Senator Carlos UrestiEthical Lapses Ruin Lives in Two Short Years

Professor Dennis Elam PhD CPAProfessor Richard Green PhD CPA

Texas A & M Univ. San Antonio

Abstract of Case Study

• Senator Uresti violated his Fiduciary Duty to Client Denise Cantu

• Convinced Cantu her legal recover of $900 K would be safe in Four Winds Logistics

• Four Winds was a Ponzi Scheme, paying off first investors with later investor money

• Disregard for ethical standards ruined lives and lost $6.3 million in four short years

State Senator Carlos Uresti

• Attorney – St. Mary’s• Texas House Rep 118th

District 1997-2006• Texas Senate 19th

District Nov 2006 –June 21, 2018

• Two Brothers• Lmarries leanna

Elizondo 2012

Denise Cantu

• Uresti Client• Recovered $900 K in

Accident killing 2 of her children

• Yes this is a mug shot• Lost $800,000 in Four

Winds which she termed Blood Money

• Salacious Conduct

Stan Bates• Former Marine• Began Four Winds

Logistics in 2014 to market Frack Sand

• No Oilfield Experience• Charged with 22

counts• No record of claim

UNC Chapel Hill degree

Gary Cain

• Paid $15 K every two weeks for consulting at Four Winds

• He and Uresti convicted of 20 felony charges

• Recommended by District Attorney Nicolas Hood

Meet the Four Winds Greeters

The Arrest May 17, 2017

• Uresti 53, Bates 45, Cain 60 turn themselves in

• Arrested and Cuffed and Leg Irons• Surrender Passports, restrict travel outside

US• Unsecured Bonds $50,000 each• I am innocent of the charges• Guilt requires intended to defraud• Bates denies all charges

The Bar is Open

• Witness Desire Talley testified to wanting a rule against drinking at Four Winds before 4 00 PM

• Employees drunk by Noon

Fraudulent Bank Statements

• Eric Nelson E Commerce and Marketing Director

• Actual Balance $198,896• Add 187for $18,798,896 in bank• Forced to change statement from Bates

threatens to shoot him in the head

A Socionomic Moment

• Cain brought in May 2014 to help raise money

• One month before Oil prices peaked at $107• Cantu invests $800 K, Uresti gets $27,000

fee unbeknownst to Cantu and 10% interest• Frauds usually occur before market peaks• Social Mood so positive, people believe the

con

The Pitch

• End user agrees to buy sand• Four Winds Marks up Price $18-25 ton• Profits in an escrow account, nothing until

the buyer was assured• Bates-a zero risk investment• What Could Go Wrong?

Uresti Spins Out of Control

• Moves from $300 Residence to $2 M

• Buys $77 K Porsche• Texts salacious

comments and photos to Cantu

• Borrows $40 K from Four Winds

Denise Cantu Spins Out of Control

• Charged with Aggravated Assault with a deadly weapon January 2017. Not guilty

• In a second case armed robbery she plead guilty and received a ten year probated sentence.

Stan Bates Spins Out of Control

• Wild Lifestyle• Personal Bankruptcy October 2015• Four Winds Bankruptcy August 2015• Four Winds Funds for Mercedes SUV $100K• $21,800 for diamond engagement ring• $45,000 Monthly Salary• Ponzi Scheme-Cantu Money Paid off Early

Investors

All Fall Down

• Cantu sues Four Winds for Fraud• Bates blames Uresti for loss• Cain Arranges for Factoring invoices but

Bates spends money as it comes in• Investor Thum reports case toDA La Hood

and then the FBI• Sand listed at $233,674 sold for $5,000 in

bankruptcy

The OutcomeCarlos Uresti

• Resigns Senate Seat• Brother loses House Race• 12 Year Prison Sentence-11 Felonies• – I will examine my options! Expected to go free as

part of Texas Senate-Show Photo• Surrenders Law License• Wife Sues for Divorce• House and Law Office for Sale• $6.3 M in Restitution

But It Ain’t Over Yet for Carlos• 2nd Case charged with bribing Pecos County Judge Jimmy Gallindo• $10 K per month from Lubbock Businessman Vernon Farthing II split

between Galindo and Uresti• Gallindo pleads guilty• Uresti finally

• Agrees not to appeal 12 year conviction• Plead guilty in Bribe Case

• Wife Wanted Pension in Divorce• Government Garnishes 25% of pension

The OutcomeDenise Cantu

• Living in Cameron Co Jail during Uresti Trial• Two aggravated assault charges• First not guilty• Second Plead out• Ten Year Probated Sentence• Her money paid off prior investors, no sand

purchased

The OutcomeStan Bates

• Plead guilty to Eight Felonies• Hid Money from Prosecutors, Judge places

Bates in jail prior to sentencing• $6.3 M in Restitution• 15 year Sentence• Asked for leniency as a Marine Sniper – no

record of that - Mortarman

Careful What you Claim!

• Judge Ezra Dyer served as a Marine• To use the name, the honor, and the dignity of

any branch of service for purposes of persenting oneself as being a person of honor, when they knew I fact the opposite, is an unfortunate shame upon themselves.It’s a seriou,s serious shame rthat they did such a thing

Six SentencedThree Cooperated

• Bates-15, Uresti-12, Cain-5+• SEC Sues Uresti and Cain for Securities Fraud• Shannon Smith co owner – Five Years Probation

for helping• Laura Jacobs, Four Winds Comptroller, On Year

Women’s Prison Camp• Eric Nelson, Marketing Director, four years

probation

Still Going – Prosecutions

• Vernon Trey Farthing III on trial in Uresti Gallindo case, Gallindo co-operating

• Cain hands LaHood’s Father Deed of Trust on Shavano home for $850,000

• Cain, LaHood and Michael LaHood id s Restrained Parties In Judge Order

Take Aways• Bates like Carlo Ponzi a fraudster with no way to complete

his scheme• Uresti only received

– $28,000 fee, $60,000 annual bribe, funds for advising Four Winds

• My University compromised in last Legislative Session with Uresti’s Problems

• Total Lack of Fiduciary Duty to Cantu• Cantu unlikely to recover what she termed Blood Money