Officers raiding Senator Uresti’s San Antonio law office
FBI and IRS agents descended on the San Antonio law offices of state Sen. Carlos Uresti on Thursday morning, confiscating documents and other items in connection with the senator’s involvement in a now-defunct San Antonio oil field services company accused of defrauding investors and with other matters.
“I can confirm the FBI and IRS are lawfully present and conducting a lawful law enforcement activity,” said FBI spokeswoman Michelle Lee. She said no arrests had been made as of 9 a.m.
Uresti has not been on the site since the raid began. His son Carlos Uresti Jr. was seen at the site, sources said. Calls to Uresti and his spokesman were not immediately returned.
Uresti had been in Austin, where the Texas Legislature is in session. However, the Senate is not meeting Thursday.
The oil field services company, FourWinds LLC, traded frac sand. It went into bankruptcy in 2015.
Investors have alleged their money was wasted by FourWinds CEO Stan Bates on personal expenses, expensive gifts, exotic car rentals and a wild lifestyle, the San Antonio Express-News reported in August.
FourWinds co-owner and Chief Operating Officer Shannon Smith, Comptroller Laura Jacobs and e-commerce and marketing director Eric Nelson each pleaded guilty to a single felony charge of conspiracy to commit wire fraud last year. They have yet to be sentenced.
Uresti had multiple roles with FourWinds. He provided legal services and served as outside general counsel for the company for four or five months at the end of 2014. He had a 1 percent ownership interest in the company, though he said the stock certificates were never transferred to him.
The senator also helped recruit investors.
One investor, Denise Cantu of Harlingen, was a former legal client who he helped win a personal-injury case following the 2010 death of two of her children. He suggested she go see Bates. Uresti later received a $27,000 commission on her $900,000 investment with FourWinds. Cantu lost most of her money.
Last summer, Uresti said he had been contacted by FBI but only as a witness.
Nelson testified at a bankruptcy hearing in January 2016 that he used Photoshop image-editing software to inflate the actual balance shown on a FourWinds bank statement at Bates’ request. Bates planned to use the bank statement as “proof of funds” to purchase frac sand, Nelson said at the hearing.
In the Smith charging documents, federal prosecutors accuse an unnamed co-conspirator of transferring or wiring $74,000 to Smith in 2014 and 2015 from FourWinds’ bank accounts. And additional $10,000 allegedly was transferred to a bank account controlled by Smith’s wife.
Jacobs was accused of sending a FourWinds investor an email containing a spreadsheet that falsely showed the investor’s money was used to purchase sand. The charging document didn’t detail how the money was actually spent.
Jacobs testified in Bates’ personal bankruptcy that she paid Bates’ personal bills, including car payments, with FourWinds’ money and recorded them as “owner’s draws.”
In addition to the investment scandal, Uresti also was facing questions over a failure to disclose donations to his campaign, according to Texas Tribune. State Sen. Jose Menendez also failed to disclose a donation according to the Tribune.
Uresti told the Tribune that a $9,975 in-kind donation from the Texas Trial Lawyers Association for a poll of voters in his district was inadvertently included with another TTLA donation for advertising.
“We realized that was an oversight,” Uresti told the Texas Tribune. “I’ll keep an eye out and try to make sure it doesn’t happen again.”
Ian Steusloff, general counsel for the Texas Ethics Commission, told the Tribune failing to report donations is a violation of state law.