State Sen. Uresti’s Trial Opens as Prosecutors Allege Fraudulent Dealings

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State Senator Carlos Uresti walks with his wife Lleana following an appearance in Federal Court.

Scott Ball / Rivard Report

State Sen. Carlos Uresti walks with his wife, Lleana, after opening statements in his federal fraud trial.

State Sen. Carlos Uresti’s fight for his freedom and political future started Monday morning as federal prosecutors and Uresti’s defense attorneys presented opening statements in the senator’s fraud and money laundering trial.

Uresti, a San Antonio Democrat and trial attorney, is accused of misleading investors who sunk millions into FourWinds Logistics, a now-bankrupt fracking sand company. The senator faces 11 counts including fraud, money laundering, and securities fraud. If convicted on all charges, Uresti would face decades in prison.

The courtroom was packed with media members, Uresti family members, and other spectators, and a few people were forced to wait outside until someone vacated a seat.

Key to the government’s case is Denise Cantu, a client of Uresti’s. Prosecutors claim he talked her into investing money from a wrongful death settlement in FourWinds because she was vulnerable and unsophisticated. U.S. Attorney Joseph Blackwell mentioned Cantu almost immediately in his 70-minute opening statement to jurors.

“This is a set of circumstances that led to a loss,” Blackwell told the jury made up of 10 women and six men. “The circumstances were born of tragedy.”

He went on to detail the fatal rollover accident that killed Cantu’s 13-year-old daughter and 4-year-old son. That’s how she met Uresti, who represented her in the wrongful death case, winning a nearly $1 million settlement.

Blackwell told jurors Uresti grew closer and closer to the vulnerable Cantu. “He became her confidant, he became her advisor, her friend, her dear friend, and it became sexual. The sexual grooming began during the [civil] case,” Blackwell said. “As the intimacy grew, Miss Cantu could not have known that because of that intimacy she would lose the bulk of her settlement.”

Blackwell then talked about former FourWinds CEO Stan Bates, painting him as moving “from scheme to scheme.” Bates, who was originally indicted with Uresti but has since pleaded guilty, had a concept for a company to sell fracking sand to the oil and gas industry. Only there was no company, Blackwell said.

Instead, FourWinds was Bates’ “personal piggy bank,” Blackwell said, and the involvement of a respected legislator such as Uresti brought Bates much-needed credibility. FourWinds provided Uresti the opportunity to earn commissions and fees without investing his own money, Blackwell said, maintaining that the senator was overextended financially, bouncing checks for the first payments on a million-dollar mortgage.

Uresti’s defense attorney, Michael McCrum, focused his opening statement on a cadre of FourWind executives who have pleaded guilty to fraud. McCrum said these executives hid their activities behind faked documents, bamboozling “sophisticated” investors as well as his client, Uresti.

McCrum told jurors that at the time FourWinds was formed, oil and gas production in the Eagle Ford Shale area south of San Antonio was at its peak. Investors who had performed extensive due diligence found FourWinds a worthy investment based on the information they were being provided by Bates and associates Laura Jacobs, Shannon Smith, and Eric Nelson.

Uresti was familiar with the the Eagle Ford Shale because his Senate District 19 covered much of that area. McCrum said that when someone wanted to introduce the senator to Bates, CEO of a company doing business in the Eagle Ford Shale, Uresti saw no harm in it.

“And what do you think Stan Bates thought when he sees a senator walk through his door?” McCrum asked the jury. “He tried to sell it to Sen. Uresti. You’re going to hear that Stan Bates uses Sen. Uresti’s name any chance he could.”

Addressing allegations of a sexual relationship between Cantu and Uresti, McCrum said the relationship really was between Cantu and Bates, and there were “almost 1,000 text messages with Stan Bates. You’re going to see the sexual relationship she had with Stan Bates.”

McCrum told the jury that fraud occurred, and the people who committed it have pleaded guilty. Uresti is “not in this group.”

U.S. District Judge David Ezra moved the high-profile proceedings into a courtroom that had better video capabilities than his usual courtroom, only to have the audio system malfunction. Once the audio system was repaired, the video displays went out, prompting an early recess after opening statements. The prosecution had planned to call former FourWinds bookkeeper Jacobs as their first witness.

McCrum said he preferred to have the jury start hearing witness testimony Tuesday morning. “After the jury hears two to three hours of opening statements by lawyers, I want them to be able to concentrate on the witnesses,” he said. “That’s where we’re going to win this case.”

Uresti has been under scrutiny since an August 2016 story in the San Antonio Express-News reported on Uresti’s role in FourWinds and Cantu’s investment in the company.

Federal officials opened an investigation into FourWinds as allegations of financial mismanagement and lavish spending poured out of FourWinds’ bankruptcy proceedings. Three former company officials pleaded guilty to federal charges of wire fraud in late 2016.

In February 2017, FBI and IRS agents raided Uresti’s law offices. By May, a federal grand jury indicted Uresti, along with Bates and FourWinds consultant Gary Cain on charges of wire fraud, money laundering, and securities fraud.

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