Feds mum on Mayagüez fraud case

By John McPhaul


Federal prosecutor W. Stephen Muldrow declined on Wednesday to comment on statements made by Mayagüez Mayor José Guillermo “Guillito” Rodríguez last week to the effect that the mayor was a victim in relation to the arrests made in the Mayagüez Economic Development Inc. (MEDI by its Spanish acronym) case.

“I am not going to go into the case of the mayor of Mayagüez,” Muldrow said in response to questions from the press.

Asked whether it was prudent to regard the mayor of the “Sultana del Oeste” as a victim, when the case has not yet ended, Muldrow again declined to comment.

“I am not going to comment on the case,” he reiterated.

A federal grand jury in the District of Puerto Rico issued a formal indictment last week in which seven people were charged with 33 counts of wire fraud and money laundering. Muldrow, the U.S. attorney for the District of Puerto Rico, Tyler Hatcher, special agent in charge of the Internal Revenue Service, Criminal Investigation (IRS-CI) Miami Field Office, and Rafael Riviere Vázquez, special agent in charge of the FBI, made the announcement.

“The defendants in this conspiracy were entrusted to invest public money for the benefit of the municipality of Mayagüez and the western zone, but instead they used part of it for personal gain and expenses, defrauding the government,” Muldrow said in a statement. “We will continue to target these types of fraud schemes and will work with our law enforcement partners to bring the accused to justice.”

Hatcher said: “People in a position of trust who use public money to commit fraud for personal enrichment purposes betray the trust of citizens whom they are supposed to serve.”

“These funds were destined to improve the quality of life of the citizens of a region of Puerto Rico and this fraud will not go unpunished,” he said. “We are all responsible for complying with the laws, regardless of position of influence. The IRS Criminal Investigation along with our law enforcement partners will continue our collective efforts to enforce the law and build public trust.”

The indictment alleges that from March 2016 to June 2018, the defendants Eugenio García Jiménez, alias “Gino”; Stephen Kirkland, also known as “Steve”; Steve Minger; Alejandro Riera Fernández; Joseph Kirkland; Arnaldo Irizarry Irizarry; and Roberto Mejill Tellado orchestrated a scheme to defraud the municipality of Mayagüez and Mayagüez Economic Development Inc. of money belonging to Mayagüez by falsely representing that the total of $9 million in capital belonging to the Municipality of Mayagüez and entrusted to MEDI for investment in fact was invested and returned a significant rate of return. MEDI is a national public for-profit corporation created with the purpose of promoting the economic development of Mayagüez and the western region of Puerto Rico, generating jobs, supporting infrastructure projects, and improving the quality of life of citizens.

The defendants transferred, distributed and spent the money in ways inconsistent with the statements made to the Municipality of Mayagüez and MEDI regarding the investment of the money, to include purchases of a marine vessel, jewelry, clothing, school fees, meals at restaurants, public services, credit card payments and home decoration, as well as real estate improvements (swimming pools, for example) and the payment of home mortgages.

Using multiple phantom corporate entities and financial accounts, the defendants collectively received hundreds of thousands of dollars from the Municipality of Mayagüez, earmarked for investments, which the defendants then used for personal expenses and purchases of real and personal property. The use of phantom corporate entities further served to conceal the scheme to defraud Mayagüez and MEDI and allowed the defendants to lull Mayagüez and MEDI into believing that the $9 million was invested as falsely represented by the defendants.

Of the $9 million obtained from the municipality through material misrepresentations, the defendants only returned $1.8 million to the Municipality of Mayagüez and in doing so, they falsely represented that the $1.8 million was a return on investment.

If convicted, the defendants face a maximum statutory sentence of up to 20 years in prison and a fine of up to $250,000 on charges related to wire fraud, and up to 10 years in prison on the money laundering charges.