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

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.

FBI investigates shooting threat at Puerto Rico university

(Juan J. Rodríguez/CB)

Sources says it may be false; investigation continues

SAN JUAN — The Federal Bureau of Investigation (FBI) has in its sights a potential shooting threat in Ponce, Puerto Rico’s Pontificia Universidad Católica (Pontifical Catholic University) that is has kept the academic community in suspense since early Thursday.

FBI spokesman Luis Rivera told Caribbean Business that the agency received information about an alleged threat posted on social media that is being handling with the Puerto Rico Police to determine whether it is credible and “take the necessary measures.”

An anonymous message was posted on the “PUCPR-Ponce Confessions” social media page Wednesday night about an allegedly depressed young man expressing his hate of humanity and his intention to take an assault rifle in his bag to the university center and shoot as many students as possible.

The message immediately began to circulate on social media, resulting in a tense atmosphere at the academic institution Thursday.

Another person reacted to the message on social media Wednesday, saying that the person “who wants to shoot the [university] is my buddy and is being serious. I have tried to advise him and help him, but he says it’s seriously happening anyway…be very careful.”

Sources said Thursday that what has been found indicates the threat was a “bad joke” and that the messages have already been deleted, but the FBI continues investigating to determine the gravity of the threat.

On Thursday, the university’s president, Dr. Jorge Iván Vélez Arocho, said in a statement that security had been reinforced at the institution and reiterated that he referred the alleged threat to the FBI.

“For the Pontifical Catholic University of Puerto Rico, the safety of our students and the university community is vital. Our commitment is to continue providing this attention,” he said.

Vélez Arocho urged students or individuals who have any information related to acts that threaten any member of the university community to immediately notify the Office of Security or the Vice Presidency of Student Affairs.

“The University urges those who have information to contact the FBI at 787-754-6000 or through the website,” he added.

Follow Limarys Suárez Torres on Twitter: @Limarys_Suarez

FEMA official, Cobra Energy president arrested in connection with Puerto Rico recovery contract

U.S. Attorney Rosa Emilia Rodríguez Vélez (Juan José Rodríguez/CB)

Former FEMA deputy regional administrator, former Cobra Energy president and FEMA deputy chief of staff indicted for disaster fraud, among other crimes

SAN JUAN — U.S. Attorney Rosa Emilia Rodríguez Vélez held a press conference Tuesday to give details about arrests made in relation to Hurricane Maria recovery funds, specifically to repair the island’s destroyed electrical grid.

Ahsha Tribble, the former deputy regional administrator of the Federal Emergency Management Agency’s (FEMA) Region II, assigned to work in Puerto Rico as part of FEMA’S response to Hurricane Maria; former Cobra Acquisitions LLC President Donald Keith Ellison; and Jovanda Patterson, FEMA deputy chief of staff, assigned to San Juan, were arrested on charges of conspiracy to commit bribery of public officials; acts affecting a personal financial interest; false statements; disaster fraud; honest services wire fraud, Travel Act violations, and wire fraud.

The arrests were carried out by Homeland Security Office of the Inspector General and FBI agents.

“Today’s arrests are reprehensible and outrageous. Knowing that federal government officials defrauded Puerto Rico, in this case FEMA, and the private company COBRA, in charge of helping our Island’s restoration of the electrical system, is of great sadness. These [defendants], according to the accusation, misused and took advantage of the need and pain that Puerto Rico faced after the passage of Hurricane Maria. We reproach corruption, wherever it comes from and it is why we work every day to strengthen the measures to identify possible behaviors of this kind, that seek to take advantage of the need and pain of a people,” Gov. Wanda Vázquez said in statement issued from Washington, D.C., where she was to meet FEMA officials this week.

Cobra Energy’s former president allegedly gave Tribble a helicopter tour, lodging, multiple first-class tickets, security, access to credit cards and even an apartment in San Juan to the former FEMA official in exchange for exerting undue pressure on Puerto Rico Electric Power Authority (Prepa) officials, according to the 15-count indictment, which does not include en utility officials.

Prepa Executive Director José Ortiz said Tuesday that Cobra has collected $1.1 billion of the $1.9 billion it had in contracts. That balance corresponds to March, when the contract was canceled, Ortiz said, adding that “PREPA will soon request a meeting with FEMA officials to determine the next steps to follow.”

“These defendants were supposed to come to Puerto Rico to help during the recovery after the devastation suffered from Hurricane María. Instead, they decided to take advantage of the precarious conditions of our electric power grid and engaged in a bribery and honest services wire fraud scheme in order to enrich themselves illegally,” Rodríguez said. “We hope that these accusations are an example for people who believe they can get away with it.”

In a statement, FEMA said it “cannot comment on personnel matters; however, the Agency is fully cooperating with federal investigators.”

Federal authorities have been investigating FEMA-funded contracts granted by the Prepa to Cobra Energy, a subsidiary of Mammoth Energy, for the repair of the island’s power grid after it was mangled by Hurricane Maria in 2017.

The investigation into Cobra Energy’s former president became known after he asked the court to unseal an affidavit provided by an officer that gave way to freezing $4.5 million Ellison sought to gain access to.

“From in or about October 2017 to in or about April 2019, within the District of Puerto Rico,” Tribble, Ellison, “the defendants, and others known and unknown, willfully and knowingly combined, conspired…” against the United States, the indictment reads.

Ellison would influence Tribble, the deputy regional administrator, sector lead, and recovery manager, in connection to Cobra’s contracts with Prepa related to electric power grid restoration after Hurricane Maria, with such assistance as airfare, ground transportation, helicopter flights, hotel rooms, meals, entertainment expenses, employment for an individual at the behest Tribble, and personal security services.

According to the indictment, “The things of value promised and given directly and indirectly” to Tribble by Ellison included the following:

a. A helicopter tour over Puerto Rico on or about February 7, 2018; 

b. Assistance procuring a place to live in New York in or about February 2018; 

C. The negotiation and hiring of [3] Jovanda R. Patterson a/k/a Jo a/k/a Jojo by Cobra Energy;

d. starting in or about March 2018 and culminating in July 2018; e. Hotel accommodations in Fort Lauderdale, Florida on or about July 17 to July 18, 2018; 

f. Airfare from Miami to Orlando for travel on or about July 20, 2018; 

g. First class airfare from San Juan to New York for travel on or about September 22, 2018; 

h. Personal security services in or about November to December 2018; 

i. Roundtrip airfare from Washington DC to Charlotte for travel on or about November 29, 2018 to November 30, 2018; 

j. Hotel accommodations in Charlotte on or about November 29-30, 2018; 

k. Access to and the use of the credit card of Ellison; and 

l. Access to and the use of an apartment located in San Juan, Puerto Rico.

In exchange for things of value from Ellison, Tribble took official action to cause a letter to be sent from FEMA’s federal coordinating officer to the Puerto Rico Government’s authorized representative informing that FEMA had determined the costs under the Cobra contract with Prepa to be “reasonable.”

Tribble also “directed, advised, and pressured PREPA executives to utilize Cobra personnel to repair damage to the Monacillos substation, and then on FEMA officials as well to “take action for Local Redevelopment Authority for Naval Station Roosevelt  Roads (“LRA”) to enter into an agreement with PREPA for Cobra to perform repair work at Roosevelt Roads. 

She also pressured PREPA executives to accept the specifications of a COBRA design for the electric power distribution system in Vieques and to engage COBRA in the execution of the proposed redesign. 

Tribble and Ellison communicated using her private email account, her private cellphone, a disposable prepaid cellular number, Apple iMessages, SMS texts, and photographs, rather than through her FEMA issued email account or FEMA issued cellular telephone, the indictment reads.

(Screen capture of

(Screen capture of

Earlier Tuesday, the spokeswoman for the U.S. Attorney’s office, Lymarie Llovet, told NotiUno radio that three people were arrested, in Florida, Oklahoma and another unknown location.

If found guilty, the defendants face possible sentences of up to five years for conspiracy, Travel Act violations, conflict of interest, and false statements, and up to 30 years for honest services wire fraud and disaster fraud.

In its second quarter financial results, Arty Straehla, Mammoth’s CEO, stated, “While our work in Puerto Rico has ended, we have continued to receive payments from PREPA, with $42 million received in the second quarter of 2019.”

Corrections Secretary says no federal probe into contract underway

Corrections Secretary Erik Rolón (CyberNews)

‘Deaths occur in the department,’ Rolón says about new inmate case

SAN JUAN — Puerto Rico Corrections Secretary Erik Rolón said Thursday that reports about the Federal Bureau of Investigation (FBI) investigating the bidding process granting a multimillion-dollar contract are fake news. 

“There has been no requirement, no summons from the federal authorities. It is a process that has been followed according to the channels and regulations in force. Everything that is said in the media regarding the investigation is totally false,” Rolón told reporters.

Reportedly, federal authorities were investigating alleged irregularities at the department’s Bid Reconsideration Board regarding a $300 million contract to run prison commissaries, or canteens, and supply food to the inmates.

He said no department employee has been contacted by federal authorities.

When questioned whether he could assure there would be no news of any related arrests, Rolón replied, “obviously there are some people, who I don’t know, that have the intention of giving incorrect information. I cannot guarantee some news [report] will come out tomorrow but I can guarantee that every time one comes out I will be giving clear and precise information concerning this servant or any other official.”

Rolón also spoke about another inmate who was found dead in his cell.

“It was at [correctional facility] Bayamón 292. It is already in the process of investigation. A Police report was made. For now, what we have is preliminary information, so there will be two investigations. The one by the Police and the one that is done in the department,” the secretary replied to questions from the media.

The official minimized the situation despite the death of several inmates having been reported.

“Unfortunately, deaths occur in the department. This is something that happens year after year. What’s important is that it is clear this situation is being investigated and there will be accountability,” the secretary said.

Rolón did not want to elaborate on reports that point to the death as a result of a fight. The body had several bruises. The incident occurred in the middle of a lockdown ordered as Hurricane Dorian approached the island.

“Whether there is a lockdown or not, what it means is no one enters or leaves the prison. The rest works normally, although security is increased. All there is, is speculative information that will be determined once the two investigations started are concluded,” he said.”

Do you not believe that the time you served as deputy chief of staff affected your performance as Corrections secretary?” he was asked.

“Not at all. When I was deputy was when a lot of initiatives were moved forward,” he replied.

“But we also see what is happening with the deaths in the prisons,” reporters pressed.

“I’ll say it again, deaths occur in prisons. And the statistics are similar to those for years. That has nothing to do with my duties as deputy,” he replied.

“But it’s been 40 years since there was a Corrections officer was murdered,” reporters insisted.

“And the question is whether that has to do with my duties as deputy chief of staff. The final report reflects that it was not due to lack of instructions, regulations or protocol. Even that it was not due to the lack of internal restrictions or lack of personnel, it was due to the very particular execution of a rule that had been issued and was not followed,” the secretary replied about the death of officer Pedro Rodríguez Mateo, who was killed at the beginning of August by and inmate, Luis Sostre Piccinini, who was later found dead in his cell.

Rolón did not inform Gov. Wanda Vázquez about this death. The secretary was attending in a meeting with the Safety Project Management Office (PMO) for response and recovery established by former Gov. Ricardo Rosselló to channel fund requests more effectively.

Federal authorities arrest 6 for Social Security fraud

Also face charges for Medicare and identity theft

SAN JUAN – Federal agents reportedly conducted an operation Tuesday morning for allegedly exploiting the Social Security Administration.

Preliminary details suggest there were six arrests following indictments returned by a federal grand jury. They also face charges for Medicare and identity theft.

“These are white-collar crime violations, among them, Social Security fraud and other violations of the law … This is part of the investigations that we carried out,” Federal Bureau of Investigation (FBI) spokesman Guillermo González confirmed in a radio interview with WKAQ.

The arrests were made by U.S. Department of Health & Human Services Office of Inspector General, Social Security, the Drug Enforcement Agency (DEA) and FBI agents. The detainees are expected to be brought before a federal magistrate for the initial hearing.

Rosa Emilia Rodríguez-Vélez, U.S. Attorney for the District of Puerto Rico, will give a press conference at 11 a.m. to provide more details.

Former heads of Puerto Rico Education Dept. and Health Insurance Administration arrested along with president of BDO

At the lectern, Rosa Emilia Rodríguez Vélez, U.S. attorney for the District of Puerto Rico; and, to her left, Douglas Leff, FBI special agent in charge of the San Juan division (CyberNews)

U.S. House Natural Resources Committee chairman calls for governor to step down over alleged $15.5 million contract scheme

SAN JUAN – The former secretary of the Puerto Rico Department of Education (PR DOE), Julia Keleher; the former director of the Health Insurance Administration (ASES by its Spanish acronym), Ángela Ávila; the president of accounting and auditing firm BDO Puerto Rico, Fernando Scherrer, and subcontractor Alberto Velázquez Piñol were arrested by federal officials after a grand jury returned a 32-count indictment.

The indictment also charges Glenda E. Ponce Méndoza, who worked as Keleher’s special assistant despite not being a department employee, and her sister, Mayra Ponce Mendoza, owner of consulting firm Colón & Ponce.

The Justice Department held a press conference in which Rosa Emilia Rodríguez-Vélez, U.S. attorney for the District of Puerto Rico, provided details of the operation carried out by the FBI and the Office of Inspector General of the Department of Health and Human Services (OIG-HHS) earlier Wednesday.

“Both Keleher and Ávila Marrero exploited their privileged positions as heads of agencies in Puerto Rico. Both defrauded the United States government and Puerto Rico in a contract scheme upwards of $15.5 million, $13 million in [the Education] Department and $2.5 million in ASES,” the district attorney said, adding that the conspiracy charges carry a sentence of up to five years, while money laundering and wire fraud charges carry a sentence of up to 20 years.

Rodríguez Vélez went on to explain that the 32 charges cover three schemes, two in the Department of Education and one in ASES, that were carried out from 2017 to 2019. 

Counts 1 to 11 in the indictment cover the contracts that Colón & Ponce received, allegedly because of the close relationship with the then-Education secretary, for whom there was no evidence presented of having benefited financially.

“The purpose of the conspiracy was to steer contracts between the PR DOE and Colón & Ponce, a company owned by Mayra Ponce Mendoza. This was accomplished through a corrupted bidding process pursuant to a Request for Proposal (“RFP”), wherein Colón & Ponce was provided with a competitive advantage over other bidders based in part, on the close relationship between Keleher, Glenda Ponce-Mendoza, and her sister Mayra Ponce-Mendoza,” the Justice Department said in a written summary. 

Furthermore, Rodríguez explained that despite pressure from Keleher to grant the contract to Colón & Ponce, no one in the Education Department’s Office of Federal Affairs had asked for those types of services, and the indictment states that someone, identified as Individual C, from the office of the Education Department Process Official for Fund Adjudication Unit, “concluded that Colón & Ponce was the only company that was not qualified for the contract, and was the worst applicant.” 

Nevertheless, Colón & Ponce received a $43,000 contract that was then increased to $95,000 to pay one of Keleher’s assistants, who was not classified as an Education employee.

As for the remaining two schemes, Rodríguez explained they were similar but instead benefited Velázquez Piñol through a contract with BDO, which was contracted by the Education Department and ASES.

“The conspiracy and scheme to defraud involved federal funds paid by PR DOE to BDO for several contracts totaling over $13 million from January 2017 until April 2019. Despite express prohibitions in said contracts, BDO subcontracted other companies to perform the services, and paid Velázquez through his company, Azur, a 10% commission for the contracts awarded through Velázquez-Piñol’s influence with government officials,” Justice said. 

Keleher, who resigned April 1, was arrested in Washington, D.C., by the FBI, and as with Velázquez Piñol, who was arrested in Greenwich, Connecticut, after turning himself in, the process to bring them back to the island may take about eight days.

Keleher must surrender to the federal authorities in Puerto Rico by July 17, as determined in a Washington court.

The other four arrested were released on bail. Both Ángela Ávila, as well as the contractor sisters Glenda and Mayra Ponce Mendoza were released after paying a $25,000 bail. Scherrer’s bail requires a $2 million deposit, or $1 million in cash and $1 million in assets.

In a statement, BDO Puerto Rico said Scherrer submitted his resignation, which “will allow Mr. Scherrer to focus on his defense, while allowing BDO to concentrate its efforts on providing services” to its clients. It added that it takes the “allegations made by federal authorities very seriously and reiterate our willingness to continue cooperating.”

A day earlier, former Gov. Ricardo Rosselló’s chief adviser Alfonso Orona had been interviewed by OIG-HHS agents. The arrests were made less than 24 hours after Orona testified before a grand jury regarding Velázquez’s relationship with the government.

Rodríguez assured the governor was not part of the ongoing investigation, for which she later replied to questions from the press, saying it involved several municipalities as well as “new accusations” coming.

Orona admitted he was questioned about Velázquez’s activities in the aftermath of Hurricane Maria, to authenticate official documents and provide evidence of the participation of the contractor in the awarding of government health plan contracts.

Velázquez was also in charge of working with the Health Department in the implementation of the first Medicaid Management Information System (MMIS) and served as an external adviser to the Education Department.

In a statement, Gov. Rosselló, who was vacationing in Europe and said he would return earlier than planned, added that his administration “will not tolerate corruption and anyone who betrays the trust [in government] should pay with the full weight of law.”

“Likewise, I reiterate the call for collaboration with the law and order agencies that work on these cases,” he added.  

U.S. Rep. Raúl Grijalva of Arizona (CB file)

Raúl Grijalva (D-Ariz.), the chairman of the U.S. House Natural Resources Committee, which oversees Puerto Rico matters in Congress, said Rosselló must take “immediate steps” to restore his administration’s credibility.

In an interview with the Washington Post, Grijalva called on Rosselló to resign.

“We’ve crossed that crucible now,” Grijalva said. “The restoration of accountability is so key going forward.”

In a statement posted earlier on his official webpage, the congressman wrote: “Announcing a zero-tolerance attitude toward corruption is easy. Taking meaningful steps to prevent and punish it is leadership,” adding, “The Puerto Rican people deserve a government that takes public service seriously, that’s transparent and accountable, and that doesn’t let this happen in the first place. Gov. Rosselló has little time and much to do to restore public faith in his government, and I urge him to take a housecleaning approach as quickly and thoroughly as possible.”

Ex-Puerto Rico Police chief referred case involving ruling party’s former campaign manager

Elías Sánchez, Gov. Ricardo Rosselló’s representative to the Puerto Rico Financial Oversight & Management Board (CB file)

Questions why probe into police protection for gov’s former campaign manager, rep to fiscal board hasn’t ended

SAN JUAN — Former Puerto Rico Police Superintendent Michelle Hernández confirmed Monday evening that in November 2017, she referred an anonymous document that contained allegations about the former executive director of the New Progressive Party’s (NPP) 2016 gubernatorial campaign, Elías Sánchez, who allegedly had police escorts assigned to him even though he was not a public official.

In a TV interview with Univision’s “Jugando Pelota Dura” (“Playing Hard Ball”), a political analysis primetime show, Hernández said that, in late 2017, she received information with the allegation.

“It was very specific and I referred it to the Auxiliary Superintendency for Professional Responsibility [SARP by its Spanish acronym], which is an internal office in the Police that investigates [allegations against] police officers,” Hernández said. “The anonymous information was making reference to [allegations from] November and December 2016.”

Hernández said that when she read the document, she was surprised about the serious allegations being made and the amount of detail contained in the document that led her to think that “it came from someone inside the Police force that saw what was going on.”

She said the document was credible enough for her to refer it for investigation, adding that it was also sent to the Government Ethics Office.

Sánchez was also Gov. Ricardo Rosselló’s representative to the Financial Oversight and Management Board for Puerto Rico and .

The former police chief said she doesn’t know why the police probe has taken so long, “because one of the orders and regulations that had already been approved at the federal Department of Justice level says that an investigation has to be completed in 90 days,” she said. “Three 30-day extensions can be requested if there is a compelling reason to request an extension.”

The document with the allegations was sent for investigation 18 months ago, and “if you look at it, the way it should be working is there is a justification to request an extension. So we are talking about 90 days, plus three 30-day extensions so that is a total of 180 days at the most,” she explained.

The Government Ethics Office and SARP reportedly continue to investigate the allegations. The FBI is thought to also be conducting an investigation into the matter.

Hernández said that when she sent the information to be investigated, it wasn’t made public.

“It’s part of the work that has to be carried out and that involves police, so it was sent to SARP and the Government Ethics Office.”

Individuals are not supposed to receive protection from police escorts as these are paid with public funds.

“It’s very difficult to justify granting a police escort to someone that is not a public figure,” Hernández said, adding that during her tenure, the majority of threats made to individuals “didn’t receive police escorts but preventive patrolling could be offered around the home the person threatened lives in.”

Two contractors, 1 Puerto Rico Senate Employee arrested for ‘ghost employee’ scheme

(CyberNews photo)

FBI special agent: It is now open season on apprehending all those responsible

SAN JUAN – On Tuesday, a federal grand jury returned an 18-count indictment charging three individuals with conspiracy to commit wire fraud, 10 substantive counts of wire fraud, intentional misapplication of property by an agent of an organization receiving federal funds, aggravated identity theft, and money laundering, announced Rosa Emilia Rodríguez-Vélez, U.S. Attorney for the District of Puerto Rico.

According to the allegations in the indictment, since about 2016 until June 2018, defendants Chrystal Robles-Báez, Isoel Sánchez-Santiago, and Ángel Figueroa-Cruz engaged in a scheme to defraud money and property from the government of Puerto Rico “by means of materially false and fraudulent representations and promises. The defendants sought to accomplish their scheme to defraud by billing, approving and collecting for contractual professional services work that was either not completed, or was performed in contravention to the explicit terms of the contracts.

As alleged in the indictment, the defendants participated in lawful electoral campaign activities for candidates to elected offices during the 2016 Puerto Rico general elections. After the general elections in late 2016, the defendants began to explore employment opportunities with the Government of Puerto Rico, including contracts for professional services.

On Jan. 1, 2017, defendant Chrystal Robles-Báez incorporated Global Instant Consulting Group, Inc. (GICG). The purpose of the corporation was to provide administrative and political counseling, workshops and public relations, and consulting. On the same day, defendant Isoel Sánchez-Santiago incorporated International Legislative and Governmental Consulting Group, Inc. (ILGCG). The purpose of the corporation was to provide governmental administrative consulting, creation of proposals, offering of workshops, and legislative process and parliamentary procedures.

“In the process of establishing the corporations, defendant Robles-Báez solicited through interstate wire communications necessary documentation from various departments, agencies, and dependencies of the Government of Puerto Rico, including but not limited to: (a) the Department of State; (b) the Treasury Department; and (c) the Police of Puerto Rico. Eventually, the defendants entered into professional services contracts with the Government of Puerto Rico. Specifically, the P.R. Senate and the P.R. House of Representatives,” the Justice Department’s release reads.

According to the indictment, defendant Robles-Báez, on numerous occasions certified and requested payments indicating that she had attended the Office of Governmental Affairs to provide professional services as detailed in the two GICG contracts, when in fact on those days the defendant did not attend the Office of Governmental Affairs or provide professional services, Justice explained.

“Additionally, defendants Robles-Báez and Sánchez-Santiago utilized the personal identifying information of numerous individuals, without their knowledge or consent, in order to give the impression that defendant Robles-Báez, as an ‘Intergovernmental Coordinator’ on behalf of GICG, had provided those individuals with professional services, when in fact no such services were ever requested by those individuals,” the release reads.

Furthermore, defendant Robles-Báez utilized the assistance, contacts, and services of defendant Sánchez-Santiago in order to fraudulently justify work allegedly completed under the GICG contracts.

“Defendant Ángel Figueroa-Cruz, who was the Executive Director of the Office of Governmental Affairs in the Puerto Rico Senate, falsely certified as correct, the information contained in the bills/invoices for payment submitted by defendant Robles-Báez as an ‘Intergovernmental Coordinator’ on behalf of GICG in support of payment. Defendants Robles-Báez and Sánchez-Santiago divided the proceeds of the conspiracy and scheme to defraud,” according to the department.

“This is the first indictment charging the use of ‘ghost employees’ to defraud the people of Puerto Rico. The defendants’ reprehensible conduct undermines the trust that the public places in our government,” said Rodríguez-Vélez.

Douglas A. Leff, Special Agent in Charge of the FBI, San Juan Division said: “Through the Puerto Rico Secretary of Justice’s referral of this case, and the U.S. Attorney’s Office diligent prosecution, it is now open season on apprehending all those responsible for this corrupt scheme to defraud the People of Puerto Rico. Those who perpetrated the scheme, as well as their family and friends who benefitted from it, can either cooperate quickly or they will receive one last gratuity from the federal government: A free ride in the back seat of an FBI squad car.”

“The Puerto Rico Department of Justice started this investigation, and our commitment to fight corruption along with federal authorities remains undeterred, no matter where it comes from. This case is an example of our joint efforts to identify and process anyone who unlawfully benefits from the government, abusing positions of trust and misusing public funds,” said Wanda Vázquez-Garced, Secretary of the Puerto Rico Department of Justice.

The defendants are facing a maximum term of imprisonment of 20 years.

Document destruction, falsification and obstruction involved, FBI says about San Juan raid

SAN JUAN – Douglas Leff, the special agent in charge of the FBI’s San Juan Division, said Tuesday there was destruction and falsification of documents as well as obstruction of justice involved in the agency’s raid of the capital’s Purchasing Division offices at the Municipal Tower of the Municipality of San Juan.

“There are a lot of documents here, but we think there are other documents that should be here and they are not. We have information that they took documents from here to another place, but at this moment we do not have enough information to corroborate it,” Leff told the press.

“Therefore, we request the cooperation of the public, of whoever knows the location or the extraction of documents to another place. Please contact us at 787-754-6000 or via the portal,” he added.

The FBI director said the fraud investigation follows a referral from the office of Comptroller Yesmín Valdivieso. Agents searched floors 3, 4, 14 and 15 of the municipal tower, and confiscated documents and computers.

San Juan Mayor Carmen Yulín Cruz had confirmed the raid, tweeting, “At this moment members of the FBI are intervening in the Municipal Tower of San Juan. My instructions as always are of total collaboration. I do not have more information at this time. We all have the duty to collaborate to clarify this situation.”

In an afternoon statement, the mayor said, “I reiterate to the municipal employees that they have a duty that all their actions are legal, moral and ethical. In addition, it is their responsibility to use all the mechanisms available, in the event that they believe that they must submit any information, to do it internally and / or externally.

Any employee who has not fulfilled their duty or who has not complied with the rules and regulations, after the due process that corroborates such actions, will have to face the consequences.”

The FBI’s San Juan Special Agent in Charge Douglass A. Leff (CyberNews)

Leff told the media earlier that the FBI had “a search warrant from the Federal Court,” and that “We are going to take computers, electronic records, documents. I think we’ll be here all day.”

He added that there are several “different investigations, but this one is particularly related to a judge with a federal order that has just signed it. We are working for a little while with the Comptroller of Puerto Rico and there is information from [her] Division that we are using to obtain this order.”

FBI spokesman Carlos Osorio said in a radio interview (WKAQ) earlier as well that “there are several floors we have to search. There are more than three. I cannot tell you the exact number but I know it’s more than three. It has to do with allegations of fraud and favoritism regarding purchases.”

He said there are were no arrests and that the order is to locate documents or electronic files.

Irregularities plague Puerto Rico Corrections Department phone deal

Editor’s note: This article first appeared in the July 19-25 print issue of Caribbean Business

The brouhaha over the renewal of the Puerto Rico Department of Correction & Rehabilitation (DCR by its Spanish initials) contract with Global Tel Link (GTL) to operate the island inmates’ calling service has roots that trace back across several administrations and are underpinned by irregularities.

Questions about the contract arose after news the Federal Bureau of Investigation (FBI) reportedly was investigating the DCR’s procurement process and after its secretary, Erik Rolón Suárez, announced with great fanfare in June that the agency had begun the bidding process for installation of the managed-access system and to continue offering the inmate phone service.

The contract was again awarded to GTL, including the installation of a monitoring system, despite the fact the firm has been plagued since 2015 with complaints and scandals related to irregularities.

According to the Puerto Rico Comptroller’s website, the original contract with the DCR became effective June 18, 2014, and was renewed June 29, 2018. However, during an exclusive interview with Caribbean Business, José Aponte Carro, DCR’s former interim secretary during the administration of Gov. García Padilla, explained that although the agreement began in 2014, it was put on track during the administration of former Gov. Fortuño in 2016.

Bid first issued under Fortuño administration

“This bid was issued under the former secretary of Corrections, Jesús González, who was the last [DCR administrator] under the Fortuño administration. He issued the bid to implement the project of putting phones in prisons, which are known throughout the nation as the [prison] wall phones. [In] this new scenario…calls are generated but there is a record that helps prisons more effectively monitor inmates and facilitates [access, so] relatives can pay for calls,” the former official said.

“Jesús González issued and carried out the bid. The telephone company Claro provided the service, but they, in turn, subcontracted GTL to offer the service. Claro had already informed that the service did not generate profits and they were thinking about canceling it. Obviously, there were negotiations on both sides, but Claro kept threatening to leave and Corrections could not be left without that service. A bid in which other companies competed was held, but GTL was the most robust and won it. Then came the change of government and former [DCR] Secretary José Negrón Fernández assumed the post, with whom I served as undersecretary,” Aponte Carro recalled.

The lawyer who now has a private practice said he was tasked with reviewing the projects that had been pending during the administration of the outgoing DCR secretary, to verify that all legal requirements were observed in the awarding of the contract.

Recent media reports also point out the alleged FBI investigation of Act 117 of Nov. 21, 2017, which amended Act 15 of 2011 to require the DCR to establish a controlled access system, known as managed access, to monitor calls made by inmates.

Act 117 was enacted through House Bill 966, authored by majority New Progressive Party (NPP) Rep. Félix Lassalle Toro, who was part of the communications team of former Gov. Fortuño and currently chairs the House Public Safety Committee and is vice chairman of its Agriculture, Natural Resources & Environmental Affairs Committee.

The bill succeeded in amending articles 3 and 5 of Act 15 to require the DCR secretary to initiate a process that would establish a controlled-access system to prevent unauthorized communications from within the island’s prison system.

Aponte Carro said the GTL contract, which did not include managed access, expired in June 2017 but included the possibility of a special extension for one year, that is, until June of this year, when the contract was renewed and the new service was added. During this extension period, the Legislature amended Act 15 and required the DCR to install the monitoring system.

It should be noted that neither the original nor the renewed contract represent a cost to taxpayers. As stated in the contract-renewal document provided by the DCR press office, “GTL will pay the DCR 30 percent of the gross revenue generated by all completed telephone calls, whether made or received….” However, in the “category of service” indicated by the Comptroller’s Office, the contract is for “Personal Services Not Professional” services.

Aponte Carro said that during his term in office, such a contract was rejected because, although it did not represent a direct cost to the Treasury, when evaluated during his time at DCR, the cost of installing the monitoring equipment was at least $60 million, or an average of $1.5 million to $2 million per facility, for a prison system that has some 40 institutions.

The former DCR official also explained that during the Fortuño administration, managed-access system tests were completed at the Guayama Correctional Complex, but were stopped when it was determined they were affecting communications at a pharmaceutical company adjacent to the prison. He said the system has proven to be inefficient even in states where the company, formerly known as Global Telcoin Inc. and Global Tel*Link Corp., has implemented them.

Claims, fraud and lawsuit

Puerto Rico Act 458 of 2000, as amended, provides that “a head of a government agency or instrumentality, public corporation or municipality, shall not award any bid or contract whatsoever for services or for the sale or delivery of goods to a natural or juridical person who has been convicted or found guilty in a state or federal forum or in any other jurisdiction of the United States of America, of certain crimes [that] constitute fraud, embezzlement or misappropriation of public funds, for a term of…10 years in cases of convictions for felonies and…five years for misdemeanors; to provide that a conviction for said crimes shall entail the automatic rescission of contracts in effect with government agencies or instrumentalities, public corporations or municipalities; to require the inclusion of a penal clause in the contracts for the reimbursement of public funds by the person convicted or found guilty; and for other related purposes.”

While GTL has not been charged with any of the aforementioned crimes, since 2015, it has been linked to one of the most notorious public fund scandals in the United States.

In February 2015, former Mississippi Corrections Commissioner Christopher Epps, along with other officials, pled guilty to bribery and filing false tax returns, after evidence submitted to the court indicated he led one of the largest and longest-running criminal conspiracies in the history of the state, the so-called “Operation Mississippi Hustle,” when accepting at least $1.4 million in bribes over an eight-year period to award more than $800 million in private contracts for that state’s correctional system, including to GTL. In May of that year, Epps, now 59, was sentenced to nearly 20 years in prison and fined $100,000.

On July 13, 2017, a federal class-action lawsuit was filed against those accused of the bribery scandal. The defendants include Epps, Global Tel*Link Corp. (GTL) and businessman Sam Waggoner, who were alleged to have taken part in a racketeering conspiracy, which the lawsuit called the “Mississippi Prison Phone Scam.”

In April of this year, GTL agreed to pay $8.8 million to settle the lawsuit, alleging the company violated the Telephone Consumer Protection Act when it sent automatic messages to 1.8 million people.

In addition, the state of Mississippi sued 10 individuals and 15 corporations in February 2017 to recover more than $800 million in illegally appropriated state funds during Epps’ incumbency. At the time, state Attorney General James Hood told stateside media that several corporations, including prominent private prison contractors such as GTL, paid millions of dollars in so-called “consulting fees” to people who used to pay bribes and kickbacks to Epps.

Furthermore, the Better Business Bureau posted dozens of negative customer reviews and complaints about the company’s dismal service. The renewed contract raises questions related to whether the Government of Puerto Rico was aware of the company’s history and whether it violates Act 458.

Done legally

DCR Secretary Rolón Suárez, who took over the agency last year, fiercely defended the GTL contract renewal and assured it was signed under the department’s existing legal framework.

“In this particular service, we included and requested the help of the Telecommunications Regulatory Board, which assisted us in the evaluation of the proposals that arrived; a recommendation was made and the DCR Bidding Board made the final decision; it wasn’t even this [public] servant. The Bidding Board made its decision based on the evaluation of the proposals. If there’s a class-action lawsuit or not…perhaps that information was not part of the evaluation because perhaps that information would not have arrived in due time during the process,” the secretary explained while assuring the contract did not require a competitive bidding process, despite having publicly said it did.

“Since it’s a renewal, there’s no time to [start the] process from scratch, and especially when there’s one running. Having done a bid would have meant starting another process, when we already had one running, and that would put us in a very uncomfortable position…the contract had to be renewed because the request for proposals [RFP] had not ended and the contract expired, and I, as secretary, cannot afford to have a service without a contract, and we extended it because the RFP has not concluded, so they would have a contract while the process ended,” he added.

He did not explain, however, that if the renewal of the contract did not require a bidding process, why it required the approval of the department’s Bidding Board.

Aponte Carro, the former DCR official, contradicted the current secretary and categorically stated that it is the secretary’s prerogative to authorize the contract with his signature.

“In the end, it’s the secretary who signs, but before arriving [to his desk], it [the contract] has to go through the different components that let him see there will be no problem when signing it; therefore, an office of primary interest comes first—administrative, security or any other—that’s interested in obtaining the equipment; they make the request and that goes to the purchasing department and establishes if there is money in the budget. Once that is complied with, it goes to the secretary, who determines whether he sends it to the bidding board or not,” the former official said.

As of presstime, Caribbean Business had yet to receive a reply to a request for comment from GTL.