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  • Writer's pictureThe San Juan Daily Star

Pierluisi Isern brothers, cousins of the governor, plead guilty in yearslong scheme to steal funds

After his cousins Walter and Eduardo Pierluisi Isern pleaded guilty on Thursday to charges of federal program funds theft, Gov. Pedro Pierluisi said the two men “failed my family, failed the people and now face severe penalties, loss of their freedom, payment of large fines; justice is being served as it should be.”

By The Star Staff

Walter Pierluisi Isern, Eduardo Pierluisi Isern, and American Management and Administration Corp. (AMAC) pleaded guilty Thursday to one count of theft of federal program funds concerning the misappropriation of operational funds provided by the U.S. Department of Housing and Urban Development (HUD) for the administration of public housing projects.

A prepared statement issued Thursday said the defendants, who are cousins of Gov. Pedro Pierluisi Urrutia, admitted to knowingly and intentionally stealing some $3.7 million from HUD federal assistance programs from 2014 to August 2022.

Given its fiduciary responsibility to manage millions in HUD funds and operate more than 5,000 housing units in 12 municipalities in Puerto Rico, the court prohibited AMAC from contracting with any company affiliated with AMAC or its officers. Walter Pierluisi Isern was the president of AMAC, and Eduardo Pierluisi Isern supervised the repair and maintenance work at the public housing projects for AMAC during the duration of the fraudulent scheme.

The defendants admitted in their plea agreements that despite AMAC’s fiduciary obligations, Walter Pierluisi Isern and Eduardo Pierluisi Isern used their executive positions within AMAC to operate a fraudulent scheme designed to circumvent that prohibition. In furtherance of that scheme, they illegally caused the diversion of operational funds from the federal assistance programs to corporations and subcontractors that they controlled to enrich themselves personally. The defendants further admitted that they caused AMAC to submit false certifications to HUD, ensuring no conflict of interest existed between AMAC and the companies hired to provide operational services, in violation of federal law.

As detailed in the proceedings, Walter Pierluisi Isern created contracts for FiveStar Pest Control Inc. (FiveStar) and CoolBreeze Air Conditioning Inc. (CoolBreeze) to provide services to public housing projects under AMAC’s management. He then caused multiple payments by FiveStar and CoolBreeze to funnel money to Docu‑Wharehouse, Pier Property and XY Enterprises, subcontractors controlled and owned by Walter Pierluisi Isern. As a result, Walter Pierluisi Isern illegally obtained some $2 million in HUD funding for public housing projects’ operational expenses through the scheme.

The admissions included the recognition that Eduardo Pierluisi Isern caused checks from FiveStar and CoolBreeze to be issued to the names of others, which he then cashed and deposited into his personal bank account for his benefit. He illegally obtained some $363,202 in HUD funding for public housing projects’ operational expenses through the scheme.

AMAC, through its executives and officials, admitted to illegally diverting a total of $3.7 million in HUD funding.

The defendants, who have agreed to pay back the $3.7 million, are scheduled to be sentenced on July 11 and face a maximum sentence of 10 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The governor said this week that the conviction of his cousins would have no impact on his reelection campaign. On Thursday following the guilty pleas, he said of his cousins’ actions, “what they have done tarnishes my last name.”

“What was demonstrated today is that in Puerto Rico there is no impunity, no matter who it is, if they fail the people, if they commit an act of corruption, they will have to face the consequences,” Gov. Pierluisi said. “In this case we are talking about two of my cousins who failed my family, failed the people and now face severe penalties, loss of their freedom, payment of large fines; justice is being served as it should be. And obviously, I am saddened by this situation on a personal level, it bothers me enormously, because after all we are talking about the illegal appropriation of federal funds that were destined to administer public housing, and that touches me closely because my father was secretary of Housing for eight years and dedicated himself body and soul to caring for the residents of public housing, among other things.”

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