute of higher learning.
According to allegations detailed in the suits, Molina profited off the land deals, in part, by hanging onto sale proceeds — at least in relation to the separate sale of the land in Alamo in 2011.
In that instance, the city claims Molina brokered the sale himself — in violation of state law — and then kept the $65,000 sale proceeds in his attorney trust account for six years. It wasn’t until months after Molina’s resignation — and only after the city discovered the funds were missing — that he returned the money.
But the city also suspects Molina may have personally profited off the land deals in other ways. The city seeks to discover precisely how via a list of interrogatories it has filed with the man as part of the lawsuits.
To that end, the third lawsuit against Molina involves records Mercedes claims he failed to turn over after his 2019 resignation that he amassed during his 14-year tenure as city attorney. The city claims Molina held onto the records in order to obscure evidence of his alleged wrongdoing.
In January, Molina was sanctioned by the State Bar of Texas in relation to a complaint filed against him by current Mercedes City Attorney Anthony Troiani.
Molina admitted to professional misconduct and received a three-year probated suspension of his law license to end Feb. 6, 2024.
Commenting at the time, Troiani said Molina’s admissions of misconduct lined up with some of the allegations the city has made against him in its lawsuits.
