By The Star Staff
Lawyers for Julio M. Herrera Velutini, the former chairman of Bancrédito International Bank & Trust who was indicted along with former Gov. Wanda Vázquez Garced on corruption-related charges, sought dismissal Thursday of counts five, six and seven of the indictment citing the government’s failure to establish an essential element of the charged offenses.
“Herrera, aware of the high hurdle defendants face when attacking the sufficiency of an indictment, would not bring this motion if the facts and controlling legal precedent were not clearly on his side,” the petition reads. “Aside from its failed attempt to criminalize Mr. Herrera’s lawful campaign contributions to former Governor Wanda Vazquez Merced, the Government also targeted Mr. Herrera through an undercover operation relating to purported campaign contributions to Governor Pedro Pierluisi.”
In count five, the government charges a conspiracy between Herrera Velutini, John Blakeman, who worked in Vázquez Garced’s campaign, and bank president Frances Díaz to offer and give a bribe to Pierluisi, in the form of a campaign contribution, in return for a promise by Pierluisi to use his influence as governor to ensure a favorable outcome for the bank from an ongoing examination by the Puerto Rico Office of the Commissioner of Financial Institutions (OCIF by its Spanish initials).
The indictment also charges, in count six, a substantive violation of Section 666, which is related to federal funds, and, in count seven, a violation of the wire fraud and honest services fraud statutes. Herrera Velutini’s lawyers said prosecutors have not established the element of a quid pro quo or that there was a favor or advantage granted in return for the contribution to Pierluisi.
According to the official indictment, from December 2019 through June 2020, Vázquez Garced, 62, of San Juan, allegedly engaged in a bribery scheme with various individuals, including Herrera Velutini, Díaz, former FBI agent Mark Rossini, and Blakeman to finance Vázquez Garced’s 2020 gubernatorial election campaign.
According to the indictment, beginning in 2019, Herrera Velutini’s bank was the subject of an examination by OCIF, a regulatory agency that oversees financial institutions operating in Puerto Rico. Through intermediaries, Herrera Velutini and Rossini allegedly promised to provide funding to support Vázquez Garced’s 2020 gubernatorial election campaign in exchange for Vázquez Garced terminating the OCIF commissioner and appointing a new commissioner of Herrera Velutini’s choosing. The indictment alleges that Vázquez Garced accepted the offer of a bribe and, in February 2020, took official action to demand the resignation of the OCIF commissioner and, in May 2020, to appoint a former consultant for the international bank owned by Herrera Velutini – who had been personally selected by Herrera Velutini. In return, Herrera Velutini and Rossini allegedly paid more than $300,000 to political consultants in support of Vázquez Garced’s campaign.
Vázquez Garced, Herrera Velutini, and Rossini are each charged with conspiracy, federal programs bribery, and honest services wire fraud.
The motion filed by Herrera Velutini on Thursday notes that for years, the FBI purposely interfered with the operations of Bancrédito International Bank & Trust, a United States corporation where Herrera was the chairperson, including surreptitiously intervening in and subverting privileged relationships with bank counsel who were negotiating with OCIF.
“And yet, after having failed to establish that the Bank committed any crimes, and in recognition that Mr. Herrera had not engaged in any criminal activity concerning Governor Vazquez, the FBI ultimately resorted to engaging in a five-month sting operation, by tasking Joseph Fuentes, a confidential informant who had engaged in campaign-related crimes, with masquerading as a person with access to Governor Pierluisi and making repeated, unrequested overtures to representatives of the Bank – including Frances Diaz, the Bank’s President – with the false representation that Mr. Fuentes could assist the Bank in its negotiations with OCIF,” the motion notes.
In so doing, Fuentes requested a contribution not for Pierluisi, but for an independent expenditure committee (a Super PAC) that Fuentes controlled, according to the motion.
“As with its prior efforts, the FBI’s five-month sting operation ultimately failed,” the document notes. “Undeterred, the Government nonetheless filed charges against Mr. Herrera. The sheer, unfettered degree of Mr. Fuentes’s misconduct as a confidential informant for the FBI cannot be understated and should be judicially noticed by this Court.”
The misconduct, the document says, included but was not necessarily limited to: “(i) purchasing and concealing ‘burner’ phones following receipt of a Government warrant; (ii) secretly informing third-parties of the Government’s investigation, in an effort to aid them in avoiding scrutiny; and (iii) refusing to provide cooperative assistance against certain individuals who were highly relevant – if not utterly integral – to the Government’s claims, including most notably Pierluisi himself.”
“Nonetheless, and contrary to how the Government may seek to characterize the involvement of Mr. Fuentes and/or the alleged actions of the Bank, the Indictment fails entirely to allege any actual quid pro quo arrangement between Mr. Herrera and Governor Pierluisi,” the document notes. “In fact, Governor Pierluisi – the lone ‘public official’ of the purported bribery and wire-fraud scheme, and therefore the only person who could have manifested the required mutual understanding to exchange money for favor – was entirely unaware of Fuentes’s actions and representations.”
Moreover, the petition says, “and what the Government has consistently refused or otherwise failed to recognize, are that campaign contributions are constitutionally protected expressions of free speech.”
“Recognizing the threat unfounded charges of bribery can pose to free speech, controlling precedent imposes a heightened evidentiary standard and requires the Government – where it alleges a bribery scheme predicated upon campaign contributions – to prove that such campaign contribution was part of an explicit and contemporaneous agreement, between the donor and public official,” the document notes.