SAN ANTONIO (CN) — Texas state Senator Carlos Uresti used his “well-known name” to lure investors into a Ponzi scheme from which he skimmed money, a federal prosecutor told jurors Monday during opening statements in the felony trial that could send the lawmaker to prison for life.
Uresti, 54, a three-term Democrat from San Antonio, is accused of 11 felonies in running the now-bankrupt fracking enterprise FourWinds Logistics, with his co-defendant Gary L. Cain. The two were indicted in May 2017. If convicted of any felony, Uresti could lose his law license, and will lose his state senate seat.
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.
At issue for the jury of 12, with four alternates, is whether they believe Uresti knew that FourWinds was a Ponzi scheme, as Assistant U.S. Attorney Joe Blackwell said as the trial began.
FourWinds CEO Stanley P. Bates pleaded guilty this month to eight felony charges for his role in the scheme.
Uresti, a longtime San Antonio politician, appeared stoic in court Monday, facing jurors as his attorney Michael McCrum downplayed his connection to the fraudulent company. Several family members and supporters, including Uresti’s wife and father, packed into a small courtroom at the John H. Wood Jr. Federal Courthouse for the first day of the trial expected to last three weeks.
“The circumstances in this case were born in tragedy,” Blackwell said as he launched into a series of events that led to Uresti’s involvement in FourWinds.
Blackwell told jurors that Uresti worked to secure a $1 million settlement as personal injury attorney for a grieving mother, Denise Cantu, after her two children were killed in a 2010 rollover accident. Uresti soon became Cantu’s “rock,” helping to arrange funerals for her young son and daughter, and eventually developing a relationship with her that escalated into “sexual grooming.”
“Instead of cutting ties with Mr. Uresti, those ties deepened and it became sexual. She began to depend on him more and more,” Blackwell said.
Uresti, a former Marine and one of 11 Democrats in the 31-member Texas Senate, is married with children.
Relying on Uresti’s advice, Cantu lost nearly $900,000 in the Ponzi scheme that took millions of dollars from other unsuspecting investors. She sued Uresti in state court.
Uresti made $115,000 in seven and a half months of work as the company’s general counsel and investment recruiter, the government says. Cain, a consultant, made $210,000.
McCrum told jurors that Uresti was an unknowing participant in Bates’ start-up company, who “didn’t know what the inner circle knew about FourWinds Logistics … and that’s what the trial is all about.”
“There was a fraud that happened and people pled guilty to it and they should’ve. But he’s not in that group,” McCrum said, pointing to Uresti. “And the evidence is going to show that.”
McCrum blamed Bates, who he said used Uresti to sell FourWinds to investors without ever purchasing a single grain of sand, an essential component in fracking. He said Uresti had no idea how investors’ money was being used, and thought FourWinds was a legitimate business.
“Stan Bates used Senator Uresti’s name in any way he could. It was a great value to Stan Bates to get Carlos Uresti involved in any way,” McCrum said.
Technical difficulties in the aging courtroom’s multimedia system delayed the start of Monday’s proceedings and were responsible for the day ending early after about four hours of arguments.
Testimony Tuesday is expected from three former FourWinds employees who have pleaded guilty for their roles. Cantu, 38, is also expected to testify for the government at trial.
Prosecutor Blackwell said Uresti sold his credibility and status in the community to steer millions of dollars into the sham company, and hid its true financial status from investors.
“The lies are not confined to Stan Bates. Carlos Uresti lies,” Blackwell said.
“This case is not only about things said, but things unsaid.”
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