Feds want to seize nearly $1 million from Weslaco bribe payers

McALLEN — Federal prosecutors are looking to seize nearly $1 million combined from former Hidalgo County Precinct 1 Commissioner Arturo “A.C.” Cuellar and Weslaco businessman Ricardo “Rick” Quintanilla two weeks after they were found guilty of 70 counts of bribery, money laundering and wire fraud.

Specifically, the government is asking the court to order a $947,454 forfeiture in regard to Cuellar, and $43,540 in regard to Quintanilla.

Those figures represent just 24% of the $4.1 million total that prosecutors claim Cuellar, Quintanilla and other co-conspirators bilked from the city of Weslaco during the rehabilitation of its water and wastewater treatment plants from 2011 to 2014.

Prosecutors arrived at the two figures after taking “a very conservative approach,” according to Sonia Hurtado, a criminal investigator with the IRS who testified during the defendants’ forfeiture hearing Tuesday.

Hurtado analyzed the personal and business tax records for both defendants, as well as others involved in the conspiracy scheme.

Her testimony during the 8-day-long trial outlined how Cuellar and Quintanilla tried to obscure the bribe payments as legitimate income in their annual federal tax returns.

Testifying again briefly on Tuesday, Hurtado used those same tax records to justify how prosecutors had calculated the forfeiture amounts the government is seeking.

Investigators were able to calculate that Cuellar received nearly $1.3 million in checks from Leonel J. “Leo” Lopez Jr., whom prosecutors referred to as the “mastermind” of the yearslong scheme to funnel money from corrupt contractors to the Weslaco public officials voting to hire them.

However, the government is not seeking to recover that entire amount.

For Cuellar, “$947,545 is appropriate in regard to counts 1, 2, 5-through-7, and 11,” Assistant U.S. Attorney Roberto “Bobby” Lopez Jr. said, referring to the conspiracy to commit honest services wire fraud, wire fraud, and conspiracy to commit money laundering charges against Cuellar was convicted of Oct. 20.

Nor is the government seeking to recover the full amount Leo Lopez paid to Quintanilla.

Instead, the $43,540 prosecutors hope to seize from Quintanilla represents just half of the $87,080 in checks Leo Lopez paid Quintanilla.

The government explained the reasoning behind its calculations in a 6-page brief it filed about an hour before the forfeiture hearing got underway Tuesday afternoon.

“The (Supreme) Court held that such forfeiture is limited to the property the defendant himself actually acquired as a result of the crime,” the brief states, referring to a 2017 U.S. Supreme Court decision which placed limits on whether a member of a criminal conspiracy can be held jointly and severally liable for forfeiture.

The high court found that such conspiracy members can only be held liable for their own stake in the scheme — for what they personally retained as profits.

In the case of Cuellar, prosecutors were able to make an argument to seek more than the $873,500 he had hung onto after paying his cousin John $405,000 in bribes.

That’s because A.C. Cuellar used a corporation he held a partial ownership stake in — Corpus Christi-based Quality Ready Mix — to funnel the bribes, then used the company to write off the bribes as legitimate business expenses for legal services.

At the time, John Cuellar was a practicing attorney and served as the Weslaco mayor pro tem.

Hurtado explained that the concrete company is a so-called “pass-through taxing entity” which places any tax burden on the individual partners who own the business.

“The company was not paying taxes itself. It was passing that obligation to each of the owners,” Hurtado testified.

Further, the company also spreads out its profits and losses among its partners proportionately.

So, while Cuellar paid his cousin $405,000 in bribes, he used QRM as a way to recoup some $73,954 by improperly reporting the funds on his tax returns, according to the government.

“Defendant Cuellar misrepresented the amount of total taxable income on his personal tax returns from 2011 through 2014,” the government’s forfeiture brief states.

“The misrepresentations thereby allowed Defendant Cuellar to in effect retain an additional $73,954 by claiming the bribe payments as sham legal services for Quality Ready Mix,” the forfeiture brief states.

Prosecutors are seeking additional forfeiture from both Cuellar and Quintanilla in relation to the single counts of federal programs bribery and the multiple money laundering counts against them.

However, they are asking that those forfeiture orders run “concurrently” with the rest, meaning A.C. Cuellar and Quintanilla would not have to forfeit more than the initial $947,454 and $43,540, respectively.

The court postponed making decisions, however, after the defense requested more time to study the forfeiture brief.

“I didn’t know what the government was going to be asking for until, literally, the beginning of the hearing,” said Carlos A. Garcia, the attorney representing A.C. Cuellar.

The judge gave Garcia until next Wednesday to file a response to the government’s brief.