Nieto, Hernandez caught in FBI sting operation
Defendants granted bond, but feds appeal ruling, keeping them in jail
By NICK WINCHESTER
PECOS — The federal bribery case against Carlos Nieto and Lorenzo Hernandez was an FBI sting operation.
FBI Special Agent Sean Powers of Midland, questioned by Assistant U.S. Attorney Monty Kimball of Alpine, laid out the agency’s scheme of how they snared the two public officials in testimony before U.S. Magistrate David Fannin of Marfa on Thursday morning during an arraignment and detention hearing in Pecos federal magistrate court, following their arrests last week.
Nieto is a longtime current Presidio school board member and former board president, and for several years the special projects coordinator for the city of Presidio. However, on Wednesday night at a special city council meeting, council members voted unanimously to abolish the position, effectively ending Nieto’s employment.
Hernandez is a current Presidio County commissioner, a former Presidio mayor and city council member and a former Presidio schoolteacher and coach. He is now a partner in a Presidio trucking business.
Powers’ testimony painted a picture of the two Presidio men, duped by an FBI agent posing as a businessman, detailed their recorded meetings across various West Texas cities, and outlined the many payments Nieto and Hernandez received in order to help win a fake contract between Presidio County and a shell computer software company that the FBI established in Westlake, Ohio. Hernandez received $19,800 and Nieto received $8,300.
The court heard a story of greed, corruption, and power from the FBI’s two-year investigation before listening to witnesses made up of one current federal employee, two retired federal law enforcement officials, one of Nieto’s sons, a priest, and a former student of Hernandez, all who vouched on behalf of the defendants.
As testimony drew close to noon, the judge set bond for Nieto and Hernandez, who approached the bench in orange jumpsuits and chained at the wrists and feet, at $20,000 each, with a 10 percent cash deposit, or $2,000.
However, Kimball, who argued that both men should remain jailed, filed an appeal of the magistrate’s ruling, keeping both defendants in the Sierra Blanca jail facility, awaiting an appeal hearing, set for Wednesday, July 19 at 9am in front of U.S. Magistrate David C. Guaderrama of El Paso at the Alpine federal magistrate courthouse.
After Nieto was arrested in Odessa last week, his father, Edmundo Nieto of Presidio, passed away on Sunday. A rosary is Friday and his funeral is Saturday in Presidio, but Kimball objected to Carlos Nieto attending the funeral, instead agreeing to have Carlos Nieto see his late father at a Fort Stockton funeral home to pay his final respects, under supervision of U.S. Marshals.
As Powers continued his testimony, he said the FBI placed an undercover officer in Presidio in order to investigate what he described as “historical corruption.” No testimony was offered as to what that meant or why the FBI targeted Hernandez and Nieto.
The undercover agent posed as an influential businessman seeking business with area governments. According to the indictment – unsealed on Thursday – on September 29, 2015, Hernandez agreed to work with the undercover agent in return for $6,000, which was later paid to him during a meeting in Austin on October, 2015. Hernandez, the FBI agent testified, said he would help win bids for work in Presidio County. To begin with, Hernandez ostensibly wanted the money for his election campaign, the court heard.
During a meeting between Hernandez and the undercover agent on November 4, 2015, Hernandez requested he be paid between $500 and $1,000 per week in return for being an “a commissioner in his pocket,” agent Powers told the court.
In a meeting with the undercover agent in El Paso on February 10, 2016, Hernandez received a further $3,000 for his “continued support,” the indictment reads. In the same meeting, Hernandez agreed to help the undercover agent win the county’s contract for document management services.
The FBI set up a firm called S&K Computer Works in order to continue the sting operation on Nieto and Hernandez. The contract would see the county’s documents and records be digitalized.
During a meeting on July 27, 2016 in Midland, Hernandez requested further payment, telling the undercover agent, “never turn up to meetings (with Hernandez) empty handed.” Hernandez received $400 during this meeting and a further $400 less than a week later, on August 31, during a meeting in El Paso in which Nieto was also present. According to the indictment, the payment was purposely made in front of Nieto, who caught wind of what was going on and requested $5,000 to assist Hernandez and the undercover agent’s efforts to win the document management services contract.
Powers described how Hernandez said he wanted Nieto involved in the deal because “Carlos has the power to stop us in our tracks.”
According to Powers, Nieto set up a company called Kennedy Consulting and a bank account. The FBI traced the account to Wells Fargo Bank and to an address, allegedly belonging to a brother of Nieto’s in Austin.
On September 13, 2016, another FBI agent, posing as Matthew Brown, a representative of S&K Computer Works, gave a detailed presentation in front of Presidio County Commissioners’ Court, describing how his company could digitalize all county records and set up a cloud service accessible to the public. According to the indictment, Hernandez was responsible for putting Brown’s presentation on the Commissioners’ Court agenda that week.
The same day, Nieto met with the first undercover agent in Alpine and received $2,500. Powers said Nieto told the agent he would offer his support to ensure S&K Computer Works won the bid with Presidio County. Nieto also told the agent he could establish a similar contract with Presidio ISD and arranged a meeting for the very next day between Matthew Brown and the school’s Technology Director, Carmen Rudner.
Powers told the court that Nieto said the city of Presidio was “too broke” to sell document management services to.
On November 9, 2016, during a public meeting of Presidio County Commissioners’ Court, Hernandez made a motion to approve that the county issue a request for proposal (RFP) for the document management services contract.
Nieto requested more money from the undercover agent at a meeting on December 15, 2016. According to the indictment, Nieto wanted $3,000 up front and another $2,500 once the contract was awarded to S&K. Powers told the court that Nieto often complained he was fed up of being an underpaid public servant. A week later, on December 22, 2016, the undercover agent mailed $3,000 in cash to Nieto.
On February 3, 2017, the undercover agent sent Hernandez an email containing wording that should be used in Presidio County’s RFP for the document management services contract. According Powers, the RFP did not completely follow the wording outlined by the undercover agent but that some of the text was used.
Powers also testified that at an April 25 commissioners’ court meeting where Hernandez and Commissioner Eloy Aranda were absent, Nieto urged the county to delay the contract vote.
The Presidio County Commissioners’ Court met on May 9 and discussed item 21 on the agenda, the county’s document management services contract. The indictment details how on this day Hernandez, along with Commissioners Aranda and Loretto Vasquez, voted to award the contract to S&K Computer Works. Commissioner Brenda Silva Bentley voted against the measure, but the motion passed.
Powers told the court that both Nieto and Hernandez helped convince Aranda and Vasquez to vote in favor of S&K Computer Works. Later that month, on May 22, the undercover agent met with Hernandez and Nieto in Alpine. According to the indictment, they discussed the vote and the undercover agent handed over their agreed payments of $10,000 to Hernandez and $2,500 to Nieto.
Nieto and Hernandez were arrested on Thursday, June 29, Nieto in Odessa and Hernandez in Midland.
Powers said that following their arrests, both allegedly admitted that what they did was wrong.
Under cross-examination, David M. Guinn Jr., defense attorney for Hernandez, asked Powers, so the FBI “lied to commissioners’ court,” you “lied to the people and taxpayers.”
“We couldn’t tell them we were FBI agents,” Powers said.
Powers said FBI agents told Presidio County Judge Cinderela Guevara about the ruse last Friday when agents descended on the courthouse in Marfa and after Nieto and Hernandez were taken into custody.
During his testimony, Powers described Nieto as a controlling power broker who preferred to work behind the scenes, citing his influence over city and county officials. He also testified that Nieto agreed to introduce the S&K undercover agent to Brewster County Judge Eleazar Cano.
Powers testified that both men had a high risk of fleeing, the border with Mexico being so close to Presidio. Kimball told the judge that Nieto presented a danger to the community due to his strong grip of influence, while Hernandez’s brother, a fugitive from U.S. justice lives in Ojinaga, Chihuahua, Mexico, across the Rio Grande from Presidio.
Kimball also said Nieto “could go to Ojinaga and (still) be a power broker” in Presidio County.
Powers said the FBI documented 233 trips Hernandez made from Presidio to Ojinaga from 2013 to 2015. Nieto made 65 trips across the river.
Nieto’s counsel, defense attorney Liz Rogers of Alpine, put four witnesses on the stand, attesting to Nieto’s character and that he wouldn’t be a flight risk: retired federal agent Hipolito “Poli” Acosta, one of the most decorated officers in the history of federal law enforcement who has since written three books about his exploits, and who grew up in Redford and Presidio and has known Nieto for many years; retired federal agent Richard Joachim, who served several tours of duty in Presidio both as a Border Patrol agent and U.S. Customs officer, who married a Presidio woman and who served on the Presidio school board with Nieto; Jose “Joe” Tavarez, an attorney, Presidio native and life-long friend of Nieto; and Father Fabian Marquez, now with the El Paso Catholic Diocese but who once served as the parish priest at Santa Teresa de Jesus Catholic Church in Presidio.
Rogers also acknowledged Nieto’s wife and four children, sitting in the court. Also in the courtroom was Nieto’s brother from Presidio, Mario Nieto.
“This is a remarkable family and (Nieto) is not a flight risk,” she said.
Other friends of Nieto and Hernandez – both from Presidio and elsewhere – were also in the audience.
Guinn placed Olivia Ortiz on the stand to say her brother – Hernandez – likewise isn’t a flight risk and that he’s lived on the same street as hers in Presidio for many years.
She also testified that the defendant isn’t like their fugitive-from-justice brother, and that he would stay in Presidio and fight the charges against him.
Also taking the stand as character witnesses for Hernandez were a longtime friend, Teodoro Escontrias, and a former student of Hernandez, Denia Renteria.
Editor/Publisher Robert Halpern contributed to this report.
Update: Since publishing this article online the time and date set for Hernandez and Nieto’s appeal hearing was announced as Wednesday, July 19 at 9am. Both men will appear in front of U.S. Magistrate David C. Guaderrama of El Paso at the Alpine federal magistrate courthouse.
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