Federal case against former IES execs inches forward

The trio of suspects, including a father and son, accused of misapplying hundreds of thousands of dollars in federal grant funds meant to be used for temporarily housing migrant children appeared in Brownsville federal court this week where a May trial date was scheduled.

Ruben Gallegos Sr., Ruben Gallegos Jr. and Juan Jose Gonzalez, who are charged with conspiracy and theft concerning programs receiving federal funds, appeared before a judge on Tuesday, court records indicate.

Ruben Gallegos Sr. was the president of International Educational Services, or IES, a shelter for migrant children. His son, Ruben Gallegos Jr., was the chief executive officer, and Juan Jose Gonzalez was the nonprofit’s finance director.

IES abruptly shuttered its doors and fired all of its employees on March 31, 2018. At the time, the organization provided no details as to why. Neither did the federal government.

The Brownsville Herald at the time filed a Freedom of Information Act request with the Office of Refugee Resettlement’s Administration for Children & Families seeking communications between those agencies and IES following the closure. The Herald also reviewed years of IES tax documents.

Six months later, the Herald had received those communications, which along with the review of tax documents, painted a troubling picture of how the organization used millions of dollars in federal grant money meant to shelter migrant children.

In a letter the federal agency sent to IES, its then-director said an audit initiated in 2016 determined that employees profited when IES leased properties owned by its executives and that those executives paid themselves salaries which were hundreds of thousands of dollars more than federal grant rules allowed.

Nearly four years to the date of the Sept. 30, 2018 publication of that story, on Aug. 30, 2022, federal authorities arrested Ruben Gallegos Sr., Ruben Gallegos Jr. and Gonzalez on a federal indictment accusing them of embezzlement.

That indictment matches the findings of the Herald’s reporting and expands on more allegations, including that IES used federal grant funds to lease vacant lots and residential properties from Ruben Gallegos Sr. and Ruben Gallegos Jr.

“Ruben Gallegos Sr. and Juan Jose Gonzalez approved less-than-arms-length transactions in which IES used federal grant funds to pay for multiple leases on the same properties that were owned by Ruben Gallegos Sr., or related entities, in order to inflate rental income paid with federal grant funds to Ruben Gallegos Sr.”

The 13-page indictment goes on to levy numerous allegations against them, including purchasing a $1 million San Benito property they falsely claimed was operational and would serve more than 1,000 children in Fiscal Year 2015.

“The IES San Benito Shelter was not operational during FY-2015,” the indictment stated.

Following the indictment, all of the men pleaded not guilty to charges and have been out on bond.

The case has also been certified as complex as there is voluminous discovery the government must provide to defense attorneys.

That has been at issue during their last two hearings on Dec. 12 and on Tuesday.

Currently, at issue is software needed to view and search files.

A federal judge has ordered the government to provide a case manager with information related to the use of a license to use the software as defense attorneys need a license.

Currently, a final pretrial hearing is scheduled for April 30 with jury selection set for May 6.