Jury selection begins Thursday in the federal fraud and money laundering trial of state Sen. Carlos Uresti, the powerful legislator whose standing as a voice for abused children and other vulnerable Texans has been damaged by charges that he misled a client who invested in a fracking sand company.
Uresti, a 54-year-old San Antonio Democrat and personal injury attorney, has built a reputation as an advocate for abused children and the infirm during nearly two decades in the state capitol. Now federal prosecutors allege that he and several former officials of the now-bankrupt FourWinds Logistics fracking sand company conspired to defraud investors. Uresti has called the charges against him baseless.
When opening statements begin Monday, Uresti’s successful political career will be front and center. He served nine years as state representative for state House District 118 after winning a special election in 1997 to represent Texas House District 118. Uresti chaired the Committee on Human Services during the 78th Legislature and the Committee on Government Reform the following session.
Uresti won a state Senate seat representing District 19 in 2006, defeating incumbent Frank Madla. The district covers 15 counties, including parts of Bexar and Atascosa counties, and 400 miles of the Texas-Mexico border. In the 85th Legislature, Uresti co-chaired the Health & Human Services Committee, focusing on reform of Child Protective Services and the state’s foster care system.
In August 2016, the San Antonio Express-News reported on Uresti’s role in FourWinds, which sold sand used in hydraulic fracturing, a process that extracts oil and gas from shale rock. The company filed for bankruptcy protection in August 2015. Uresti was listed as having a 1 percent stake in the company and was responsible for bringing in investors, according to the story. One of those investors was Denise Cantu.
Cantu is at the heart of the government’s case. Uresti represented her in a wrongful death lawsuit after Cantu’s 13-year-old daughter, 4-year-old son, and two friends were killed in an auto accident. The tread on one of the tires of the vehicle they were riding in separated, causing it to roll over. Uresti successfully settled the case in Cantu’s favor in 2013, yielding a sizable settlement.
A year later, he suggested she invest in FourWinds. She did to the tune of $900,000. Uresti received a $27,000 commission on Cantu’s investment, the newspaper reported, and was given a 10 percent stake in her share. When the company filed for bankruptcy, she lost almost all her investment.
As allegations of financial mismanagement came out through the bankruptcy proceedings, federal officials opened an investigation into FourWinds. By November 2016, three FourWinds employees — former marketing director Eric Nelson, former comptroller Laura Jacobs, and former chief operations officer Shannon Smith — were all indicted for an alleged scheme to defraud investors.
In February 2017, the FBI and IRS raided Uresti’s law office. By May, a federal grand jury had indicted Uresti and FourWind’s former CEO, Stanley Bates, along with company consultant Gary Cain. When the U.S. Department of Justice announced the indictment, it alleged Uresti, Bates, and Cain “developed an investment Ponzi scheme” and used proceeds of recent investors to pay off earlier investors.
Bates, Cain, and Uresti were to stand trial together. However, Bates surprised his co-defendants at a hearing last week by pleading guilty to money laundering and securities fraud. He was scheduled to meet Wednesday with federal prosecutors about the possibility of testifying against his former co-defendants.
During a pre-trial conference Wednesday, prosecutors and defense attorneys received U.S. District Judge David Ezra’s rulings on their motions to limit the introduction of certain pieces of evidence in the trial. This does not prevent them from arguing those points should they come up during the trial.
Uresti also faces charges in a separate indictment that was issued the same day as the FourWinds indictment. This one involves a contract to provide medical services to a correctional facility in West Texas. A colleague of Uresti’s, Vernon C. Farthing III, is alleged to have paid the senator $10,000 a month over 10 years. Half of that money was allegedly paid to an official in Reeves County to win his vote to award the contract to Farthing’s company.
Copy Editor Wendy Lane Cook contributed to this report.