State Sen. Uresti facing 200-plus years in prison on multiple federal criminal charges

State Sen. Carlos Uresti was indicted Tuesday on multiple federal criminal charges. State Sen. Carlos Uresti was indicted Tuesday on multiple federal criminal charges. Photo: Ron Cortes /Ronald Cortes Photo: Ron Cortes /Ronald Cortes Image 1 of / 14 Caption Close State Sen. Uresti facing 200-plus years in prison on multiple federal criminal charges 1 / 14 Back to Gallery

State Sen. Carlos Uresti, a San Antonio Democrat, was indicted Tuesday along with three other individuals in two separate cases for bribery, wire fraud, conspiracy and other charges in connection with his involvement in bankrupt frac-sand company FourWinds Logistics and public corruption in Reeves County.

Uresti, who was indicted on 13 different charges that carry more than 200 years in prison if found guilty on all counts, denied any wrongdoing.

“The charges against me are groundless and I look forward to proving my innocence in a court of law at the appropriate time. I will enter a plea of not guilty and immediately return to work representing District 19,” Uresti said in a statement.

Uresti, former FourWinds CEO Stanley Bates, 45, and consultant Gary L. Cain, 60, each face conspiracy and numerous other charges related to their work at FourWinds, a now-defunct oil-field services company accused of defrauding investors, according to the indictment that was unsealed Tuesday afternoon.

Three other FourWinds’ officials already have pleaded guilty and are scheduled to be sentenced later this year.

The indictment accuses Uresti, Bates and Cain of developing an “investment Ponzi scheme to market hydraulic fracturing (fracking) sand for oil production,” according to statement issued by the Justice Department.

The San Antonio Express-News published an in-depth investigation into FourWinds and accusations of fraud against Uresti and Bates in August.

Cain didn’t return a call for comment after normal business hours, Bates couldn’t be located for comment and Bates’ defense attorney didn’t return a call for comment after normal business hours.

Uresti, 53, and Lubbock businessman Vernon C. Farthing III, 44, are accused in a separate indictment of conspiring with others from January 2006 through September 2016 to pay and accept bribes to secure a Reeves County Correctional Center medical services contract for Farthing’s company.

Farthing couldn’t immediately be reached for comment after normal business hours.

That indictment accuses Farthing of paying Uresti $10,000 a month as a “consultant.” Half of that amount allegedly went to a Reeves County Judge Jimmy Galindo for his support and vote to award the contract to Farthing’s company, the indictment says. Galindo, who served as county judge from 1995 to 2006, only is identified as a co-conspirator.

The case is being prosecuted by the Justice Department’s public corruption task force. Federal prosecutors, led by U.S. Attorney Richard Durbin Jr., and FBI Special Agent in Charge Christopher Combs have given Uresti a chance to turn himself in.

Uresti, Bates and Cain are scheduled to make an initial appearance this morning before U.S. Magistrate Judge Henry Bemporad in San Antonio.

“Sen. Uresti’s indictment comes as no surprise,” said Andrew Wheat, research director for Texans for Public Justice, a left-leaning watchdog group in Austin. “He gave an unsophisticated investor insane advice.”

Uresti advised a legal client of his to take $900,000 she received from a wrongful death case and invest it in a “risky startup” he worked for, the Express-News has previously reported.

“Why did he do that, if not to line his own pockets?” Wheat asked.

That investor, described as “Victim 1” in the indictment, was Denise Cantu of Harlingen.

She was a legal client he helped in a personal-injury case following the 2010 death of two of her children, the Express-News previously reported. He suggested she go see Bates; Uresti later received a $27,000 commission on her $900,000 investment with FourWinds.

Uresti previously told the Express-News that he disclosed the commission to Cantu and used Turning Point to collect it from FourWinds.

According to the indictment, “Uresti told Victim 1 that her investment would obtain a better return with Four Winds than with her current investments.”

Cantu lost most of the money.

Uresti, who isn’t a registered securities broker, said he consulted with legal counsel who told him he didn’t need to register with the Texas State Securities Board. He also wasn’t registered as a broker with the Securities and Exchange Commission

Uresti is the second Democratic state lawmaker to be indicted during this legislative session.

In January, a state grand jury indicted state Rep. Dawnna Dukes of Austin on 13 felony counts of tampering with a government record and two misdemeanor counts of abuse and official capacity. She has said she is innocent.

Uresti’s indictment comes more than three months after agents from the FBI and IRS raided his San Antonio offices.

At the time, Uresti said the search was part of a “broad investigation” of FourWinds. But law enforcement sources told the Express-News that another target of the raid was his consulting firm, Turning Point Strategies.

“We have a responsibility to the families we represent to be effective and anytime there are news stories about corruption and wiretaps floating around, it hurts your effectiveness,” said state Rep. Roland Gutierrez, a San Antonio Democrat. “It is unfortunate that Uresti has found himself in this position.”

Uresti has been the cornerstone of a mini-political dynasty on the South Side. He was re-elected to the Senate for a third time in November.

Prior to his election to the Senate in 2006, Uresti was the state representative for House District 118 for nine years. That seat now is occupied by his brother Tomas Uresti. The Express-News last month reported that the FBI tapped Tomas Uresti’s cellphone, according to a letter notifying the recipient that a wiretap was used to eavesdrop on his conversations.

At the time of the wiretap, Tomas Uresti was a Harlandale ISD board trustee running for the House seat.

Another brother, Albert Uresti, is the Bexar County tax assessor-collector.

FourWinds went bankrupt in 2015 with more than $14 million in debt. Some investors accused Bates of wasting their money on personal expenses, expensive gifts, exotic car rentals and a wild lifestyle. Those investors claim Bates lured them, in part, by presenting allegedly forged bank documents and financial statements that vastly inflated the company’s cash holdings and receivables. Bates has disputed the allegations.

Uresti had multiple roles with FourWinds. He provided legal services and served as outside counsel for the company for four or five months at the end of 2014. He said that ended prior to the 2015 legislative session.

He had a 1 percent ownership interest in FourWinds and was promised a 10 percent cut of the profits from any investments he brought in, the indictment states. His share of the profits would increase to 20 percent for any subsequent investments from those initial investors.

The indictment accuses Uresti and Bates of using the senator’s position in sales pitches to investors. The indictment says Uresti brought in four investors and charges him with illegally selling securities. None of the investors was named.

“I was not selling a security,” Uresti said in an August interview.

He faces one count of being an unregistered securities broker and two counts of securities fraud. He also has been charged with five counts of wire fraud and one count of “engaging in monetary transactions with property derived from specified unlawful activity,” among other charges.

The indictment says Uresti, Bates and Cain never invested any of their own money in FourWinds.

But Uresti allegedly transferred a portion of three victims’ money from his law firm’s trust account to FourWinds’ bank account. That money then was mixed with other funds that were used to pay a different investor, which is why prosecutors describe it as a Ponzi scheme.

Cain was brought on to help find funding for FourWinds' operations in September 2014, just two months after being cleared in an unrelated criminal trial.

In that case, he was accused of defrauding managed-cloud company Rackspace Hosting Inc. out of millions of dollars in a land scheme he orchestrated. He was represented by Nico LaHood, who was elected Bexar County district attorney in November 2014.

Testifying at a 2015 hearing in his personal bankruptcy case, Bates said he was introduced to Cain by Uresti but that LaHood recommended that FourWinds hire Cain as a consultant. Uresti also has represented Cain in a divorce case.

In the other indictment, Farthing is identified as the president of a company that provided medical services to prison inmates. In 2006, the Federal Bureau of Prisons awarded Reeves County a contract to house federal inmates at the county’s detention facility. The Reeves County Commissioners Court awarded Farthing’s company a contract to provide services at the facility. Galindo presided over the vote.

Galindo helped Farthing’s company negotiate, price and secure the contract from Reeves County, the indictment charges. In exchange, Farthing agreed to hire Uresti as a “consultant” and pay him $10,000 a month, the document says.

“Uresti acted as a conduit for the payments from Farthing’s Company and Farthing to Galindo,” the indictment states. Uresti kept half the money and other half he sent to Galindo over about a 10-year period ending last September. From some of the payments to Galindo, Uresti deducted about $250 to $500 for “office rent,” even though Galindo never rented office space from Uresti, the filing adds.

The indictment says Uresti used Turning Point Strategies, his consulting firm, and his law firm’s trust and operating accounts to pay Galindo and his companies and “to hide and cover-up this conspiracy.”

Elena Mejia-Lutz contributed to this article.