Financial Fraud: Group Of Individuals Guilty of Wire Fraud, Bribery and Extortion Charges

Bribery and Extortion Charges
Bribery and Extortion Charges

Four Individuals Guilty Of Conspiracy To Commit Federal Programs Bribery, Honest Services Wire And Extortion

Six co-conspirators plead guilty

SAN JUAN, Puerto Rico– Today, after a 25-day trial before U.S. District Court Judge Pedro A. Delgado-Hernández, three women and one man were found guilty of wire fraud, bribery and extortion charges, announced U.S. Attorney for the District of Puerto Rico, Rosa Emilia Rodríguez-Vélez. The four defendants participated in several schemes to corruptly give things of value to public officials within the government of the Commonwealth of Puerto Rico in exchange for favorable treatment and awarding of government contracts to various corporations. The 25-count indictment filed on December of 2015, included charges of conspiracy to commit federal programs bribery and honest services wire fraud, wire fraud, federal program bribery, extortion through fear of economic harm, money laundering, false declarations before a grand jury, and obstruction of justice.

The defendants who were found guilty today are:

  1. Sally López Martínez, Administrator of the Commonwealth of Puerto Rico’s “Administración de Desarrollo Laboral” (Workforce Development Administration) (hereinafter “ADL”). She was found guilty of Count One, Conspiracy to Commit Federal Programs Fraud and Wire Fraud; Count Two, Conspiracy to Commit Honest Services Wire Fraud; Counts Three to Five, Honest Services Wire Fraud; and Count Eleven, Receipt of a Bribe by Agent of an Organization Receiving Federal Funds.
  2. Ivonne M. Falcón Nieves, Vice President of the Puerto Rico Aqueduct and Sewer Authority (“AAA”), and former Treasurer of AAA. She was found guilty of Count One, Conspiracy to Commit Federal Programs Fraud and Wire Fraud; Count six, Conspiracy to Commit Honest Services Wire Fraud; Counts Seven to Nine, Honest Services Wire Fraud; Count Thirteen, Receipt of a Bribe by Agent of an Organization Receiving Federal Funds; and Count Seventeen, Extortion Through Fear of Economic Harm.
  3. Marielis Falcón Nieves, sister of Ivonne M. Falcón Nieves. She was found guilty of Count Seventeen, Extortion Through Fear of Economic Harm.
  4. Glenn O. Rivera Pizarro, Special Assistant for Administration at the House of Representatives of Puerto Rico. He was found guilty of Count Twenty-Four, Conspiracy to Commit Wire Fraud; and Count Twenty-Five, Intentional Misapplication of Property by Agent of an Organization Receiving Federal Funds.

Their sentences were scheduled for February 6, 2017.

The other defendants are:

  1. Anaudi Hernández Pérez, businessman and political fund raiser. Although not named in official corporate records, he exercised de facto control over numerous companies doing business with agencies and public corporations of the Commonwealth of Puerto Rico. He plead guilty on February 18, 2016.

  2. Sonia M. Barreto Colón, Purchasing Director of the Commonwealth of Puerto Rico’s Aqueduct and Sewer Authority. She plead guilty on May 31, 2016.

  3. Javier A. Muñiz Álvarez, businessman. Utilized the Company JM Profesional (sic) & Training Group, Inc. to secure contracts from the Commonwealth of Puerto Rico. He plead guilty on June 29, 2016.

  4. Carlos F. Luna Cruz, businessman. He worked for JM Profesional (sic) & Training Group, Inc., and plead guilty on April 28, 2016.

  5. Xavier González Calderón, Administrator for the House of Representatives of the Commonwealth of Puerto Rico. He plead guilty on August 9, 2016.

  6. Victor R. Burgos Cotto, Director of Technology for the House of Representatives. He plead guilty on July 13, 2016.

According to the evidence presented at trial, Hernández Pérez utilized his political and personal connections with high ranking members of the current government in order to have “his people” appointed in critical government positions within the new administration which took over after the November 2012 elections. He also provided those individuals with things of value in exchange for government contracts, benefits and preferential treatment for several of his corporations. The indictment focused on benefits Hernández Pérez, his co-conspirators, and corporate entities, obtained from the Commonwealth of Puerto Rico’s “Administración de Desarrollo Laboral” (Workforce Development Administration) (hereinafter “ADL”), the Commonwealth of Puerto Rico’s Aqueduct and Sewer Authority, and the Puerto Rico House of Representatives.

Hernández Pérez and his co-conspirators utilized their government influence to receive an unfair competitive advantage over their competitors, in that they: a) received preferred opportunities on certain government “request for proposals” (“RFPs”); b) received guidance from agency employees on the proper format and content of proposals and bids for government contracts; c) had access to speak and meet with critical employees in decision making positions within the agencies, departments and government corporations; d) received guidance on how to structure bids and proposals in order to avoid the formal bidding process required by law; e) demanded and were provided with explanations from agency employees when their proposals or bids were not selected.

Once awarded the government contracts, Hernández Pérez and his co-conspirators would utilize, often without proper contractual authority, subcontractors who would perform the work defined in the contracts. On many occasions, Hernández Pérez and his co-conspirators provided substandard work on their contractual obligations in that they: a) failed to make the required payments to suppliers, subcontractors and creditors; b) failed to abide by the terms of the contract regarding performance results/follow up as required under the contract; c) failed to competently provide the services they were contracted to perform.

Defendants Ivonne Falcón and Marielis Falcón, were also charged with Hobbs Act extortion under fear of economic harm. Hernández Pérez and unindicted co-conspirators would utilize their contacts and influence within at least one government dependency (the AAA) to secure, for a fee, the release of legitimate payments due to other corporations, which lacked the current connections within the government. In particular, Hernández Pérez and his associates, obtained property not due to them, specifically, $100,000.00 from Contractor A, in exchange for utilizing his connections within AAA in order to secure a portion of the money owed (approximately $1,000,000) to Contractor A, with Contractor A’s consent, induced through the wrongful use of a fear of economic loss. Moreover, the Falcón sisters, aided and abetted each other to commit extortion. Defendant Ivonne M. Falcón Nieves utilized her position at AAA in order to enable her sister, defendant Marielis Falcón Nieves, to obtain property not due to her, specifically, cash payments, check payments, payments to contractors, and the performance of residential tree trimming, from Contractor A, with Contractor A’s consent, induced through the wrongful use of a fear of economic loss.

The case was investigated by the FBI’s San Juan Division. The case is being prosecuted by First Assistant U.S. Attorney Timothy Henwood and José Capó Iriarte, Chief of the Criminal Division. If found guilty, the defendants are facing possible sentences of up to five years for the conspiracy to commit federal programs fraud and wire fraud, up to 10 years for honest services fraud, up to 20 years for money laundering, Hobbs Act, obstruction of justice, and conspiracy to commit honest services fraud.

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