FBI and IRS agents raided the San Antonio law offices of state Sen. Carlos Uresti on Thursday morning — confiscating documents and other items.
A law enforcement source told the the San Antonio Express-News, which first reported the raid Thursday, that it was connected to Uresti’s involvement with a now-bankrupt fracking sand company that he held a financial stake in.
“Law enforcement agents with IRS and FBI are lawfully present conducting a law enforcement operation,” FBI spokeswoman Michelle Lee told the Texas Tribune. “No further details have been released at this time.”
Lee confirmed that no arrests had been made.
Uresti, a San Antonio Democrat and personal injury attorney, has been entwined in a complicated saga involving FourWinds Logistics, which sold sand used in hydraulic fracturing, a process that extracts oil and gas from shale rock.
A lengthy investigation published by the Express-News in August first detailed Uresti’s involvement in the company and fraud allegations it faces.
FourWinds’ purported intent was to buy sand and sell it at a markup to oil and gas companies, but some investors have accused the company’s leadership of misrepresenting its financial health and spending their money on frivolous, personal expenses. It now faces millions of dollars in claims from investors and other companies.
Denise Cantu, whom Uresti represented in a wrongful-death case, said she lost most of the $900,000 she invested in the now-bankrupt company in 2014 at the suggestion of Uresti, according to the Express-News. She has said she was not initially aware that Uresti would get a piece of her investment, though Uresti has suggested otherwise.
With allegations of serious financial mismanagement detailed in bankruptcy court, the FBI last year opened an investigation into FourWinds, the Express-News reported. In August, Uresti told the paper that he was a “witness” in that investigation but not its target.
On Nov. 4, four days before Election Day, Eric Nelson, the former marketing director for FourWinds, was indicted for his role in an alleged scheme to defraud investors. He later pleaded guilty to one felony charge of conspiracy to commit wire fraud. Federal attorneys accused Nelson of altering company bank statements to “grossly” inflate its account balance. At least two more former FourWinds employees have been indicted since the election: Shannon Smith, who held a 48 percent stake in the company, and Laura Jacobs, who worked as its comptroller. They face similar charges to Nelson’s.
FourWinds had paid Uresti to attract investors before it filed for Chapter 11 reorganization in August 2015 — beset by allegations of fraud and misused funds.
It could be that this action by the FBI and IRS was to collect evidence for the case against FourWinds and its executives. If that’s all it is, and Uresti himself is not implicated in anything criminal, then this will be as bad as it gets for him, and the news will fade in time. If not, well, he’ll probably wind up having something in common with Ken Paxton. I hope for his sake it doesn’t come to that, but we’ll see. A statement from Sen. Uresti can be found here, and the Current has more.