Bankers plead guilty to
fraud, bribery in FBI probe
12/22/2007
By Ramon Bracamontes and
Tammy Fonce-Olivas / El
Paso Times
Two investment
bankers who were
financial advisers to
almost every government
entity in El Paso
pleaded guilty Friday to
fraud and bribery
charges, increasing to
six the number of people
who have been convicted
in the ongoing public
corruption
investigation.
Roberto Gerardo
"Bobby" Ruiz pleaded
guilty to four counts
combined of conspiracy
to commit mail fraud,
wire fraud and a scheme
to bribe elected
officials. He is the
former managing director
for the Bear Stearns
Cos. office in Dallas.
Christopher Chol-Su
Pak, who was known in El
Paso as Chris Pak,
pleaded guilty to
engaging in a scheme to
bribe an elected El Paso
County commissioner. Pak
is a former vice
president for the Bear
Stearns office in
Dallas.
The name of the
county commissioner whom
Pak attempted to bribe
was not released but is
identified as a man,
according to a U.S.
attorney's news release.
Neither Ruiz nor Pak
could be reached for
comment.
Both pleaded guilty
Friday afternoon before
U.S. District Judge
Frank Montalvo in El
Paso. The hearing, like
others in the public
corruption case, was
closed to the public. It
lasted less than an
hour.
Russell Sherman, Bear
Stearns' spokesman in
New York City, said he
was not aware of
Friday's events, but
said Ruiz has not worked
for the company since
June, when officials
learned he was a target
of the investigation.
Sherman would say
only that "Bear Stearns
is a leader in the public finance industry, and we hold our company and our employees to the highest business and ethical standards. Bear Stearns is not a subject of the inquiry; we will continue to cooperate with the authorities regarding this matter."
Records from the Texas Bond Review Board dating from September 1999 show that Bear Stearns has been the primary underwriter of dozens of local bond issues totaling more than $1.8 billion.
The charges against Ruiz, according to the news release, are related to his interactions with El Paso Independent School District trustees, El Paso Community College board members, City Council members and county commissioners. No details or additional names were released. Legal documents that would detail the criminal activity were not released Friday.
According to a news release, Ruiz allegedly devised a scheme to "bribe elected members of those respective boards and councils to secure their votes for certain vendors seeking to do business with the various public entities."
City Chief Financial Officer Carmen Arrieta-Candelaria said the city used Bear Stearns and Ruiz for years, but quit doing business with the company when its name came up in connection with the FBI investigation in June.
"We have not heard from the company since that time," she said. "Now that he's pled guilty, I'm certain that in the next few weeks, we will be re-evaluating our relationship with the company."
As a bond underwriter, she said, Bear Stearns arranges the sale of bonds with buyers, and if it cannot do so, the company will buy those bonds itself.
"That's why you want a strong company that has the financial strength to buy the bonds," Arrieta-Candelaria said.
She said the city had done business with Bear Stearns for at least 10 years and had a positive working relationship with Ruiz.
"He was here before anyone was interested in El Paso," she said. "When the El Paso school district went out for that huge bond issue and then there was another large one by the city in 2000, more underwriters started taking interest in El Paso."
Bear Stearns and Ruiz, she said, developed a close working relationship with the city and other government entities because that was the only company interested in handling smaller bond issues.
"That's probably why they got more business here than anyone else -- because they were first," she said.
EPISD spokesman Luis Villalobos issued a statement on behalf of the school district after the pleas by Ruiz and Pak:
"The district is incensed to learn of these crimes. The individuals and their former employer are not directly related to EPISD's bid process or financial adviser contract; rather, the individuals worked for a brokerage firm that has purchased bonds from the district in the past. That firm was not involved in the district's latest bond sale."
Bear Stearns also does not have any current contracts with the county.
County Judge Anthony Cobos and Commissioners Luis Sariñana and Miguel Terán could not be reached for comment, nor could anyone from the county auditor's office.
County Commissioners Dan Haggerty and Veronica Escobar said they didn't know Ruiz.
City officials also said that Bear Stearns is not doing any work for the city, but has in the past.
El Paso Community College officials could not be reached for comment, and it is unknown whether Bear Stearns has any contracts with the college right now.
Though the federal "information" used to describe the charges against Ruiz and Pak was not available late Friday, Ruiz and Bear Stearns have been named, mentioned or implicated in other public documents related to the ongoing investigation that began in 2005.
Ruiz and Bear Stearns are named in the federal search warrant used by FBI agents in May to search the county offices of Cobos, Terán and Sariñana. Agents on that day took dozens of records from the offices.
In June, when John Travis Ketner, Cobos' chief of staff, pleaded guilty to federal conspiracy charges, he implicated 17 other county officials, individuals and companies of bribery and a wide array of other illegal activities. Although they are not named, the co-conspirators implicated by Ketner are easily identifiable. John Co-Conspirator 10 is believed to be Ruiz, and John Co-Conspirator 11 is believed to be Pak.
The Ketner "information" uses the initials "BS" to refer to a bond underwriting firm that wanted to refinance the county's debt.
In addition to Ketner entering a guilty plea, others include former commissioner Betti Flores, former EPISD trustee Carlos "Coach" Cordova and architect Bernardo Lucero.
June 8, 2007: John Travis Ketner, former chief of staff for County Judge Anthony Cobos, pleaded guilty to two counts of conspiracy to commit mail fraud, one count of conspiracy to commit wire fraud and one count of conspiracy to commit bribery. In the process, he implicated 16 others, including county officials, individuals and companies in a court document known as an "information." The document describes how county officials allegedly sought bribes from vendors, received secret campaign donations, met in a bathroom and restaurants, and broke into a computer in an attempt to rig court cases. Among those thought to have been implicated are Cobos, County Commissioners Miguel Terán and Luis Sariñana, District Clerk Gilbert Sanchez and former County Commissioner Betti Flores.
July 6, 2007: Flores pleaded guilty to six counts of conspiracy to commit mail or wire fraud by trading her votes as county commissioner for money. She is the only one identified in documents associated with Ketner's guilty plea who has been charged with any wrongdoing. The other unnamed co-conspirators linked to Ketner's case have denied any wrongdoing.
Aug. 17, 2007: Bernardo Lucero Jr., vice president of Lucero/Melendez Architects, pleaded guilty to conspiracy to commit mail fraud and conspiracy to make false statements to obtain credit. He was accused of influencing an unnamed El Paso Independent School District trustee by securing a $25,000 loan for the trustee using illegal practices. The unnamed trustee is believed to be Sal Mena, who resigned from the board in August. Mena, who has denied the allegations, has not been charged or arrested.
Nov. 28, 2007: Carlos "Coach" Cordova pleaded guilty to a count of conspiracy to commit mail fraud, wire fraud and the deprivation of honest services. Cordova was accused of exchanging his vote on the school board for money. The vendors or Cordova's uncharged co-conspirators were not identified in public documents outlying his charges.
Dec. 21, 2007: Roberto Gerardo Ruiz, better known as Bobby Ruiz, former managing director for the Dallas office of Bear Stearns, pleaded guilty to four counts of conspiracy to commit mail, wire fraud and a scheme to defraud the citizens of their right to the honest services of elected officials of the El Paso Independent School District, the El Paso Community College District, the city of El Paso and members of El Paso County Commissioners Court by seeking to bribe elected members of those boards and councils to secure their votes for certain vendors seeking to do business with the various public entities.
Dec. 21, 2007: Christopher Chol-Su Pak, also known as Chris Pak, former vice president of the Dallas office of Bear Stearns, pleaded guilty to engaging in a scheme to bribe an elected El Paso County commissioner in an effort to secure his vote for a specific vendor seeking to do business with the County of El Paso.
None of those who have pleaded guilty have been sentenced, and jail records do not show any of them having ever been arrested. All four pleaded guilty using a federal "information" document.
Bear Stearns background
Bear Stearns Cos. is in the midst of some turmoil itself:
First-ever loss: Thursday, Bear Stearns, the nation's fifth-largest U.S. investment bank, posted the first loss in its 84-year history because of a bigger-than-expected write-down in its mortgage portfolio. Bear Stearns took a $1.9 billion write-down in the quarter ended Nov. 30 as its mortgage-backed securities continued to lose value amid the global credit crisis. That was much larger than the $1.2 billion it expected in November.
Bonuses eliminated: Bear Stearns' fiscal fourth-quarter loss, and the collapse in the summer of two hedge funds it managed, prompted Chief Executive Jimmy Cayne to announce this week that he would pass on his 2007 bonus. Members of the company's executive committee also will not receive year-end bonuses.
Layoffs: Bear Stearns has undergone three waves of layoffs since the two hedge funds collapsed. About 1,500 jobs have been eliminated from its staff of around 15,500.
Legal actions: The company, one of the nation's biggest underwriters of mortgage-backed bonds, may be the Wall Street investment bank most directly exposed to this year's credit squeeze. It faces a number of legal actions related to the funds' collapse, including a lawsuit filed this week by investor Barclays PLC and one filed Friday by FIC LP.
