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Mayagüez mayor suspended by special prosecutor’s office


Mayagüez Mayor José Guillermo Rodríguez Rodríguez

By The Star Staff


The Office of the Special Independent Prosecutor (OFEI by its Spanish initials) temporarily suspended Mayagüez Mayor José Guillermo Rodríguez Rodríguez on Thursday in relation to a scheme that caused the city to lose millions in public funds.


It was in November 2021 that the OFEI decided to investigate Rodríguez over the performance of his functions in the municipality and in the Mayagüez Economic Development Corp. Inc. (MEDI). The investigation included the municipal finance manager, Yahaira Valentín Andrades.


The OFEI ordered Rodríguez stripped of official vehicles, cell phones and computers. He was also ordered to refrain from accessing the Mayor’s Office or any municipal facility.


Through a media outlet from the island’s western region, the mayor said he was going to appeal the decision. He also said he was at peace because the charges against him have more to do with negligence in his failure to watch over the use of public funds rather than corruption.


Thursday’s actions had to do with the whereabouts of about $9 million in municipal funds that even resulted in actions by the U.S. Securities and Exchange Commission (SEC), which levied fines against LPL Financials for its role in allowing an unregistered investment adviser, Eugenio García Jiménez, to misappropriate over $7.1 million from the western coastal city.


García Jiménez and seven other employees were accused in March 2021 of engaging in a scheme to defraud Mayagüez and MEDI of funds belonging to the city council by falsely representing that some $7.1 million that were invested had a significant rate of return.


In 2016, García Jiménez told municipal officials that he could invest some $9 million of the municipality’s funds with no risk to principal and earn the city annual returns of around 10%.


The city intended to use returns from this investment to fund municipal projects, including the construction of a new trauma center. Instead, García Jiménez falsified documents, including bank correspondence and brokerage opening documents, to convince municipal officials to entrust him with the municipality’s funds.


Instead of executing an investment strategy designed to generate the promised returns, García Jiménez purchased U.S. Treasury notes, immediately took out a margin loan pledging the notes as collateral and, over a period of six months, misappropriated $7.1 million by transferring funds to himself, entities he controlled, and his associates.


The scheme took place through MEDI, a 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. But García Jiménez and the other defendants, including former Judge Alejandro Irizarry Irizarry, allegedly transferred, distributed and spent the money for their own personal benefit.

The SEC punished LPL Financials for failing to verify when it opened a customer account and processed wire transfers at García Jiménez’s request.


After misappropriating $4.1 million of the city’s funds through an account at “Brokerage Firm 1,” the SEC said, García Jiménez approached LPL in April 2016 to open an investment account.

“During its review before opening the account, LPL failed to comply with its Customer Identification Program procedures and, despite various individuals in different departments questioning the account’s beneficial ownership, source of funds, and reason for transfer from the Brokerage Firm 1, García Jiménez opened an account controlled by him at LPL in June 2016,” the SEC complaint issued in March said. “LPL subsequently processed wire transfers that Garcia [Jiménez] requested. In the less than one month before LPL froze and later liquidated the account, Garcia was able to misappropriate an additional $3.1 million of City funds.”


Four of the accused individuals reportedly have reached a plea bargain.


Senate President José Luis Dalmau Santiago, a staunch supporter of the Mayagüez mayor, canceled a press conference he had scheduled for Thursday and refrained from answering questions about the OFEI’s actions. But later in the day, Dalmau Santiago, who is the president of the Popular Democratic Party, suspended Rodríguez as president of the party in Mayagüez.


Mayors Association President Luis Javier Hernández Ortiz said Rodríguez left the association, which groups mayors from the PDP, several years ago and has not kept in touch. Nonetheless, he said the association promotes good administration of public funds and rejects criminal acts.

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