An arraignment and detention hearing was cancelled Wednesday for Ruben Gallegos Jr., the CEO of International Education Services, who is charged with embezzlement and theft.
U.S. Magistrate Judge Ronald G. Morgan was told that Gallegos was medically unavailable after he suffered a cardiac event Wednesday morning and was transported to McAllen Medical Center in McAllen, where he was being treated, said Trey Martinez III, one of Gallegos’ attorneys.
Gallegos, a federal inmate, had been housed at a Hidalgo County jail facility because Cameron County is no longer allowed to house federal inmates.
“He made matters worse by making himself worse,” Morgan told the attorneys.
The hearing will be rescheduled once Gallegos is out of the hospital.
A federal grand jury Aug. 30 handed down an indictment charging Gallegos on embezzlement and theft charges.
According to a portion of the indictment, Gallegos was paid salaries way over the $183,000 cap limit with his 2017 salary at $435,416.88. The indictment also states others were also paid high salaries one at $506, 0032.22 and another at $377,060.96, also in violation of the salary caps. Those names are redacted in the document.
Gallegos served as CEO of IES from 2014 to 2018 until the federal government decided it would not renew its funding for the shelter. He was taken into custody Thursday after a bench warrant had been issued by Morgan for his arrest, federal court documents reflect.
The IES contracted with the Unaccompanied Alien Children Program and provided temporary shelter care and other related services to unaccompanied alien children, according to the federal indictment. IES received almost all of its funding in the form of federal grants, and for each fiscal year from 2014 through 2018, it received millions of dollars in federal grant funds.
Count one of the indictment charges Gallegos with conspiracy and count two charges him with theft concerning programs receiving federal funds.
According to the Aug. 30 partially unsealed federal indictment, from 2014 through 2018, Gallegos did knowingly conspire with another unnamed person to commit an offense against the United States, to “embezzle, steal, obtain by fraud knowingly convert without authority, and intentionally misapply property that is valued at $5,000 U.S. dollars or more, and is owned by, or is under the care, custody, or control of, an organization that receives more than $10,000 U.S. dollars in federal assistance in any one year period.”
The indictment reads that from 2014 to 2017, Gallegos and another unnamed person caused IES to use federal grant funds to pay themselves salaries that were hundreds of thousands of dollars above the salary cap imposed by federal regulations.
According to the indictment, the cap limit for Gallegos’ salary was at $183,000.
In a 2014 meeting, Gallegos told defendants’ he wanted his salary to be increased by about $300,000. With the defendants’ approval, IES paid him a salary of about $491,540.04, in violation of the cap limit of $181,500. The indictment states that Gallegos received a $1,000 salary increase in 2015, bringing his salary to $492,001.62.
In 2017, his salary was $435,416.88.
The U.S. Congress prohibited use of grant funds to pay salaries above a certain rate. In addition, federal regulations further limited spending of grant funds.
The indictment also states that Gallegos, defendants and IES did not comply with federal regulations requiring competitive bidding and did not comply with federal regulations setting rental cost limits in less-than-arms lengths transactions.
The federal government is seeking to seize multiple properties on Maverick Road that are owned by Gallegos, the federal indictment reads. One of the properties on Maverick Road is a small frame house with a large tract of land located next to it.
If found guilty on Count One of the indictment, Gallegos faces five years in federal prison, and or a $250,000 fine and three years supervised release. If found guilty on Count Two of the indictment, he faces up to 10 years in federal prison, and or a $250,000 fine plus three years supervised release.
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