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The mayor of Sabana Grande, Puerto Rico has been indicted on corruption charges. FBI agents arrested Miguel Gabriel Ortiz-Vélez at his home early in the morning of July 5th. The investigation has been a joint effort between the FBI and the U.S. Department of Education.
Here’s what you need to know.
1. Ortiz-Vélez Faces Several Charges Including Fraud and Money Laundering
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Miguel Gabriel Ortiz-Vélez
Prosecutors say Ortiz-Vélez is accused of conspiring to steal federal funding from the Puerto Rico Department of Education. They say this was done by fraudulently obtaining contracts with the government agency.
According to a press release from the U.S. Attorney’s Office of Puerto Rico, a federal grand jury made the decision to indict Ortiz-Vélez on July 2nd. The charges include:
• 2 counts of theft of government money and property
• 1 count of conspiracy to commit wire and mail fraud
• 2 substantive counts of mail fraud
• 1 count for money laundering
The two Department of Education contracts were valued at a combined sum of nearly $3 million. If convicted, Ortiz-Vélez may be ordered to pay that money back.
2. Prosecutors Identified a Second Alleged Conspirator
Irving Riquel Torres-Rodríguez
According to the indictment, Ortiz-Vélez is accused of conspiring with businessman Irving Riquel Torres-Rodriguez. Rodriguez is the owner and president of the Administrative Environmental And Sports Consultant Corporation, which is based in San Juan. Based on information from his LinkedIn account, Rodriguez started the company in 2008. He states that his experience includes consulting on educational services, economic development, human resources and environmental topics.
Prosecutors say Torres-Rodriguez previously pleaded guilty in two different cases, and no new charges were announced against him. The indictment against Ortiz-Velez alleges that the two men worked together to obtain the Department of Education contracts. Part of the acquired funds would allegedly go to Torres-Rodriguez’s company. Some of the money would also reportedly go to the Municipality of Sabana Grande.
The U.S. Attorney’s Office accuses Ortiz-Vélez of taking advantage of his post as Mayor of Sabana Grande to obtain the education funding. Prosecutors say he misrepresented the Municipality’s “ability to perform the activities and the scope of the activities subject to the proposals.” According to the press release, Ortiz-Vélez subcontracted with AESC and another unnamed company (referenced as Company F by prosecutors) without informing the Puerto Rico Department of Education. The alleged agreement was that AESC would get 40% of all profits and Company F would get 60%.
3. Indictment: Ortiz-Vélez is Accused of Misusing Net Proceeds From the Contracts
Miguel Gabriel Ortiz-Velez, Mayor of Sabana Grande in Puerto Rico
Prosecutors say the defendant misrepresented how much money the planned projects were going to cost. There were two contracts awarded from the Department of Education: Verano Educativo and Desarrollo Contínuo. The first project ended up costing approximately $221,747 to run. But the Municipality obtained net proceeds valued at more than $363,000. More than $549,000 more reportedly went to AESC.
Prosecutors say the Municipality, AESC and Company F netted even greater profits with the second project. The three entities are accused of splitting approximately $1,330,612 in profits. The actual cost of the program was less than $440,000.
The alleged scheme took place over the course of three years, beginning in 2013. Prosecutors also accuse Ortiz-Vélez of accepting more than $22,000 in cash payments from Torres-Rodriguez and his consulting company.
4. The Head of Ortiz-Vélez’s Political Party Quickly Condemned Him
Hector Ferrer, president of the Popular Democratic Party
Ortiz-Vélez is associated with the Popular Democratic Party. The president of the party, Hector Ferrer, announced through written statements that disciplinary actions had already been underway before Ortiz Velez was arrested. The news site El Nuevo Dia published Ferrer’s statement. An English translation of the statement reads, “I have immediately asked the Secretary General, Charlie Delgado, to initiate the disciplinary proceedings in accordance with the party’s regulation to separate Mayor Miguel Ortiz from his political positions. In the PPD we have always been consistent in acting according to the laws and regulations that apply. The message must be clear. Zero tolerance for corruption.”
5. Ortiz-Vélez Reportedly Earned Substantially More Money Than the Community He Served
According to Puerto Rico Decide 2016, Ortiz-Vélez previously worked in an advertising agency before beginning his public service career in 1993. He earned a Master’s degree from the Interamerican University of Puerto Rico. He reportedly earns an annual salary of $66,000. The public profile also lists his alleged assets and debts. You can see the profile here.
Sabana Grande is a municipality in the southwest corner of Puerto Rico. The population in 2017 was just under 23,000 people. The median household income, which according to the U.S. Census Bureau is less than $15,000 per year, is significantly lower than the rest of the territory.