The FBI conducted a raid on Thursday, Feb. 16, 2017, at the law offices of state Sen. Carlos Uresti, who is under investigation for his connection to FourWinds, a fraudulent fracking business.
Here are things to know about Uresti's connection to FourWinds.
The FBI conducted a raid on Thursday, Feb. 16, 2017, at the law offices of state Sen. Carlos Uresti, who is under investigation for his connection to FourWinds, a fraudulent fracking business.
Here are things to
1. Carlos Uresti is the target of a grand jury investigation weighing possible public corruption charges related to his various roles at FourWinds, a company that traded frac sand used in fracking to extract oil and gas from shale rock, according to people familiar with the probe.
less1. Carlos Uresti is the target of a grand jury investigation weighing possible public corruption charges related to his various roles at FourWinds, a company that traded frac sand used in fracking to extract
... more2. Uresti provided legal services for FourWinds and served as its outside general counsel for four or five months in 2014.
He received FourWinds shares, as well as a $40,000 loans from the company that he initially failed to disclose in his state financial disclosures, according to previous reports.
less2. Uresti provided legal services for FourWinds and served as its outside general counsel for four or five months in 2014.
He received FourWinds shares, as well as a $40,000 loans from the company that he
... more3. Uresti also was paid a $27,000 commission on Harlingen investor Denise Cantu’s $900,000 investment in a joint venture with FourWinds, according to previous reports.
3. Uresti also was paid a $27,000 commission on Harlingen investor Denise Cantu’s $900,000 investment in a joint venture with FourWinds, according to previous reports.
4. Uresti, a San Antonio Democrat, disclosed owning between 100 and 499 shares of FourWinds on his personal financial statement filed with the Texas Ethics Commission, but not his other financial dealings with FourWinds or Cantu’s joint venture.
less4. Uresti, a San Antonio Democrat, disclosed owning between 100 and 499 shares of FourWinds on his personal financial statement filed with the Texas Ethics Commission, but not his other financial dealings with
... more5.Creditors’ claims in the bankruptcy top $14 million.
In this photo, Shannon Smith, former chief operating officer for FourWinds Logistics (right), leaves court with attorney Alex Scharff.
5.Creditors’ claims in the bankruptcy top $14 million.
In this photo, Shannon Smith, former chief operating officer for FourWinds Logistics (right), leaves court with attorney Alex Scharff.
6. Investors have accused FourWinds CEO Stan Bates of misspending their money on personal expenses, expensive gifts, exotic car rentals and lavish vacations. Bates, who has not been charged, has disputed the allegations. Bates was forced into personal bankruptcy proceedings by some of his creditors in October 2015.
less6. Investors have accused FourWinds CEO Stan Bates of misspending their money on personal expenses, expensive gifts, exotic car rentals and lavish vacations. Bates, who has not been charged, has disputed the
... more7. In late November, Lt. Gov. Dan Patrick quietly removed Uresti from the Legislative Budget Board — less than one year after being appointed by Patrick and before Uresti attended even one meeting. In a statement, Uresti said he believes his removal was due to him being the only Democrat on the committee at a time when Republican lawmakers are bracing for a penny-pinching session. The removal came after Uresti's link to the FourWinds scandal.
less7. In late November, Lt. Gov. Dan Patrick quietly removed Uresti from the Legislative Budget Board — less than one year after being appointed by Patrick and before Uresti attended even one meeting. In a
... moreThe federal criminal fraud case against State Sen. Carlos Uresti opened Monday, with the trial hinging on whether he knowingly lured investors into a failing company so he could profit, or if he was was a mere “finder” who wasn’t familiar with the inner workings of a company that later imploded.
The longtime San Antonio lawmaker and high-profile attorney, along with his co-defendant Gary Cain, face various fraud charges in connection with their roles at FourWinds Logistics, a now-defunct oil field services company that federal prosecutors say was a Ponzi scheme.
The trial follows a more than two year investigation by the FBI and Internal Revenue Service. It’s one of the most high-profile and sensational in San Antonio in years, with allegations of an extramarital affair and investor money spent on drugs and prostitutes. It’s expected to last three weeks, but interest on day one was high — some people who wanted to watch the proceedings were turned away because the courtroom was full. Even Uresti’s father at first had trouble getting a seat in the courtroom.
If Uresti is found guilty, it could derail his legal and political career. The San Antonio Democrat has been in public office nearly 21 years.
Uresti had no knowledge that the head of FourWinds Logistics was squandering investor money on expenses unrelated to the now-defunct oil field services company’s business, one of his lawyers told jurors during opening statements.
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Attorney Michael McCrum, who represents Uresti, painted the lawmaker as a “finder” who introduced investors to FourWinds officials and then got out of the way.
“People didn’t know what (FourWinds CEO) Stan Bates and his inner circle knew,” McCrum told jurors. “Sen. Uresti did not know what was going on in those walls, what was going on in those computers, what was going on in those bank accounts that those people controlled.”
Assistant U.S. Attorney Joseph Blackwell said during his opening statement that Uresti and Cain knew FourWinds was a sinking frac-sand company, yet claimed to potential investors that it was successful because they stood to make large amounts of money.
Uresti lied to prospective investors to convince them to invest with FourWinds, Blackwell told jurors.
“‘I’ve invested too. I’ve made money,’” Uresti said to a group of Mexican investors, according to Blackwell. “It’s a lie.”
Uresti, who Blackwell said was financially “overextended” and “bouncing checks,” never invested any of his own money in FourWinds. It went bankrupt in 2015. Uresti got involved with FourWinds despite warnings from multiple people calling Bates “shady.”
“He needed money and he needed it soon,” Blackwell said of Uresti’s reasons for getting involved with FourWinds. McCrum never addressed the allegations about Uresti’s finances during his opening statement.
Charges against Uresti, 54, include securities fraud, wire fraud and money laundering. He faces years in prison and millions in fines if convicted. Cain, 61, was a FourWinds consultant and was indicted on nine felony counts. Both have denied the charges.
Four FourWinds Logistics employees already have pleaded guilty for their in roles, including Bates, Chief Operating Officer Shannon Smith, comptroller Laura Jacobs and marketing director Eric Nelson. The latter three are slated to testify Tuesday. Bates pleaded guilty to eight felony charges two weeks ago rather than stand trial with Uresti and Cain.
Monday’s proceedings were cut short after opening statements around mid-afternoon so that workers could attempt to repair a courtroom video system that wasn’t working.
FourWinds was formed to buy and sell sand, which is used in fracking to extract oil and gas from shale rock.
“Despite not putting a dime in (FourWinds), the people who made the most money were Stan Bates, Shannon Smith, Carlos Uresti and Gary Cain,” Blackwell said.
Uresti received more than $115,000 in about 7½ months, acting as legal counsel and escrow agent. Bates received about $663,000, while Smith got $196,000 and Cain pocketed $210,000.
Any monies paid to Uresti were earned as FourWinds’ outside lawyer and as an escrow agent, McCrum said, adding that commissions that Uresti received for bringing in investors were known to those investors.
“What the law requires is that he had actual knowledge of what was going on there and that he intended to cheat people, that he intended to rob them,” McCrum said of Uresti. “That is the requirement and that’s what trial is all about.”
Blackwell told jurors how Uresti “groomed” investor Denise Cantu by carrying on a sexual relationship with her. Uresti had previously represented Cantu in the wrongful-death case of two of her children, killed in a 2010 vehicle rollover.
Uresti “became her confidant, he became her adviser, her dear friend, and it became sexual,” Blackwell said.
The government has nothing to corroborate the charge, McCrum said, before mentioning there were almost 1,000 texts between Cantu and Bates, many of which detailed a sexual relationship they were having.
In his opening statement for Cain, attorney Charles “Chad” Muller said his client was not running FourWinds and was only acting as a consultant.
“He’s not supposed to turn in the company the first time he sees something wrong,” Muller said.
Bates was not present for opening statements, though his court-appointed public defenders were in attendance. In a court filing prior to his guilty plea, Bates worried that Uresti and Cain would cast blame on him.
Bates used FourWinds’ money as a “piggy bank,” and was “living the good life,” Blackwell said. Bates rented Ferraris to go to University of Texas football games and hired prostitutes — referred to as “packages” by Bates, according to Blackwell.
Muller told jurors that after the oil market tanked in December 2014, that Bates began buying up more sand on the hunch that oil prices would rebound.
“Mr. Bates decided he was going to be a marketing genius,” Muller said. “‘I’m going to be the sand king. I’ll go out and buy all the sand I can,’” Bates said, according to Muller.
But that decision only drained FourWinds of its cash, Muller added.
McCrum also said that the evidence will show Bates used Uresti and his status as a state senator to sway potential investors.
Uresti supporters packed most of one side of the courtroom for opening statements. Supporters included his wife Lleana, father Alberto, brother Tomas Uresti, a state representative, and friend Mikal Watts, a San Antonio lawyer who confirmed he has been covering the cost of Uresti’s legal defense.
Other courtroom observers included Roy Barrera Sr., a former Texas secretary of state, and Tylden Shaeffer, a San Antonio attorney running for Bexar County District Attorney.
Senior U.S. District Judge David Ezra is overseeing the trial in a courtroom a few feet from where a grand jury convened in May to indict Uresti, Cain and Bates.
Before calling in the jury to the courtroom, Ezra said there would not be hundreds of witnesses testifying — alluding to the more than 200 potential witnesses that Uresti said in a December court document he may call during the trial.
Ezra addressed jurors about the wide public interest in Uresti’s trial, warning them not to read any newspaper or internet articles, or watch or listen to news reports of the trial.
“I very much believe in a free press, but not for you,” Ezra told jurors.
An earlier version of this story included an incorrect political office for Roy Barrera Sr.
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