Firm probes San Benito nepotism allegations; denies being hired by VARCO

SAN BENITO — An investigator is denying City Manager Fred Sandoval’s claim that his firm is working for a real estate company building the city’s first resaca-side development.

On Tuesday, Sandoval said a member of Dolcefino Consulting, a Houston-based investigative firm, told him, “We’ve been hired by VARCO attorneys,” referring to the Brownsville-based real estate company developing Resaca Village off Business 77.

But the company’s owner, Wayne Dolcefino, denied the claim.

“I have never spoken for a second (with Sandoval) and no one on my staff has,” Dolcefino said in an interview. “That’s absolutely false. I haven’t told city officials who I was hired by. Who gives a crap who hired me?”

“VARCO is not my client,” he said, adding he’s told others, “All I said is, ‘I am working with an attorney on this case but it’s not VARCO’s attorney.’”

But Sandoval is sticking to his statement.

Last week, Paul Serafy, an attorney representing VARCO, said the company did not hire Dolcefino’s firm.

As part of what Dolcefino described as an “ongoing” investigation, he said he’s investigating information presented to him.

“We are now investigating members of several families,” he said, referring to city officials’ families. “We are investigating allegations they have used political influence to get jobs for relatives. We are investigating allegations that political influence may have quashed an investigation into alleged misconduct of an elected official.”

In his probe, Dolcefino said he’s also investigating City Commissioner Deborah Morales and her husband Jose Morales, whom she’s appointed to the city’s Economic Development Corporation board and the Planning and Zoning Commission.

Dolcefino also said Deborah Morales has appointed her son Jesus Morales to the city’s Community Development and Citizens Advisory Board.

On Tuesday, Deborah Morales did not respond to messages requesting comment.

For weeks, Dolcefino has been requesting the city release public records such as campaign finance reports.

Now, he said, an EDC attorney is “blocking” the release of Jose Morales’ cellphone records.

On Tuesday, Mayor Rick Guerra said Dolcefino’s firm is requesting the release of his city cellphone records.

On Dolcefino Consulting’s website, Dolcefino describes himself as an former award-winning investigative reporter with ABC 13 in Houston.

“Dolcefino Consulting is an investigative media consulting firm, hired by companies, law firms, private citizens and taxpayers to expose injustice, fraud, and abuse of power,” the website states.

Two weeks ago, the firm’s tip led San Benito police to arrest then-EDC board member John Flores Jr. on a felony charge of failing to register as a sex offender after moving here, Dolcefino said, adding his investigators “stumbled” upon Flores’ case while probing the EDC.

Last week, Flores said he had resigned from the EDC’s board.

On Friday, commissioners didn’t take action after meeting in closed session to discuss what an agenda described as “legal aspects of economic development appointments.”

At city offices, Sandoval said he’s running criminal background checks on city board members.

“I did a background check on all current board members,” he said in an interview, adding he’s also running background checks on San Benito Housing Authority board members.

“I wanted to make sure they’re done correctly and make sure they’re all up-to-date, the same as we do for employees,” Sandoval said, adding officials are reviewing Texas Department of Public Safety and state sex offender records.

“I want to make sure this doesn’t happen again,” he said, referring to Flores’ case. “We’re doing the full scrubbing.”

In late 2023, Flores failed to disclose his criminal history on an EDC application which questions whether applicants have criminal backgrounds, Sandoval, who serves as the EDC’s executive director, said.

As commissioners were reorganizing city boards, Guerra appointed Flores to the EDC’s board.

“I didn’t know,” Guerra said, referring to Flores’ criminal history.

Now, officials are running criminal background checks on commissioners’ board appointments, Guerra said.

“Now we’re checking everybody,” he said. “The background checks are going to get harder. We’re trying to be on the offense in case something happened — if we missed something or somebody. We’re trying to be accountable to what’s going on. We want to be transparent.”

On Tuesday, Commissioner Tom Goodman declined to disclose whether Sandoval’s background checks have turned up any criminal histories.

“It’s prudent to make sure we’re held to a higher standard. As much as we want to take people at their word, we have to verify,” Goodman said. “We’re going to be looking at some rearrangements on the EDC board. That’s in discussion.”

For about two months, VARCO’s development of the Resaca Village project has been the center of a legal battle.

On April 29, VARCO filed a lawsuit against the city, claiming the EDC breached the parties’ contracts surrounding the development of Resaca Village, failing to “honor its obligations” under an agreement extending its construction timeline while claiming its amendments “void” because city commissioners had not approved them.

In March, VARCO stated, the EDC declared the company in breach of contract.

“SBEDC purported to terminate the performance agreement and the lease agreement and demanded that VARCO cease construction and turn over operations of Resaca Village,” the lawsuit states. “It made no attempt to reimburse VARCO for the over $8 million that VARCO poured into the construction and operation of Resaca Village. Instead, it wrongfully demanded VARCO pay an additional $1.8 million.”

In response to the company’s lawsuit, city officials said they would take on the Resaca Village project to complete its development.

“To date, the terms of the agreement have not been fulfilled and city leaders took the necessary action to ensure that taxpayers would not be in a position to return the funds or suffer any penalties,” officials said in a statement. “City leaders want to ensure that the development is completed, successful and provides quality-of-life opportunities within federal guidelines, even if that means completing the project ourselves or through other qualified partners.”

On May 21, Justice of the Peace Chuy Garcia denied the city’s request to evict VARCO from the Resaca Village project site.

After launching construction of Resaca Village in 2019, in March 2020 the coronavirus pandemic’s outbreak spurred a national economic downturn slowing the plaza’s leasing while material costs soared, leading VARCO and the EDC to enter into performance agreements extending the four-phase project’s original completion date of December 2022.

As part of the city’s fourth agreement extending the company’s construction deadline to May 1, 2024, VARCO is paying the city $500 a day for every day the projected remains uncompleted.

In 2018, the EDC leased VARCO the 9.8-acre resaca-side tract off Business 77.

Under the parties’ original contract, VARCO agreed to pay the EDC 10% of the development’s property taxes for 15 years, at which time the agreement would give the developer the option of buying the property for $1.