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Former Puerto Rico Education Chief Indicted in Alleged Quid Pro Quo Involving School Property

By on January 16, 2020

Julia Keleher (CB file)

By Limarys Suárez Torrez and José Alvarado Vega

SAN JUAN – A federal grand jury has issued a nine-count indictment against former Puerto Rico Education Secretary Julia Beatrice Keleher and real estate developer Ariel Gutiérrez-Rodríguez for their alleged participation in a bribery and fraud scheme involving an exchange of public school property for a discounted acquisition of an apartment, U.S. District Attorney William Stephen Muldrow announced Wednesday.

The indictment returned Tuesday by the federal grand jury in the District of Puerto Rico includes one count of conspiracy to commit honest services fraud against Keleher and Gutiérrez-Rodríguez; six counts of wire fraud against Keleher and Gutiérrez-Rodríguez; one count of federal program bribery, or accepting a bribe, against Keleher; and one count of federal program bribery, or paying a bribe, against Gutiérrez-Rodríguez.

If found guilty, the defendants face sentences of up to 10 years in prison for conspiracy and bribery involving federal programs, and up to 20 years for wire fraud. The case is being prosecuted by Senior Litigation Counsel José Capó-Iriarte and Assistant U.S. Attorney Alexander Alum.

Keleher surrendered to federal authorities in Philadelphia and is expected to appear before the U.S. District Court in Puerto Rico.

Gutiérrez-Rodríguez, a 76-year-old civil engineer who was convicted for the island’s largest banking fraud case, perpetrated against Caguas Federal in 1995, appeared Wednesday before U.S. Magistrate Judge Sylvia Carreño and pleaded not guilty. The judge set bail at $50,000 and released Gutiérrez-Rodríguez under the tutelage of his common-law partner of 46 years.

“Public corruption continues to erode the trust between government officials and our citizens. Defendant Keleher exploited her government position to benefit herself and other private individuals,” Muldrow said in a statement. “Government officials are entrusted with performing their duties honestly and ethically. When they fail to do so, they will be held to account.”

The indictment alleges that Keleher used her position to cede 1,034 square feet at the Padre Rufo Bilingual School to a company associated with Gutiérrez-Rodríguez in exchange for “financial benefits” connected to her leasing and purchasing a two-room apartment in the Ciudadela apartment complex in Santurce. The public school is located across the street from Ciudadela, a mix of high-end apartments and commercial space that has been credited with reviving the San Juan neighborhood.

“Defendant Ariel Gutiérrez-Rodríguez facilitated Keleher’s receipt of financial benefits in connection with her lease and purchase of an apartment in the Ciudadela apartment complex in Santurce, Puerto Rico, in exchange for Keleher’s signing a letter purporting to give 1,034 square feet of the Padre Rufo School to a private company,” according to the indictment, which adds that “the purpose of the conspiracy was for Keleher to use her official position as the Secretary of Education to enrich herself by soliciting and accepting things of value from others, and for others to enrich themselves by obtaining favorable official action from Keleher through corrupt means.”

The indictment, which Capó Iriarte cited in court Wednesday, alleges that on June 7, 2018, Keleher signed a leasing agreement with a purchase option that allowed her to reside in the apartment until Aug. 12, 2018, for a nominal payment of $1, although the rental price was $1,500. The value of the property was set at $297,500 and she would be given a rebate of $12,000 for the purchase.

A month before the former Education secretary signed the lease with the purchase option at Ciudadela, Gutiérrez, representing “Company A,” “Company B” and “Company C,” none of which were identified in the indictment, contacted a former Padre Rufo School employee to execute the ceding of the 1,034 square-foot plot to Ciudadela, according to the indictment.

The plot of school property was finally transferred to the ownership of the luxury housing complex.

The Federal Bureau of Investigation is in charge of the investigation.

“Anyone involved in the bribery of a public official seeks to put their own interests above those of the People of Puerto Rico. However, those corrupt parties will eventually pay a much higher price to the criminal justice system, and we will continue to deliver them to the federal courthouse,” Douglas Leff, special agent in charge of the FBI, said in a statement. “This has been our commitment to the people of Puerto Rico and one we intend to keep in the years to come.”

Francisco Rebollo Casalduc, Gutiérrez-Rodríguez’s legal representative, rejected the charges, contending that the prosecution “did not understand or distorted” the facts of the case. The attorney said the cession of school property to Ciudadela constituted a part of “infrastructure improvements” the owners of the development were carrying out along its perimeter, adding that the land grant was “necessary” for street alignment and widening and construction.

“Absolutely not. She was given the same consideration than anyone who goes to Ciudadela to buy an apartment,” Rebollo Casalduc told Caribbean Business in response to a question about whether there was a quid pro quo between his client and Keleher involving the cession of the strip of land belonging to the Padre Rufo School in exchange for the apartment under privileged conditions. “I ask that my client Ariel’s [Gutiérrez-Rodríguez] presumption of innocence be honored, so that when in trial we are allowed to demonstrate the insufficiency of the evidence.”

The charges against Keleher are in addition to other federal corruption counts filed against her in July, when she was charged in a 32-count indictment along with five other people, including the former director of Puerto Rico’s Health Insurance Administration, and Alberto Velázquez Piñol, an executive at BDO Puerto Rico, an auditing firm that until recently worked closely with the government. She was charged with conspiracy, money laundering and fraud related to the illegal steering of federally funded contracts toward a consulting company.

By the time the indictment came down, Keleher had already quit as head of the department. During her controversial tenure, she called for the closing and consolidation of hundreds of schools, particularly after Hurricane Maria in 2017. Her abrupt departure came in the middle of the Gov. Ricardo Rosselló administration touting Keleher’s budget process. Originally, Keleher intended to keep her $250,000 contract as a consultant, saying she would help implement her budget process in other agencies. However, after public backlash, Keleher cut all ties with the Puerto Rico government and returned to the states.

Only weeks after Keleher’s indictment in July, Gov. Rosselló resigned after massive protests set off by the governor’s participation in a Telegram chat in which he exchanged crude and crass comments with members of his cabinet and lobbyists.

The trial for this case was set for May 4 and Keleher’s attorney, former federal prosecutor María Domínguez, has requested that it be moved stateside.

María Soledad Dávila Calero contributed to this report.

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