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Lurid Allegations in Texas State Senator’s Fraud Trial

In the months before Texas state Senator Carlos Uresti began pressuring a client to invest in a Ponzi scheme, they had sex in his office and he guaranteed that the bogus fracking business from which he profited “was as good as gold,” the woman testified Thursday.

SAN ANTONIO (CN) — In the months before Texas state Senator Carlos Uresti began pressuring a client to invest in a Ponzi scheme, they had sex in his office and he guaranteed that the bogus fracking business from which he profited “was as good as gold,” the woman testified Thursday.

Federal prosecutors say Uresti, 54, a three-term Democrat from San Antonio, sexually groomed Denise Cantu before defrauding her of nearly $900,000 in settlement money that he helped secure as her attorney in a wrongful death case involving two of her children.

“He said there was no risk, and it was guaranteed,” Cantu, 38, told jurors Thursday.

“He did so much for me and my kids, you know, of course I trusted him. He’s an attorney, he’s a senator. … I felt confident. The way he pitched it to me, I was going to make a lot more money.”

Uresti is accused of 11 felonies in running the now-bankrupt fracking enterprise FourWinds Logistics, with his co-defendant Gary L. Cain. They were indicted in May 2017.

If convicted of any felony, Uresti could lose his law license, and will lose his state Senate seat.

At issue for the jury of 12, with three alternates, is whether they believe Uresti knew that FourWinds was a Ponzi scheme, as Assistant U.S. Attorney Joseph E. Blackwell said in his opening statement on Jan 22.

FourWinds CEO Stanley P. Bates pleaded guilty in January to eight felony charges for his role in the scheme, including securities fraud, wire fraud and money laundering. He faces decades in prison when he is sentenced in April.

Uresti is charged with two counts of conspiracy, five counts of wire fraud, two counts of securities fraud, engaging in monetary transactions with property derived from specified unlawful activity, and being an unregistered securities broker. If convicted of all charges, he could face more than 200 years in prison.

Cantu, seen as a star witness, jolted jurors on day nine of the trial with lurid tales of sexual trysts with the San Antonio senator, who she says routinely sent sexually explicit text messages to her, and took her to a back restroom/shower at his law office to have sex.

“I knew he was married but we would still be intimate at times. He was a good friend. I could talk to him about anything,” Cantu said.

“Besides being my lawyer and my friend, he was just somebody I would mess around with.”

Uresti’s wife, who has been present for much of the trial, was not in court Thursday. Uresti sat between his defense attorneys while taking notes on a white legal notepad in between glances of Cantu.

Cantu, of Harlingen, was arrested and charged with aggravated robbery and aggravated assault with a deadly weapon in November last year.

U.S. Senior District Judge David Ezra ordered Cameron County jail officials to transfer her to the custody of U.S. Marshals for Uresti’s trial in early January.

Ezra issued a pretrial ruling blocking defense attorneys from bringing up Cantu’s pending criminal charges, which are unrelated to Uresti’s case, to challenge her credibility. Cantu wore a black blazer and black skirt in court instead of a jail jumpsuit.

The small courtroom was packed to capacity for her testimony Thursday afternoon.

Cantu told the jury that Uresti encouraged her to make large lump sum investments in FourWinds, and at one point tried taking out a home equity loan to put more money into the company. She said she thought Uresti had also invested in the company, though he had not.

She found out months later that Uresti received up to 20 percent back on her investments.

Prosecutors have said that Uresti “needed money,” so he solicited Cantu and pocketed $40,000 from her initial $800,000 investment.

Relying on Uresti’s advice, Cantu lost nearly $900,000 in the Ponzi scheme that took millions of dollars from other unsuspecting investors, prosecutors said.

She sued Uresti in state court. That case is pending.

The investment scheme began to unravel when Cantu, suspicious that her monthly checks had stopped, demanded her investment back. When the FBI became involved, Cantu said, Uresti urged her “not to mention his name.”

Prosecutors say Uresti made $115,000 in seven and a half months of work as the FourWinds’ general counsel and investment recruiter.

Cain, 61, a consultant, made $210,000. He faces nine felony charges: conspiracy to commit wire fraud, money laundering, and seven counts of engaging in monetary transactions in property derived from specified unlawful activity.

Cantu was due back on the witness stand Friday morning at the John H. Wood Jr. Federal Courthouse, for cross-examination by Uresti’s attorney, Michael McCrum.

McCrum has said that Uresti, a former Marine and one of 11 Democrats in the 31-member Texas Senate, was an unknowing participant in the scam, in which Bates used him for his good name.

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