Federal grand jury indicts former Mercedes city attorney for theft

McALLEN — A grand jury has handed up an indictment against former Mercedes city attorney Juan R. Molina for allegedly stealing federal funds through his work with the city.

Molina made his initial appearance and was arraigned in McAllen federal court Thursday on allegations that he stole federal funds issued to Mercedes while he served as its general counsel and held the money in his attorney trust account, known as an IOLTA account.

Molina pleaded not guilty to the sole charge and was released on a $30,000 unsecured bond.

“Yes, your honor, I understand,” Molina responded when the judge asked if he understood the charge against him.

The criminal charge appears to stem from information revealed in a trio of civil lawsuits the city filed against its former legal counsel in the spring of 2019.

In two of the suits, Mercedes officials allege that Molina was instrumental in a series of fraudulent land deals involving the sale of city-owned property.

In the third, the city alleges that Molina improperly retained records from his 14-year tenure as city attorney, as well as monies belonging to Mercedes, even after his 2019 resignation.

According to state court documents, Molina facilitated the fraudulent sale of just over 12 acres of land previously owned by the city to a dummy nonprofit under the guise of creating an institution of higher learning.

In 2012, the city sold the land to the nonprofit for just $10.

But Mercedes had previously purchased that land — valued at approximately $925,000 — from the Mercedes Housing Authority in 2011 using a $500,000 grant from the U.S. Department of Agriculture to help bankroll the purchase.

However, the grant came with strings attached — namely, that the city could not later sell the land or alter its intended use, lest it be forced to return the money to the government in what is known as a “reversionary clause.”

The land could not be “sold or transferred to another party without the written permission of USDA-RD,” reads a notice of federal interest the city filed with the Hidalgo County Clerk’s Office in 2012.

“Grant Conditions and requirements may not be nullified or voided through conveyance or change in use,” the notice further states.

In the second land deal, Mercedes had obtained ownership of a 6-acre parcel of land in Alamo via asset forfeiture — land it sought to sell.

Molina personally brokered the sale, which at the time was a violation of state law, according to the city’s lawsuit.

Furthermore, Mercedes claims Molina accepted a “good faith deposit” from the buyer, as well as the $65,000 sale proceeds, which he kept in his “interest on trust lawyer account,” a specific type of bank account maintained by attorneys to safeguard funds from their clients.

Mercedes alleges that Molina held onto the money and failed to return it until city officials discovered it was missing weeks after his resignation.

The civil lawsuits remain entangled in the state courts today.

And though Molina pleaded not guilty in federal court Thursday, he has already admitted fault in one venue: the State Bar of Texas.

Last January, Molina admitted to professional misconduct during a grievance committee investigation that was launched in response to a complaint filed against him by Anthony Troiani, who was then Mercedes’ city attorney.

Molina’s admissions of wrongdoing to the state bar included 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.”

The admission allowed Molina to save his ability to practice law in exchange for a 3-year probated suspension of his law license. Just a few months later, in April 2021, the FBI served a subpoena on the city of Mercedes.

Officials confirmed then that it was related to Molina.

Molina declined to comment as he left the federal courthouse Thursday afternoon.