Federal prosecutors have charged a man with federal programs theft in relation to an energy savings contract approved by the Agua Special Utility District for which he served as an intermediary.
Mariano Garcia, 49, of Mission, made an initial appearance in McAllen federal court Tuesday morning. He is charged with paying people to influence the utility district’s general manager in order to garner his support for the approval of the contract with a company called Performance Services Inc. in 2018.
“Defendant gave approximately $249,839.13 to Andres Morales, through RGV Redlight, as instructed by the Agua SUD General Manager intending to influence and reward said General Manager for his official support and recommendation for Agua SUD to award Defendant’s company a contract… in connection with an energy savings contract,” reads the June 1 indictment handed up against Garcia.
Garcia pleaded not guilty to the charge during an arraignment held Tuesday afternoon — a charge that the magistrate judge presiding over the hearing described as “a very serious offense.”
“Anybody reading the paper is aware that, unfortunately, there seems to be a series of indictments and (criminal) informations (sic) handed down involving public corruption,” said U.S. Magistrate Judge Juan F. Alanis.
“So, this is a very serious offense that the federal government is investigating. I believe the FBI has connected this investigation, from what I know from the docket sheet,” he said.
CHARGES FOLLOW LAWSUITS
As Alanis implied in open court, Garcia’s arrest and arraignment are part of a larger web of bribery and fraud schemes involving multiple public officials in western Hidalgo County in recent years.
And as with similar public corruption cases, federal charges have often followed after local government entities have first filed civil lawsuits regarding the schemes.
Lawsuits over overpriced public infrastructure projects have led to federal criminal charges in Weslaco, for example, while litigation over land sales has recently prefaced charges against a former Mercedes city attorney.
In this case, the charges against Garcia stem from an alleged scheme to bilk Agua SUD out of millions via an energy savings contract.
According to the 24-page lawsuit Agua SUD in March filed against Garcia, his company, M. Garcia Engineering, and an the Indiana-based Performance Services Inc., the scheme began around 2016 or 2017.
Around that time, Performance Services approached the utility district with promises that it could help save money by upgrading the district’s energy infrastructure.
Through the installation of LED light fixtures, solar paneling, and replacing customers’ mechanical water meters with “smart” meters, Agua SUD would be able to both save money and make money, Performance Services promised.
And all of it would come at no cost to the utility thanks to a state law that allows governmental entities to invest monies they would normally budget for expenditures on cost-saving projects instead.
Performance Services promised that Agua SUD would have to pay “zero upfront capital for this project and the savings are guaranteed,” according to the lawsuit.
But instead, the deal turned into a $12 million fiasco for the water utility.
Agua SUD took on millions in financing to pay Performance Services more than $11.4 million, and Garcia more than $346,000 over the course of just two years, the lawsuit states.
Further, Agua SUD is on the hook to pay more than a million dollars in lease payments, as well $80,000 for software maintenance each year due to the scheme.
The utility alleges Performance Services manufactured issues in order to prove its cost-saving scheme was working.
“(E)very representation that the project was ‘cost neutral,’ the promised savings guarantees had nothing to do with… actual savings. The ‘guarantee’ was simply a hypothetical calculation that produced a fictitious number that PSI created so it could sell it to Agua SUD,” the lawsuit states.
THE CONSPIRACY
Garcia’s alleged role in the scheme was as a facilitator between the utility district and Performance Services. In return, the licensed engineer would be compensated “an amount equal to 3% of the total project value,” the lawsuit states.
Garcia allegedly used those payments to pay bribes or kickbacks to a host of other co-conspirators as part of a scheme to defraud not just Agua SUD, but other governmental entities as part of similar frauds.
Those entities included the Mission City Council and the La Joya Independent School District.
In January of this year, federal prosecutors charged former La Joya school board trustee Armin Garza as a part of the larger conspiracy.
Garza pleaded guilty just one day after the charges were unsealed and awaits sentencing.
However, the charging documents against him reveal just how far the conspiracy went.
It allegedly involved at least four different companies and more than a dozen unnamed people, including elected officials at the school board, within Agua SUD and on the La Joya City Council.
Though they are unnamed in the court document, the identities of several co-conspirators and their companies — such as Garcia and Performance Services — can be inferred by dates or characteristics used to describe details of the scheme.
Members of the group — which referred to itself as a “cartel” — allegedly also formed several group chats on WhatsApp to discuss the myriad arms of the conspiracy, including organizing kickbacks, swaying local elections, and securing jobs or promotions for those who helped.
The conversations went as far as mulling judicial appointments to install judges who would be friendly to the conspiracy, court records show.
Meanwhile, Garcia said nothing in court Tuesday other than to enter his plea of not guilty.
He was expected to be released on a $50,000 unsecured bond.
Court records show jury selection is slated to begin on Aug. 2 before U.S. District Judge Micaela Alvarez.
Monitor staff writer Berenice Garcia contributed to this report.
This story has been updated to reflect that Agua SUD approved an energy savings contract with Performance Services Inc. and that Mariano Garcia served as an intermediary between the utility and Performance Services. It has also been corrected to show that one of the governmental entities allegedly targeted in the scheme was the city of Mission.
