Click ahead to learn of shocking testimony coming out of Texas State Sen. Carlos Uresti's and co-defendant Gary Cain's fraud case in connection with their roles at FourWinds Logistics. 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.
lessClick ahead to learn of shocking testimony coming out of Texas State Sen. Carlos Uresti's and co-defendant Gary Cain's fraud case in connection with their roles at
... moreShannon Smith (right), former FourWinds Logistics chief operating officer testified that CEO Stan Bates told him "he was fake snorting cocaine in front of people."
lessShannon Smith (right), former FourWinds Logistics chief operating officer testified that CEO Stan Bates told him "he was fake snorting cocaine in front of
... moreAttorney Alexander Begum told Uresti that Bates was a “complete con man.” “I told him that I didn’t think it was a good investment and I gave him my opinion of Mr. Bates,” said Begum, who has a master’s in business administration. “Something to the effect, you need to get away from this man.”
lessAttorney Alexander Begum told Uresti that Bates was a “complete con man.” “I told him that I didn’t think it was a good investment and I gave him my opinion of Mr.
... moreAttorney Alfonso Cabañas remembered a meeting at FourWinds where he was greeted by three or four 'provocatively dressed' women.
Attorney Alfonso Cabañas remembered a meeting at FourWinds where he was greeted by three or four 'provocatively dressed' women.
When Denise Cantu told a financial adviser Yvonne Silguero that she would be making about $100K per month by investing in FourWinds, Silguero, an LPL adviser who is employed at Lone Star National Bank, said she advised Cantu against moving her money. “The returns that she mentioned…seemed too good to be true,”
lessWhen Denise Cantu told a financial adviser Yvonne Silguero that she would be making about $100K per month by investing in FourWinds, Silguero, an LPL adviser who is employed
... moreShannon Smith former FourWinds Logistics chief operating officer testified that he spent most of his time Googling to find places to buy sand because FourWinds didn't have any.
Shannon Smith former FourWinds Logistics chief operating officer testified that he spent most of his time Googling to find places to buy sand because FourWinds didn't have any.
A former office manager said the fracking sand company had a reputation as a “brothel” that employed “surgically enhanced women” and let employees booze it up before noon.
lessA former office manager said the fracking sand company had a reputation as a “brothel” that employed “surgically enhanced women” and let employees booze it up before
... moreWitness Laura Jacobs testified that there were a lot of pretty women around that she called barbies because of their outfits and high heels.
Witness Laura Jacobs testified that there were a lot of pretty women around that she called barbies because of their outfits and high heels.
Witness Laura Jacobs testified that she tried to start a rule prohibiting drinking until after 4 p.m. because employees were drunk by noon.
Witness Laura Jacobs testified that she tried to start a rule prohibiting drinking until after 4 p.m. because employees were drunk by noon.
FourWinds CEO Stan Bates told others that Spurs and actor Matthew McConaughey had invested with FourWinds even though they had not said office manager Desirée Talley.
FourWinds CEO Stan Bates told others that Spurs and actor Matthew McConaughey had invested with FourWinds even though they had not said office manager Desirée Talley.
Denise Cantu a key government witness in the criminal fraud case against state Sen. Carlos Uresti told the FBI that her relationship with Uresti became sexual.
Denise Cantu a key government witness in the criminal fraud case against state Sen. Carlos Uresti told the FBI that her relationship with Uresti became
... moreFormer comptroller Laura Jacobs, said Bates used corporate funds to rent luxury automobiles, buy tickets to University of Texas games, pay his son’s fraternity dues, and shop at Neiman Marcus — “for whatever girl he was dating at the time,” she said.
lessFormer comptroller Laura Jacobs, said Bates used corporate funds to rent luxury automobiles, buy tickets to University of Texas games, pay his son’s
... moreText messages at another hearing have revealed that Stan Bates and Denise Cantu also had a steamy relationship.
Text messages at another hearing have revealed that Stan Bates and Denise Cantu also had a steamy relationship.
Here is the photo shown to jurors of the "Barbies" employed at FourWinds.
Here is the photo shown to jurors of the "Barbies" employed at FourWinds.
With oil prices surging in the spring of 2014, state Sen. Carlos Uresti sent a representative for a group of Mexican investors an email touting the opportunities to supply oil-and-gas exploration companies with frac sand via San Antonio startup FourWinds Logistics.
“The model that we have developed and perfected has proven to be successful and we are certain that that this success will continue for years to come,” Uresti wrote to the group’s accountant.
It wasn’t true, though, according to Shannon Smith, FourWinds’ former chief operating officer, the lone witness to testify Friday in the fifth day of Uresti’s criminal fraud trial in San Antonio federal court.
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Media: San Antonio Express-NewsAsked by Assistant U.S. Attorney Joseph Blackwell during direct examination what was untrue about the email, Smith simply said, “There was no perfection.”
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And there wasn’t anything particularly remarkable about the business model: FourWinds’ plans was to buy sand, resell it at about a 30-percent markup and then split the profits with investors who put up all of the money.
Within about 15 months of Uresti sending that email, FourWinds was bankrupt and out of business.
Uresti’s is on trial for his role in FourWinds, where he served as outside legal counsel, recruited investors and held a 1 percent ownership interest in the company.
Uresti was indicted last year on 11 felony charges, including for securities fraud and money laundering. He faces years in prison and millions in penalties if convicted by a jury.
Gary Cain, a company consultant charged with nine felonies, is being tried with Uresti. Both have denied the charges.
FourWinds CEO Stan Bates, accused of living a lavish lifestyle on investors’ money, pleaded guilty to eight felonies on Jan. 8 rather than stand trial with Uresti and Cain.
Smith testified as part of a plea agreement he entered into with prosecutors in 2016 in hopes of getting favorable consideration at his sentencing in April. He pleaded guilty to one count of conspiracy to commit wire fraud.
The email sent to the Mexican group’s accountant was just one of the ways Uresti misled potential investors, Smith testified.
Uresti also told Denise Cantu, a Harlingen woman who he helped obtain a large legal settlement following the deaths of two of her children in 2010, that FourWinds was a great opportunity for her, Smith said.
“He said, ‘I’m part of this company, I wouldn’t have brought you in if it wasn’t a good company,’” Smith recalled Uresti telling Cantu. She invested $900,000 and lost all but about $100,000. Uresti, though, never put any of his own money in FourWinds. She has sued Uresti for fraud.
Smith admitted he never shared with Cantu that the information given to her in a FourWinds’ sales pitch was false. However, Smith said he was unaware that Uresti sent Cantu an email with a bank statement showing FourWinds had more than $18.8 million in its account.
Asked if FourWinds ever had that much cash in its account, Smith replied, “Never.”
Tab Turner, one of Uresti’s lawyers, asked Smith about his past ties with Bates. Bates promoted a marketing deal for an auto dealership Smith introduced him to, but Smith said the promotion flopped and the dealership demanded its $20,000 back. Bates then “went off the map,” Smith said.
A few years later, Smith heard from Bates about his new venture FourWinds. Despite considering Bates “untrustworthy,” Smith accepted Bates’ invitation to go work for FourWinds in 2014.
“He said it was guaranteed thing,” Smith recalled.
Smith admitted he never told FourWinds’ potential investors about his past experience with Bates.
“Hindsight is 20-20 (but) I wish I had done it,” Smith said, conceding that at the time he was more focused on the opportunity to make a lot of money with FourWinds. He also knew that he was being paid from investor money even though the money was only supposed to be used to purchase sand.
Bates told potential investors that FourWinds had multiple purchase orders and sand lined up to ship, but Smith said little of the spiel was true.
“We didn’t have any sand,” Smith said, adding how after joining FourWinds he spent a lot of his time Googling places trying find where it could buy sand.
Smith detailed how Bates was raiding the corporate till, including spending $7,000 in one weekend on food, hotels and the rental of a Ferrari.
Smith said he started noticing “red flags” with Bates over the way he was acting.
“I started seeing he was sniffling real bad or just looking hung over,” Smith said, adding that he heard Bates was doing cocaine. “I asked him and he said, ‘They’re just saying that. I’m not doing that.’”
During a breakfast meeting, Bates denied using cocaine. “He told me he was fake snorting cocaine in front of people,” Smith said. “I never heard of fake snorting,” drawing laughs from some jurors.
On cross examination by Charles “Chad” Muller, one of Cain’s lawyers, questioned Smith about FourWinds retaining Cain on the recommendations of current Bexar County District Nico LaHood and Uresti.
At the time, Cain recently had been acquitted by a Bexar County jury of swindling Rackspace Hosting Inc. in a 2007 land deal. LaHood had represented Cain during his criminal trial before becoming Bexar County District Attorney.
Cain had a consulting business with LaHood called Trinity Global Funding & Consulting, which FourWinds contracted with for $30,000 a month to help bring in capital for the frac-sand company’s operations. Smith said he considered the monthly fee “a lot for anybody,” but Bates was in favor of it.
Muller noted how it was Smith and Cain who tried to stop Bates from spending investor money to buy up sand after oil prices had collapsed in late 2014. Bate anticipated oil and sand prices would rebound and FourWinds would reap enormous profits. In reality, it only accelerated FourWinds downward spiral.
Smith acknowledged that he pleaded with Cain not to leave FourWinds in an effort to try to save the troubled company.
The trial is expected to resume at 9 a.m. Monday.
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