Governor will visit NPP lawmakers at Capitol monthly, speaker says

Gov. Wanda Vázquez and House Speaker Carlos “Johnny” Méndez (CyberNews)

Legislative leaders applaud decision, new appointments

SAN JUAN — Puerto Rico House Speaker Carlos “Johnny” Méndez said Monday that Gov. Wanda Vázquez is committed to participating, at least once a month, in the New Progressive Party (NPP) majority Senate and House caucus meetings. 

“All of the representatives applauded that for first the time a governor comes voluntarily to the delegation’s caucus, not to a summoned legislative conference, but rather it came ‘motu propio’ from her to assist,” Méndez told reporters after meeting with the governor for about two hours in his office at the Capitol. “There is a commitment that, once a month, she will be assisting one of delegation’s caucus to discuss administration issues….”

Méndez noted that one of the priorities touched on during the meeting were economic development projects, the creation of jobs, visits to Washington, D.C., the funds assigned to municipalities and the Financial Oversight and Management Board’s stance. When asked specifically about the visits to Washington, Méndez said they aim to reopen the channels of communication with President Trump.

“Public policy is established by the government not the [fiscal oversight] board. Her [Vázquez’s] position is the same as ours,” Méndez said. 

The speaker added that the governor welcomed the recommendations of leaving without effect the reorganization of the Department of Transportation and Public Works and that of the Labor Department. 

Regarding the governor’s appointing of Luis Pérez as the executive director of the Government Ethics Office, Méndez said it was a good choice and that it will be evaluated by the legislative chambers. Vázquez also appointed Dennise Longo as Justice Secretary.

During the inauguration Monday morning of a library at the Montessori School in the Luis Lloréns Torres public housing project, Senate President Thomas Rivera Schatz, who invited Vázquez to attend, also said that Pérez was an excellent selection. However, he said he didn’t know Longo but noted that he has received excellent references about her.

“I don’t have the privilege of knowing her,” Rivera Schatz said. “I am coordinating a meeting with her in the next few days.”

The governor also met with the Senate caucus Monday afternoon.

—CyberNews contributed to this report.

‘Stay tuned,’ says U.S. attorney about possibility of Puerto Rico mayors arrested


Assures that reports of federal agents arriving are not true

SAN JUAN – The U.S. Attorney for the District of Puerto Rico, Rosa Emilia Rodríguez, spoke Tuesday about talk of arrests and operations circulating on social media as sources.

“That shows once again that you are not always right. And people who start a rumor, from there on down, the rumor develops and is turned into reality. Unfortunately, there are many things that are not correct. There is not, nor was there any contingent of agents that we brought; it was not related to any federal criminal case, and that seems to have been a rumor that continued to run on the social networks and perhaps on the other media, but there was never such a contingent of federal agents,” Rodríguez said during a press conference.

She was referring to reports that, before Ricardo Rosselló announced his resignation as governor, federal agents had arrived in Puerto Rico. Some reports alleged these arrived via the Isla Grande airport, while\ others at Aguadilla’s Ramey Base or the Muñiz Base in Carolina.

Regarding the leaked Telegram chat between Rosselló and his inner circle, the Rodríguez insisted that she could not go into the matter because of the Justice Department investigation underway.

The 2016 Puerto Rico v. Sánchez Valle case before the U.S. Supreme Court established that state and federal authorities cannot conduct simultaneous investigations on the same matter.

However, when asked whether there would be multiple mayors arrested, the federal prosecutor replied, “Stay tuned.” There are believed to be more than 10 mayors under federal investigation.

Chief prosecutor denies not having probed alleged irregularities at Medicinal Cannabis Regulatory Board

Olga Castellón says investigation underway since September

SAN JUAN — The chief prosecutor of Puerto Rico’s Justice Department, Olga Castellón, on Monday denied allegations that alleged irregularities in the Medical Cannabis Regulatory Board had not been investigated and assured a probe began in September.

“We are not going into the details of what we have been investigating in relation to this matter, but all angles are being investigated,” Castellón said in an interview with WKAQ radio, adding that the investigation began in “September 2018, the date when it was alleged to have been brought to the attention of the secretary of justice. Witnesses have been interviewed and the investigation is open.”

On Friday, Sandra Rodríguez Cotto published on her website, “En Blanco y Negro con Sandra,” that based on text messages and chats Justice Secretary Wanda Vázquez Garced refused to investigate an alleged corruption scheme at the Medicinal Cannabis Regulatory Board that benefited María Palau Abasolo and José Giovanni Ojeda, who are married and are executive mansion advisers and allegedly forced cannabis licenses be issued to specific companies. Another matter Rodríguez Cotto delved into was the lack of an investigation into an alleged fraud scheme that culminated in the disappearance of $11 million from the Pharmacies Board.

Meanwhile, Noticel reports that these accusations seem to originate from lobbyists and add to allegations that the governor’s former representative to the island’s Fiscal Oversight and Management Board, Elías Sánchez, had the ability to influence officials of Gov. Ricardo Rosselló’s government. Also mentioned is the alleged influence of Sánchez’s wife, Valerie Rodríguez Erazo.

These allegations would hinder Vázquez Garced’s taking over as governor when Gov. Ricardo Rosselló steps down Aug. 2, pursuant to the Constitution’s order of succession, after the secretary of state, who has yet to be replaced, resigned. On Sunday, the Justice secretary said she was not interested in becoming governor and asked Rosselló to appoint a new secretary of State.

“What usually happens is people expect that as soon as they refer [a case], the Justice Department has to give them an update about what we are doing, and that’s not how it goes,” the official said.

“Once a charge is made…the Justice Department starts to work on it, but doesn’t start calling to say we interviewed so and so because that is improper. Justice Department investigations are covered by confidentiality, just as investigations under the grand jury must remain in secrecy. They are confidential, cannot be disclosed, and it would be irresponsible as well as illegal to make such disclosures to third parties that have nothing to do with the Department of Justice,” she added.

The also federal prosecutor defended the work of the department and clarified that the Special Independent Prosecutor’s Panel (PFEI by its Spanish initials) is responsible for prosecuting corruption cases and that 39 referrals have been made. She also explained that federal authorities can also collaborate in these cases, under the concurrent jurisdiction.

Puerto Rico funds in peril after ex-Health Dept. head charged

Ángela Ávila, the former executive director of the Puerto Rico Health Insurance Administration (Screen capture)

Regional HHS inspector general says development affects government’s credibility 

SAN JUAN — After weeks of speculation about federal investigations in Puerto Rico, the U.S. Justice Department announced a 32-count indictment charging six defendants, including Ángela Ávila, the former executive director of the Puerto Rico Health Insurance Administration (ASES by its Spanish acronym), and the president of accounting firm BDO Puerto Rico, Fernando Scherrer, along with a contractor of the firm, Alberto Velázquez.

The U.S. attorney for the District of Puerto Rico, Rosa Emilia Rodríguez, explained Wednesday that Ávila is accused of giving BDO, specifically Velázquez, privileged information, which in turn was used so BDO could receive several contracts totaling $2.5 million.

When BDO submitted the proposal, allegedly Ávila gave the ASES governing board the recommendation to cancel the previously established contracts to then hire BDO, which against regulations, subcontracted Velázquez.

The indictments came only a day after Puerto Rico’s resident commissioner in Washington, D.C., Jenniffer González, announced a bill to grant $12 billion in Medicaid funding to the island. In remarks Wednesday, federal officials raised concerns about the charges, suggesting the possibility that those funds make it to the island may have diminished.

During the Justice Department’s press conference Wednesday the deputy inspector general for the Department of Health and Human Services (HHS) for Puerto Rico and the U.S. Virgin Islands region, José Luis Soto, said the developments affect the credibility of the local government. 

“Definitely, [how much this affects] is a decision for the Centers for Medicare & Medicaid Services [CMS], which is the agency within the Department of Health that has to make the considerations. Obviously, this does affect the credibility because we are saying that this happened in the agency that administers the Medicaid funds in Puerto Rico. In due time, CMS is going to need to make a decision,” Soto said.

He then added that “the office of the inspector general is going to have meetings with CMS to give them a series of recommendations that stem from this investigation.”

The federal official’s remarks confirm the concerns the president of the College of Physicians & Surgeons, Víctor Ramos, had expressed earlier Wednesday to Caribbean business regarding the island government’s tenability. 

“We did pretty well in getting federal funds when we would go [to Washington, D.C.] in a coalition between the public sector and the private sector. That was lost after the hurricane. The government has gone by itself and the private sector has gone by itself. Going together has to be resumed. Certainly, fair or unfair, the government does not have credibility because of these arrests,” Ramos said.

Congresswoman González’s bill to try to obtain the $12 billion for the island’s health plan, which Ávila ran until three weeks ago, was slated to be introduced for a committee vote Thursday and then be evaluated by the full House of Representatives. On June 20, Anthony Maceira, the secretary of Public Affairs at the governor’s office, La Fortaleza, confirmed that the cancellation of contracts with BDO had been ordered after it was learned the firm was being investigated.

In a Radio Isla interview, González said the arrests affect the image of the island and the credibility of the federally funded programs.

“He who says that this does not have an effect, lies,” she said.

“We arrived at an agreement of giving the government of Puerto Rico $12 billion more for the payment of the government health insurance for the next four years,” González said in the interview. “She [Ávila] was the person present at the public hearings.”

No evidence of Ávila having benefited financially from the scheme was presented. 

The congresswoman said the agreement would award some $2.8 billion in 2020, $2.9 billion in 2021, $3.01 billion in 2022 and $3.11 billion in 2023.

“This was a major achievement for Puerto Rico so that it wouldn’t have to face a fiscal health cliff and would force the Puerto Rico Financial Oversight and Management Board to amend Puerto Rico’s budget,” she stressed.

On June 20, Anthony Maceira, the secretary of Public Affairs at La Fortaleza, the governor’s office, confirmed that the cancellation of contracts with BDO had been ordered after it was learned the firm was being investigated.

Maceira said Wednesday that the administration would assure the federal government that those arrested acted on their own.

“Certainly, this represents a national challenge because people who are not friends of Puerto Rico are going to take hold of that to justify and harm us. And the government has to have a proactive role in going there and taking the message and make it clear that these were individuals acting, really, motivated by personal interest for their own benefit against what the administration itself establishes, the institutional structure and demonstrate all the measures we have taken specifically to ensure the integrity of processes,” Maceira replied to questions from the press about remarks by President Trump calling Puerto Rico officials corrupt.

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. A statement he had published on his official webpage earlier, read: “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.”

Puerto Rico Justice secretary threatens to hold ousted Treasury chief in contempt

Justice Secretary Wanda Vázquez (CB file photo)

Does not discard sharing probe findings with federal authorities

SAN JUAN — Former Puerto Rico Treasury Secretary Raúl Maldonado Gautier did not show up to an appointment Friday at the Justice Department to explain his allegations of the existence of an “institutional mafia” in the Treasury Department, Justice Secretary Wanda Vázquez Garced confirmed.

Maldonado’s lawyer, Mayra López Mulero, said Maldonado, who was ousted last week from his government roles, had informed the Justice Department Thursday that he would not appear for the appointment, thus was surprised Vázquez Garced reacted as if she had not been aware Maldonado would not show up.

Former Treasury Secretary Raúl Maldonado (CB file photo)

López Mulero said Maldonado needed more time to prepare for questioning. Nevertheless, in a statement, Vázquez Garced threatened to hold the former Treasury secretary and Office of Management and Budget director in contempt.

“In the event of his unjustified failure to appear, we will issue instructions for an official citation to be filed under the contempt and any other remedy that may be appropriate,” Vázquez Garced wrote.

Maldonado had been summoned for 10:30 a.m. to the Public Integrity Division to provide a statement about his allegations of Treasury corruption and that he had been the victim of extortion.

The Justice secretary said Maldonado did not need to appear with an attorney because allegations usually come from a victim, “to a certain extent,” and that prosecutor Maricarmen Rodríguez Barea was appointed to handle the case

Regarding Raúl Maldonado Nieves, the son of Maldonado Gautier, Vázquez Garced said he will also have to appear before the Justice Department following his remarks, which accuse Gov. Ricardo Rosselló of corruption.

Puerto Rico’s principal legal adviser also indicated it is possible that the findings of her department’s investigation will be shared with federal authorities.

On Monday, Maldonado was ousted of his positions as Treasury secretary, director of the Office of Management and Budget and chief financial officer of the government after denouncing the existence department-wide corruption in the Treasury Department such as influence peddling and the illegal issuance of licenses. The governor said he should have been informed and lost confidence in the official.

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.

Individual charged with running $98 million scheme from Puerto Rico

U.S. Attorney for the District of Puerto Rico Rosa Emilia Rodríguez-Vélez (CB file)

Federal grand jury returns 34-count indictment

SAN JUAN – An investor who moved to Puerto Rico to benefit from the island’s tax incentives under Act 20 of 2012, the Export Services Act, has been indicted in federal court for running a fraudulent scheme that netted about $98 million.

On Wednesday, a federal grand jury returned a 34-count indictment charging Gopalkrishna Pai with conspiracy to commit wire and bank fraud, 19 counts of wire fraud, five counts of aggravated identity theft, and nine counts of money laundering, the U.S. attorney for the District of Puerto Rico, Rosa Emilia Rodríguez-Vélez, announced Thursday. The ongoing investigation is being conducted by the FBI.

“This individual took advantage of Puerto Rico and Law 20 to create a company, F9 Advertising, to generate significant revenue through a fraudulent scheme based on lies and falsified documents,” Rodríguez-Vélez said. “The indictment underscores the USAO’s commitment to the investigation and prosecution of all types of fraud, and to our continued efforts to ensure that Puerto Rico is not a safe haven for criminal activity.”

If found guilty, Pai is facing a maximum penalty of 20 years of imprisonment for each conspiracy and wire fraud count as well as a maximum two-year term of imprisonment for each aggravated identity count and a maximum 10 years of imprisonment for each money laundering count.

The indictment alleges that from around May 2014, through about October 2018, Pai operated a scheme to defraud merchant processors–which provide services to other businesses to process electronic payments, including but not limited to credit card payments–and others by submitting false information and falsified documentation to create merchant accounts in the name of straw, or liablity, companies to process credit card and electronic payments. The scheme Pai employed covered his involvement and use of more than 100 companies to facilitate the processing of about $98 million in gross revenue in online retail sales.

As a part of the conspiracy, Pai owned and operated F9 Advertising LLC, a for-profit limited liability company organized in Puerto Rico in May 2014 and registered under Act 20. F9 sold personal care products, such as skin creams, online “utilizing a negative option marketing model,” which the Justice Department explained as “a category of commercial transactions in which sellers interpret a customer’s failure to take an affirmative action, either to reject an offer or cancel an agreement, as assent to be charged for goods or services.”

Through the more than 100 companies Pai created, he obtained individual employer ID numbers (EINs) from the Internal Revenue Service (IRS) for each straw company and opened individual commercial bank accounts for each. False documents were then created and submitted to merchant processors to create merchant accounts to process online sales, and to disguise his involvement.

The merchant processors include: Humboldt Merchant Services (Humboldt); Paysafe Group Limited (Paysafe); Global Merchant Advisors (Global); and Merchant Payment Acceptance Corp. (PayKings).

Pai disguised himself through the falsification of bank records and EIN tax documents and other information to prevent the merchant processors and their related financial institutions from learning he was the companies’ owner and operator. Credit card and other payments processed were paid to accounts in the name of the straw companies and transferred to F9.

As part of the scheme to defraud the merchant processors, Pai exchanged emails and documents online, which constitutes interstate wire, “including applications, containing materially false representations, and falsified documentation, which included real individuals’ personal identification information like names, social security numbers, and signatures,” Justice said.

“The mission of the FBI San Juan Financial Investigation Strike Team is to identify patterns of sophisticated money laundering, determine the criminal conduct behind those transactions, and to partner with financial crimes experts at the U.S. Attorney’s Office to prosecute those responsible,” said Douglas A. Leff, special agent in charge of the FBI-San Juan Field Office. “This case is an example of the successful use of financial intelligence to follow the money and to solve a series of crimes that might otherwise have gone undetected.”

The case is being prosecuted by Assistant U.S. Attorney Seth A. Erbe.

Pro-Statehood Lawyer: Puerto Rico Status Plebiscite is a Waste of Time

Editor’s note: The following originally appeared in the Feb. 21 -27, 2019, issue of Caribbean Business.

For years, pro-statehood lawyer Gregorio Igartúa has said Puerto Rico is an incorporated territory of the United States on the path to statehood, rejecting status votes as a way to convince Congress to make Puerto Rico a state.

After announcing recent plans to hold yet another status vote, Gov. Ricardo Rosselló threw his hat behind a letter Igartúa and Aguadilla Mayor Carlos Méndez sent to President Donald Trump asking for the island to be considered an incorporated territory. The letter coincided with a resolution approved by lawmakers in Washington to make the island an incorporated territory.

“I am in favor of any step that will eliminate the colonial status and make us the 51st state,” he recently said.

Igartúa—who has taken several cases to the courts to seek the granting of rights akin to a U.S. state to Puerto Ricans living on the island—says the local government is finally listening to him and steering way from the status vote method to achieve statehood.

“That is totally unnecessary. We do not need more referendums. Puerto Rico is already a ‘de facto’ incorporated territory. All [the governor] needs to do is to seek a declaration from Congress that Puerto Rico is an incorporated territory and, from there, there is no other choice but statehood,” Igartúa said.

He has published a book, “The ‘De Facto’ Incorporated U.S. Territory of Puerto Rico,” in which he offers evidence that the island is already incorporated. The problem, he said, is the ignorance about the congressional integration of Puerto Rico as an incorporated territory by judges, federal officials and politicians that has led to confusion and resulted in Puerto Rico being treated as an unincorporated territory in some cases and as an incorporated territory in others.

A sus órdenes incorporado

What is the difference between an incorporated and an unincorporated territory? “An incorporated U.S. territory is a specific area under U.S. jurisdiction over which Congress has determined the U.S. Constitution is to be applied to that territory’s local government and inhabitants in its entirety,” including citizenship and trial by jury, according to the U.S. Department of the Interior’s Office of Insular Affairs. The United States has not had any incorporated territories since Hawaii and Alaska were admitted as states in 1959.

Unincorporated territories, on the other hand, can be treated differently by Congress except for “abridging fundamental rights,” such as the right to privacy or same-sex marriage. This can be likened to the differences between Puerto Ricans residing on the U.S. mainland and those living in Puerto Rico. While Puerto Ricans are U.S. citizens, they are treated differently when they live on the island.

According to Igartúa, Puerto Rico has already been provided gradual legal, economic, political and social integration with the United States since 1898, making it a de facto incorporated territory on its way to statehood. In his book, he cites numerous cases to support his point and provides a historical perspective since the time Puerto Rico was acquired from Spain.

For instance, in U.S. v. Mercado Flores, a 2015 U.S. First Circuit ruling that states Puerto Rico is no longer a mere unincorporated territory of the United States and is between being incorporated and being a state. Another 2015 ruling stated that Puerto Rico was a state for purposes of the Sherman Act, an antitrust law that regulates competition among enterprises. In these cases, the U.S. Justice Department required full applicability of the U.S. Constitution to Puerto Rico. The problem is that in other cases, the U.S. Justice Department sought the nonapplicability of the U.S. Constitution or the nonincorporation theory.

In the 2016 Supreme Court ruling in the Commonwealth v. Sánchez Valle case, the U.S. Justice Department opposed the constitutional applicability of the double-jeopardy clause in Puerto Rico. “Another example of the discriminatory practice of cases related to Puerto Rico is to switch the U.S. Constitution on and off as it conveniently pleases them,” he said. The U.S. Supreme Court adopted a new territorial qualification of nonincorporation or “territorial sovereignty in sequence. In their view, Puerto Rico was acquired from Spain as if it were a colony, which justified federal unilateral control over Puerto Rico. None of the judges were advised that Puerto Rico was an overseas province of Spain, which had elected representatives to the Spanish parliament. Moreover, all lawyers in the Sánchez Valle case ignored to inform the court about the most recent cases supporting incorporation,” said Igartúa, who noted that the ruling was “very poorly decided.”

Using the principle of equal protection under the law, U.S. District Chief Judge Gustavo Gelpí recently ruled that a man who moved from New York to Puerto Rico should continue to receive supplemental social security benefits, which are only available to residents on the U.S. mainland. Igartúa warned about the economic consequences of treating Puerto Rico as a nonincorporated territory, which are financially devastating. “Discriminatory treatment to Puerto Rico will only be eliminated when Congress adopts a resolution certifying Puerto Rico as an incorporated territory, and in transit to statehood with a definite date of admission,” he said.


University of Puerto Rico pays nearly $1.8 million to settle U.S. grant funds case

SAN JUAN – The the University of Puerto Rico (UPR) paid the U.S. Government last week $1,772,790 as part of a settlement agreement reached in connection to claims of misuse of grant funds provided by the National Aeronautics and Space Administration (NASA), Department of Energy (DOE), and the National Science Foundation (NSF).

The joint investigation revealed that the UPR did not comply with the time and effort reporting requirements of salaries and wages “to ensure that payroll for the various grants was correctly and appropriately charged for the 2011 calendar year,” according to a Justice Department release Thursday.

The UPR provided certifications asserting compliance with grant rules, “when in fact, their records failed to reconcile the budget amounts reported to NASA, DOE, and NSF,” Justice said.

Under the False Claims Act, the United States can recover up to three times the amount of loss and civil monetary penalties ranging from $5,500 to $11,000 per claim, in addition to debarment from future participation in federal funding.

“It is imperative that federal award recipients use grant money appropriately, and that they track and support their award expenditures using effective accounting systems and accurate time and effort reports,” NSF Inspector General Allison Lerner says in the release.

“The United States Attorney’s Office will continue to investigate grant fraud matters on both Criminal and Civil grounds and will aggressively pursue actions against those who submit false claims to the United States,” said U.S. Attorney Rosa Emilia Rodríguez-Vélez.

The matter was prosecuted by Assistant U.S. Attorney David O. Martorani-Dale, Affirmative Civil Enforcement Coordinator, and Assistant U.S. Attorney Hector E. Ramírez-Carbó, Chief of Civil Division.

Labor leaders mulling legal options after order stops union-due collections

SAN JUAN – The heads of unions representing Puerto Rico power and wáter utility workers rejected a determination from Justice Secretary Wanda Vázquez that orders all public corporations to stop deducting union dues from workers’ salaries following a U.S. Supreme Court ruling.

Both labor leaders said Vázquez misread the Janus case. In June, the top court ruled that government employees who are represented by a union but do not belong to that union cannot be required to pay a fee to cover the union’s costs to negotiate a contract that applies to all employees. The 5-4 decision overturned an earlier ruling, dating back to 1977, that allowed the unions to charge such fees, which are often known as “fair share” or “agency” fees.

“The Supreme Court’s ruling in the Janus case is not applicable to workers affiliated to unions nor establishes a right to disaffiliate from a union. This case refers to workers who do not belong to unions but who have money from their salaries discounted to pay union fees,” Pedro Irene Maymí, head of the Independent Authentic Union, which represents unionized workers at the Puerto Rico Aqueduct and Sewer Authority, said in written remarks.

Union leader Pedro Irene Maymí (CB file photo)

Because of the Justice Department interpretation, the Labor Department is now asking public corporations to stop deducting money from unionized workers.

“It is wrong for a Labor secretary who is supposed to know the law to issue an opinion that is totally wrong,” he said.

Vázquez alleges that the Supreme Court ruling invalidated articles of Act 130, the Labor Relations Act. Maymí said he is discussing options with the union’s lawyers.

Fredyson Martínez, vice president of the Irrigation and Electrical Workers Union (Utier by its Spanish acronym), which represents Puerto Rico Electric Power Authority workers, concurred with Maymí. In an interview with Caribbean Business, he said the ruling is applicable to entities where union membership is not mandatory and there are separate fees for workers who do not want to join. While Utier membership is mandatory, he said he was unaware of any member who wanted to leave the union.

“The workers here signed a document upon employment affiliating themselves with the union,” Martínez said, adding that Utier workers who are promoted to management are free to leave the union.