IES CFO GONZALEZ PLEADS GUILTY TO FEDERAL CHARGES OF CONSPIRACY, EMBEZZLEMENT: GALLEGOS' TRIAL SEPT. 3

Former IES finance director Juan Jose Gonzalez (in black suit and white hair) leaves the federal courthouse with relatives after his guilty pleas.

Special to El Rrun-Rrun

Juan Jose Gonzalez, the former finance director for International Educational Services, or IES, pleaded guilty in a re-arraignment to conspiracy and theft charges concerning programs receiving federal funds before U.S. District Judge Fernando Rodriguez Jr. Tuesday morning in federal court in Brownsville.

Gonzalez stood before Rodriguez at the defendants' table accompanied by his attorney Reynaldo "Trey" Garza" and said guilty when the court asked his plea after an assistant U.S. Attorney read a lengthy indictment on the two counts arising from acts he admitted to committing between 2014 and 2017 conspiring with IES president Ruben Gallegos Sr. and his son Ruben Gallegos Jr., IES chief executive officer.

(The relationship between Gonzalez and the Gallegos go further than being fellow executive officers at IES. Gonzalez is married to a sister of Gallegos Sr., making him his brother-in-law and uncle to Gallegos Jr.)

He had previously pleaded not guilty to both charges at the time of he was arrested along with the Gallegos Aug. 30, 2022. He had his re-arraignment hearing on Tuesday morning and changed them to guilty. In approximately 30 minutes that the re-arraignment lasted, he admitted that in those four years, he and the Gallegos were responsible to conspiring to steal and embezzle millions in federal funds.

Gallegos Sr. and his son Gallegos Jr. pleaded not guilty with conspiracy and theft concerning programs receiving federal funds. They are currently in the process of discovery and jury selection is currently scheduled for Sept. 3.

The are also accused in their indictment of misapplying millions of dollars in federal grant funds meant to be used for temporarily housing migrant children at IES, a nonprofit. The Brownsville Herald's Mark Regan reported that IES abruptly shuttered its doors and fired all of its employees on March 31, 2018, although neither the federal government or IES explained why the nonprofit suddenly closed.

The Herald filed a successful Freedom of Information Act request with the Office of Refugee Resettlement’s Administration for Children & Families for communication between those agencies and IES following the closure and also reviewed years of IES tax documents.

Th newspaper reported at the time that the information revealed how the organization used millions of dollars in federal grant monies, including that IES employees profited from leased properties owned by its executives and that those executives paid themselves salaries that were more than federal grant rules allowed. 

During the re-arraignment, the U.S. attorneys charged that the three men conspired to increase their salaries in 2017 to pay themselves salaries way over the $183,000 cap limit. Gallegos Jr. set his 2017 salary at $435,416.88, Gallegos Sr. was paid $506, 0032.22 and Gonzalez $377,060.96. But in later tax filings, both Gallegos paid themselves more than $650,000 and Gonzalez over $550,000. 

The government said no waivers hadd been issued allowing IES to pay the three salaries above the $183,000 cap.

Those numbers were not included in the indictments. They are also charged with using federal grant funds to rent properties they owned at exorbitant prices. 

“Ruben Gallegos Sr. and Juan Jose Gonzalez approved less-than-arms-length transactions in which IES used federal grant funds to pay for multiple leases on the same properties that were owned by Ruben Gallegos Sr., or related entities, in order to inflate rental income paid with federal grant funds to Ruben Gallegos Sr.,” the indictment stated.

That 13-page indictment also alleges they purchased a $1 million San Benito property and falsely claimed it was operational and would serve more than 1,000 children in Fiscal Year 2015.
 
“The IES San Benito Shelter was not operational during FY-2015,” the indictment stated.

At Gonzalez's attorney request, Rodriguez said he would consider his request to travel out of the county to attend to a relative with cancer getting treatment in Houston.

Attorney Garza also said he hoped the judge will consider granting the elderly defendant probation in light of his assistance to federal prosecutors and his willingness to testify on the government's behalf. He said that Gonzalez will continue to assist prosecutors in the upcoming trial of the Gallegos, saying that he continues to cooperate with the U.S. Attorney's Office.

Rodriguez asked Gonzalez if he was aware that any agreement with the prosecutors was not binding on him, and asked if he was pleading guilty voluntarily and if Gonzalez understood that any agreement with the prosecutors would not determine if he will grant probation, or influence any sentence he might impose. 

Yes, sir," Gonzalez replied.