Uresti trial set to begin as most salacious criminal case in years

The criminal trial of state Sen. Carlos Uresti, slated to start with jury selection this morning, promises to deliver the area’s most high-profile and salacious case in years with allegations of an extramarital affair and drug use.

The San Antonio Democrat and his co-defendant, Gary Cain, face various fraud charges in connection with their roles at FourWinds Logistics, a now-defunct oil field services company that federal prosecutors say was a Ponzi scheme that defrauded a handful of investors.

Uresti, 54, and Cain, 61, deny the charges despite guilty pleas by four company officials who are slated to be sentenced later this year.

CEO Stan Bates, 46, pleaded guilty last week to eight felony charges rather than stand trial with Uresti and Cain. The three other defendants are cooperating witnesses.

At stake is Uresti’s nearly 21-year political career, as well as his livelihood as a lawyer. A guilty verdict on any of the charges likely would lead to his disbarment.

Some local attorneys couldn’t recall another federal criminal trial in San Antonio in the past decade or so that had as much notoriety as this one could produce. The trial is expected to last three weeks, with opening statements scheduled Monday.

“There’s probably not been one with someone of Carlos Uresti’s caliber as an elected official,” said attorney Adam Cortez, a former assistant U.S. attorney who was part of the legal team that defended Frances Hall in the 2013 killing of her trucking magnate husband, Bill Hall Jr.

Assistant U.S. Attorney Joseph Blackwell declined to comment, but prosecutors are expected to paint Uresti as a financially strapped politician who lent his name and gravitas to FourWinds in exchange for a 1 percent ownership interest in the company and a share of the profits in various joint ventures.

Uresti also served as the company’s outside general counsel, escrow agent and earned commissions for recruiting two investors, though he never invested himself.

One of those investors, Denise Cantu, 38, is a former Uresti legal client he represented in civil litigation over the deaths of two of her children following a vehicle rollover wreck in 2010. Cantu and two of her other children also were injured in the wreck.

Prosecutors say Uresti exploited and defrauded Cantu, described as a “mentally and emotionally vulnerable” client, by persuading her to invest proceeds from a large court settlement with FourWinds. She invested about $900,000 and lost all but $100,000 with the company, which bought and sold sand used in fracking to extract oil and gas from shale rock.

Cantu is expected to testify that Uresti seduced her to gain her trust and invest with FourWinds.

During a hearing Wednesday on motions to exclude certain evidence from the trial, Senior U.S. District Judge David Alan Ezra said prosecutors are “entitled to infer from that relationship that it was part of Mr. Uresti’s modus operandi in getting her to go along” with investing in FourWinds.

Uresti has disputed that he had a sexual relationship with Cantu, but even if he did, his lawyers say it didn’t violate rules on attorney professional conduct.

“It’s kind of a tough argument to make,” an amused Ezra noted. “On the one hand, you’re denying that he had the relationship. So you’re almost going to have to say, ‘Well, we deny he slept with her on multiple occasions. However, even if he did’ (it was not prohibited). That really throws water on the denial.”

Tab Turner, one of Uresti’s lawyers, responded, “We’re certainly not claiming that’s the greatest argument.”

“No, it isn’t,” the judge said. “The jury could say … if he’s really denying it, that he would deny it. He wouldn’t be going to all this trouble to argue that it was OK.”

Uresti’s legal team calls the case against their client “atypical” because it involves a longtime politician as a defendant who may be tried by jurors from his own Senate district, attorney-client issues, potential big-name witnesses and the boom and bust of the Eagle Ford shale.

“This is the most complex case I’ve ever had in terms of the different factors and dynamics that are going to be infused into this case,” Michael McCrum, one of Uresti’s defense lawyers, said during a recent court hearing in reference to six issues that he said make the case unusual. “I didn’t even list the sexual aspects.”

Uresti’s defense team unsuccessfully tried to convince the judge to keep prosecutors from introducing details of an affair they say Uresti had with Cantu. The Harlingen woman had sexual relationships with both Uresti and Bates, according to an FBI report of an April 2016 interview she gave agents and prosecutors.

In 2011, in the midst of her civil lawsuit, Cantu became closer with Uresti and “the two would exchange ‘flirty’ text messages. …Later in the relationship, the two would meet at a hotel in San Antonio for a sexual encounter,” according to the report that was provided to the San Antonio Express-News by Uresti’s legal team.

Uresti has denied Cantu’s claims and likely will portray her as a disgruntled investor and liar. In her initial meeting with the FBI and prosecutors, Cantu denied having a sexual relationship with either Uresti or Bates. She said she was embarrassed her children would find out in explaining why she initially lied.

Whether Uresti will testify in his own defense remains to be seen. Turner didn’t respond to multiple requests for comment. McCrum, though, previously has said he didn’t think it would be necessary for Uresti to take the stand.

Uresti’s legal team, though, likely will point the finger at Bates for any wrongdoing that occurred at FourWinds.

Bates last week pleaded guilty to eight felony counts, including securities fraud and money laundering, but likely will figure prominently in the trial.

Among the charges against Uresti and Cain is that they conspired with Bates to commit wire fraud and money laundering. Blackwell told Ezra they prosecutors were going to be meeting with Bates and his lawyer Wednesday afternoon to determine if Bates would be called to testify.

Before pleading guilty, Bates was seeking to be tried separately from Uresti and Cain because he said they intended to blame him for allegedly defrauding investors. Prosecutors, in an October court filing, accused Bates of misusing “investor funds to purchase and distribute gifts and controlled substances, and to hire prostitutes.”

The Express-News in August 2016 detailed the collapse of FourWinds, which went bankrupt the previous year.

Uresti’s defense team may call expert witnesses to talk about the rise and subsequent fall of oil prices. Oil prices headed into a tailspin after peaking at $107 a barrel in June 2014, around the time Cantu invested. Bates, in 2016 interview, attributed FourWinds’ troubles to a precipitous drop in the price of the sand used in fracking when oil prices plunged.

But Ezra said, “It doesn’t really matter whether the business failed because of the terrible conditions in the fracking industry, any more than it mattered that Bernie Madoff’s scheme came to naught because of terrible conditions in the stock market.” The experts won’t be able to testify that FourWinds failed because of the collapse of the oil industry, the judge said.

A lawyer familiar with the case, who didn’t want to be identified, said the fact that FourWinds collapsed and investors lost money it isn’t relevant because it was getting people to invest that was the crime. Prosecutors allege the defendants lied to investors to get them to invest.

“Getting the jury to focus on the broader market is a red herring,” the lawyer said. “It’s meant to distract and confuse.”

Attorney Charles “Chad” Muller, who represents Cain, said he didn’t think his defense strategy “would be very reportable.”

“I don’t think Mr. Cain did anything wrong,” Muller said. “The complaint that this was a Ponzi scheme I don’t believe is supported by the facts. It was a failed oil field business.”

Financial fraud cases can be hard to win convictions on because they often involve complicated issues that jurors in San Antonio aren’t familiar with, such as rules regarding who can be a securities broker, according to the lawyer.

“I see this is a difficult case for the government because the idea you invest in something and it goes bad, that’s the art of the investment,” said Adam Cortez, the San Antonio attorney and former federal prosecutor. “Sometimes you hit a home run. Sometimes you strike out. … Fracking went bad. Lots of people went broke.”

Separately, Ezra ruled that Uresti’s lawyers won’t be able to challenge Cantu’s credibility by mentioning her run-ins with the law. She was arrested twice last year, most recently in November on charges of aggravated robbery and aggravated assault with a deadly weapon, both felonies.

Cantu was unable to post the $300,000 bond and was detained in Cameron County Jail before being transferred to the federal Brooks County Detention Center in Falfurrias ahead of the trial.

She also is expected to testify that Uresti encouraged her not to cooperate with FBI agents in their investigation.

At the same time, Ezra ruled that prosecutors will not be able to bring up Cain’s criminal trial on charges that he swindled Rackspace Hosting Inc. out of millions of dollars in a 2007 land deal. A jury acquitted Cain in 2014.

The last federal criminal case to garner substantial publicity probably was the murder trial of San Antonio millionaire Allen Blackthorne, who was involved in a murder-for-hire plot to kill his ex-wife, Sheila Bellush, in 1997.

Her daughter, then 13, arrived home from school to find Bellush shot and stabbed. Bellush’s 23-month-old quadruplets were at home at the time of the slaying. Blackthorne was convicted and sentenced to two life terms.

He died at age 59 in an Indiana prison in 2014.