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Press Release

Civil Complaint And Settlement Agreement Involving The Municipality Of Sabana Grande

For Immediate Release
U.S. Attorney's Office, District of Puerto Rico

SAN JUAN, Puerto Rico – On November 22, 2019, the United States Attorney’s Office, District of Puerto Rico, filed a complaint and a settlement agreement against the Muncipality  of Sabana Grande in the United States District Court, for violations of the False Claims Act, 31 U.S.C. §3729 et seq., announced W. Stephen Muldrow, United States Attorney for the District of Puerto Rico.

The Complaint alleges that in or about April of 2014, the Municipality of Sabana Grande (“MSG”), in conjunction with members of the Puerto Rico Olympic Committee (COPUR) and Mr. Irving Riquel Torres (Torres), through his company Administrative, Environmental and Sports Consultants (AESC), entered into a contract involving funds from the United States Department of Education (USDE), whereby MSG subcontracted COPUR and AESC to provide teachers’ training for MSG’s public school teachers. Based on the rules governing the USDE grant funds provided to the Puerto Rico Department of Education (PRDE), MSG was precluded from subcontracting the services for teachers’ training to non-governmental entities. This arrangement resulted in MSG submitting or causing the submission of false statements, false records and false representations to PRDE for purposes of obtaining federal funding under Title II, Part A of the Elementary and Secondary Education Act. 

An investigation conducted by the U.S. Department of Education, Office of Inspector General (USDOE-OIG), showed that false representations caused the PRDE to disburse approximately $1,770,200 to MSG, which then disbursed the sum of $1,378,212 to COPUR in violation of the program’s applicable statutes and regulations, to include MSG’s subcontracting of COPUR to provide educational training services. Subsequently, COPUR disbursed approximately $439,587 as costs of the project, $375,449 to AESC, and retained the sum of $563,174, as proceeds for serving as an intermediary between MSG and AESC. MSG also retained $391,988.00 as proceeds not authorized under federal law.

Pursuant to the Settlement Agreement between MSG and the United States, MSG agreed to pay the United States $500,000. On October 23, 2019, prior to the filing of the complaint against MSG, COPUR paid the United States $700,000, pursuant to an out-of-court settlement agreement reached with the United States. Additionally, the United States seized in excess of one million dollars from bank accounts belonging to Torres relating to criminal charges filed against him.

“The United States Attorney for the District of Puerto Rico, together with our law enforcement partners, is fully committed to combatting fraud against government programs. We greatly appreciate the support and hard work from our partners at the USDOE-OIG, HUD-OIG, and FBI. This case also underscores the use of federal, civil enforcement laws, such as the False Claims Act, to fight and deter fraud,” said United States Attorney Muldrow.

“The Office of Inspector General has a unique and special law enforcement mission – to protect Federal education funds for eligible students. Today’s settlement is an example of our commitment to this mission,” said Neil Sánchez, Special Agent in Charge of the U S. Department of Education Office of Inspector General’s Southern Regional Office. “I’m proud of the work of OIG special agents and our law enforcement partners whose tireless efforts brought about this significant settlement. The OIG will continue to carry out our important public service and investigate allegations of fraud, abuse, public corruption, and violations of the False Claims Act.”

“Oftentimes, the most effective weapons we have against fraud and corruption are civil enforcement and asset forfeiture laws, which enable us to strike directly at the greed that motivates these types of crimes, and also give us the power to recover money on behalf of those who were meant to benefit from it:  the People of Puerto Rico.  We at the FBI were extremely proud to partner in this mission with the United States Attorney's Office, and the Offices of the Inspectors General of the U.S. Departments of Education and Housing and Urban Development, whose steadfast dedication to justice ensured this successful result, and will bring about many more in the future”, said Doug Leff, FBI Special Agent-in-Charge.

These matters were handled and prosecuted by Civil Division Assistant United States Attorneys Jorge L. Matos, David Martorani-Dale, and Civil Division Chief Héctor Ramírez-Carbó of the U.S. Attorney’s Office District of Puerto Rico, in conjunction with Special Agent Robert Wolfe of the USDOE-OIG, and in collaboration with Assistant United States Attorney Seth Erbe, Special Agent Juan Carlos López of the FBI, and Special Agent Héctor Mercado of HUD-OIG.

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Updated November 25, 2019

Financial Fraud