Defendant Pleads Guilty In Fraud And Money Laundering Case
SAN JUAN, Puerto Rico– Defendant Oscar Rodríguez-Torres pleaded guilty before United States Magistrate Judge Camille Vélez-Rivé to six counts including conspiracy, theft of government property, mail fraud, wire fraud, and conspiracy to launder money, announced Rosa Emilia Rodríguez-Vélez, United States Attorney for the District of Puerto Rico.
In June of 2017, Oscar Rodríguez-Torres, along with six other individuals were charged for their participation in a conspiracy to steal federal funds involving fraudulently obtained contracts from the P.R. Department of Education (PR DOE) and the P.R. Public Housing Authority (PR PHA) through the P.R. Department of Sports and Recreation (PR DRD).
Defendants Edgardo Vázquez-Morales and Miguel Sosa-Suárez have already pleaded guilty. Change of plea hearings have been scheduled for Cecilia Amador-López, and Juan Carlos Ortiz-Nieves, on May 24, 2018 and June 12, 2018 respectively. Ramón Orta-Rodríguez and Irving Riquel Torres-Rodríguez, are awaiting trial.
As a part of the guilty plea, defendant Oscar Rodríguez-Torres admitted to a statement of facts which included the following:
- Rosso Group, Inc. (“Rosso”) was a domestic for-profit corporation organized under the laws of Puerto Rico on or about February 8, 2013. Oscar Rodríguez-Torres was the Incorporator, President, Secretary, Treasurer, and sole owner of Rosso. Between October 2013 and October 2016, pursuant to the contracts reached between PR DRD and Rosso, payments totaling approximately $8,767,446.52 were made by the P.R. Treasury Department (Hacienda), on behalf of PR DRD, to Rosso.
- Oscar Rodríguez-Torres met in Puerto Rico after the November 2012 election with members of the conspiracy to discuss how Ramon Orta-Rodríguez could obtain the position of Secretary of PR DRD and to devise a scheme to enrich themselves utilizing prospective covenants between PR DRD and the PR DOE. Upon being named Secretary of PR DRD, Ramon Orta-Rodríguez agreed with members of the conspiracy to submit multiple work plans for federal funding on behalf of the PR DRD to the PR DOE.
- Ramón Orta-Rodríguez, Oscar Rodríguez-Torres, Miguel Sosa-Suarez, Irving Riquel Torres-Rodríguez and Cecilia Amador López agreed that if a proposal was approved by PR DOE, Irving Riquel Torres-Rodríguez and Cecilia Amador-López would administer the project, Oscar Rodríguez-Torres would finance the project, and Miguel Sosa Suarez would address the budget and accounting.
- Oscar Rodríguez-Torres, Miguel Sosa-Suarez, and Irving Riquel Torres-Rodríguez agreed to split the profits from the projects. Oscar Rodríguez-Torres made payments, totaling approximately $1,317,942.88 from Rosso’s bank accounts to himself utilizing funds obtained from PR DRD.
- Oscar Rodríguez-Torres made payments, totaling approximately $1,175,228.08 from Rosso’s bank accounts to Miguel Sosa Suarez utilizing funds obtained from PR DRD. Oscar Rodríguez-Torres made a payment totaling approximately $60,000 from Rosso’s bank account XXXXX6498, using a check payable to cash, to a bank account controlled by Miguel Sosa-Suarez at BPPR (Account XXXXX1989). Oscar Rodríguez-Torres made payments, totaling approximately $762,642.50 from Rosso’s bank accounts to Irving Riquel Torres-Rodríguez utilizing funds obtained from PR DRD. Oscar Rodríguez-Torres made payments, totaling approximately $554,246.89 from Rosso’s bank accounts to AESC utilizing funds obtained from PR DRD. Oscar Rodríguez-Torres made a payment totaling approximately $300,000 from Rosso’s bank account XXXXX6498, to Global Sports Initiative (“Global”).
- The covenants between the PR DOE and the PR DRD signed by Ramón Orta-Rodríguez contained a clause that prohibited the PR DRD from completely subcontracting the activities subject to the covenant. In violation of the covenants, Ramón Orta-Rodríguez signed contracts on behalf of PR DRD with Rosso to provide all of the services required by the covenants with the PR DOE. No competitive bidding process was used for the contracts awarded by PR DRD to Rosso.
- Ramon Orta-Rodríguez, as Secretary of PR DRD, subcontracted the services to Rosso at a lower price than PR DRD had contracted to be paid by PR DOE. Ramón Orta-Rodriguez intended to obtain net proceeds for PR DRD from the covenants with PR DOE by subcontracting all of the services to Rosso at a lower cost.
- Ramón Orta-Rodríguez, as Secretary of the PR DRD, solicited and obtained federal funding from US HUD via PRPHA to pay for one television program related to activities in public housing programs in Puerto Rico. Ramón Orta-Rodríguez contracted with Rosso for the television production services of one television program related to activities in public housing programs. The contracts awarded by Ramón Orta-Rodríguez to Rosso were not subject to competitive bidding.
- Individual A provided services for two distinct and separate television programs and billed Rosso for the totality of the services. The two television programs were 1) VEA and 2) DRD.TV. Individual A increased the invoice amount from approximately sixteen thousand seven hundred fifty dollars $16,750 to approximately thirty nine thousand four hundred seventy dollars $39,470 per episode for both television programs. Individual A sent invoices to personnel of Rosso based on a cost of approximately $39,470 per episode for both television programs. Rosso personnel would send the inflated invoice to PR DRD so that a payment would be processed to Individual A.
- In or about 2016, Oscar Rodríguez-Torres directed Individual A to make payments back to Rosso in the amount of the difference between the inflated invoice and actual cost to Individual A to produce the two television programs. By increasing the invoices submitted by Individual A to Rosso, members of the conspiracy caused the fraudulent submission of invoices for payment with federal funds. Oscar Rodríguez-Torres caused payments totaling approximately $417,623.32 to be made by Individual A to Rosso.
- Members of the conspiracy took steps to create fake bids and documents containing false information in an attempt to conceal the manner in which Ramon Orta Rodriguez awarded contracts to Rosso. Edgardo Vazquez Morales solicited and received payments from Oscar Rodríguez-Torres for the purported solicitation of fake bids from other companies as a part of the scheme to conceal the manner in which Ramon Orta-Rodríguez awarded contracts to Rosso.
“Public corruption continues to erode the trust between government officials and our citizens. These defendants robbed Puerto Rican taxpayers of more than $3.5 million,” said U.S. Attorney Rosa Emilia Rodríguez-Vélez. “These offenses are reprehensible, more so in light of Puerto Rico’s fiscal crisis. I commend the commitment of the agents, financial analysts, and prosecutors whose tireless work made these convictions possible.”
The case was investigated by the United States Department of Education Office of Inspector General in conjunction with the FBI’s San Juan Division and the United States Department of House and Urban Development Office of Inspector General. The case is being prosecuted by Assistant U.S. Attorney Seth Erbe.
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