Five Defendants Sentenced in Puerto Rico Corruption Case

             Five defendants were sentenced this week for their participation in a corruption scheme involving the 2000 resident commissioner and 2004 gubernatorial campaigns of a former governor of Puerto Rico, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney for the District of Puerto Rico Rosa Emilia Rodríguez-Vélez.   The defendants were sentenced in U.S. District Court for the District of Puerto Rico by U.S. District Court Judge Paul J. Barbadoro, sitting by designation from the District of New Hampshire.   

Former Puerto Rico Governor Aníbal Acevedo Vilá , 47, and Luisa Inclán Bird, 49, a legal advisor for the San Juan resident commissioner office when Acevedo Vilá served as resident commissioner, were acquitted on March 20, 2009, of all criminal charges related to the scheme.    

            The five defendants sentenced were:

• Jorge Velasco Mella, 39, of San Juan, Puerto Rico, who was sentenced on May 21, 2009, to three years probation, including 12 months of home detention.   Velasco Mella pleaded guilty on Jan. 23, 2009, to one count of conspiracy to violate the Federal Election Campaign Act (FECA).   According to plea documents, Velasco Mella worked in the San Juan resident commissioner’s office and assisted in handling campaign contributions.

• Ramón Velasco Escardille, 50, of San Juan who was sentenced on May 21, 2009, to three years probation, including 12 months of home detention.   Velasco Escardille pleaded guilty on Jan. 23, 2009, to one count conspiracy to violate FECA.   According to plea documents, Velasco Escardille was the treasurer for the resident commissioner campaign.

• Edwin Colón Rodríguez, 36, of Arecibo, Puerto Rico, who was sentenced on May 22, 2009, to 12 months and one day in prison, and three years supervised release following the prison term.   Colón Rodríguez pleaded guilty on Jan. 23, 2009, to one count of making a false statement to the Federal Election Commission (FEC).   According to plea documents, Colón Rodríguez was the assistant treasurer for the resident commissioner campaign.

• Jos é Gonz á lez Freyre, 56, of Guaynabo, Puerto Rico, who was sentenced on May 22, 2009, to one year probation, including six months of home detention, and a $5,000 fine.   Gonz á lez Freyre pleaded guilty on Feb. 2, 2009, to one count of making a false statement to the FBI and the Internal Revenue Service (IRS).   According to plea documents, Gonz á lez Freyre is the owner of Pan American Grain, a Puerto Rico agricultural company that contributed at least $50,000 to the former governor’s 2004 gubernatorial campaign.

• Miguel Nazario Franco, 62, of San Juan, who was sentenced on May 22, 2009, to one year probation, including six months of home detention, and a $5,000 fine.   Nazario Franco pleaded guilty on Jan. 23, 2009, to one count of misprision of a felony.   Nazario Franco, a businessman, volunteered in the finance department of the former governor’s 2004 gubernatorial campaign.

According to plea documents, Velasco Mella, Velasco Escardille and Col ó n Rodriguez admitted to participating in a scheme to defraud the United States and violate various FECA provisions by having Puerto Rico and Philadelphia-area businessmen make illegal and unreported contributions to pay off large and unreported debts stemming from the former governor’s campaign in 2000 for resident commissioner of the Commonwealth of Puerto Rico.   The defendants admitted that the scheme involved soliciting, accepting, and then reimbursing illegal conduit contributions from the candidate’s family members and staff.   Conduit contributions are illegal campaign contributions made by one person in the name of another person.   According to plea documents, payments were made principally to the campaign’s public relations firm, Lopito, Ileana and Howie.   Also, the illegal actions continued into 2003, due to the significant debt accumulated by the campaign, some of which was also concealed from the FEC and the public.  

According to court documents, the scheme continued through unreported fundraising and the making of unrecorded vendor payments for the former governor’s 2004 gubernatorial campaign in order to raise and spend far more than the limited amount that Puerto Rican law permitted.   According to court documents and the statements of the defendants who pleaded guilty, Puerto Rico businessmen, described in court documents as collaborators, used large amounts of money from their personal or corporate funds to pay for large and unreported debts to the campaign’s public relations firm.   Large sums of cash were also used to keep contributions and vendor payments concealed from the Puerto Rico Treasury Department and the public.   According to court documents, for many of the collaborator payments, the public relations company created fake invoices to make the payments appear to be legitimate business expenses of the collaborators’ companies.   As Finance Director for the 2004 gubernatorial campaign, Nazario Franco became aware of this illegal activity and pleaded guilty for failing to report it.   Gonz á lez Freyre pleaded guilty to making a false statement during the federal investigation into his illegal $50,000 contribution to the 2004 gubernatorial campaign.    

A total of eight defendants have pleaded guilty in the ongoing corruption investigation in the District of Puerto Rico.  In addition to the five defendants sentenced this week, the others are Salvatore Avanzato, Marvin Block and Ricardo Colón.  

            This case is being prosecuted by First Assistant U.S. Attorney María A. Domínguez and Assistant U.S. Attorneys Ernesto López, Timothy Henwood and Jacqueline Novas of the District of Puerto Rico, and Trial Attorneys Peter M. Koski and Ethan H. Levisohn of the Criminal Division’s Public Integrity Section, which is headed by Chief William M. Welch, II.   The case is being investigated by the FBI and IRS, with assistance and cooperation from the Office of the Comptroller of Puerto Rico.

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