Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez CAUSE NO. C-0373-17—E HIDALGO COUNTY DRAINAGE DISTRICT NO. IN THE DISTRICT COURT l 275th VS. JUDICIAL DISTRICT INTEG CORPORATION, GODFREY GARZA, JR., VALLEY DATA COLLECTION SPECIALISTS, INC., Q. GARZA, GODFREY GARZA, AND JONATHAN GARZA III, ANNIE HIDALGO COUNTY, TEXAS PLAINTIFF’S FIFTH AMENDED PETITION Plaintiff Hidalgo County Drainage District No. and exemplary damages, as well as equitable Garza, Jr., relief, Valley Data Collection Specialists, 1 files this lawsuit, seeking compensatory from Defendants Integ Corporation, Godfrey Inc., Annie Q. Garza, Godfrey Garza, III, and Jonathan Garza. I. DISCOVERY CONTROL PLAN 1. Plaintiff intends t0 conduct discovery pursuant t0 a level three discovery control plan. II. PARTIES governmental entity located in Hidalgo County, Texas. 2. Plaintiff is a 3. Defendant Integ Corporation is a Texas corporation With its principal office in Hidalgo County, Texas. 4. Defendant Valley Data Collection Specialists, Inc. is a Texas corporation with its principal office in Hidalgo County, Texas. 5. Defendants Godfrey Garza, Jr., Annie Q. Garza, Godfrey Garza, III, and Jonathan Garza are Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez individuals residing in Hidalgo County, Texas. III. VENUE 6. Venue is proper in Hidalgo County, Texas because all or a significant part of the acts and omissions giving rise t0 this lawsuit occurred in the county, and because the Defendants reside or have their principal offices in the county. IV. FACTS About Hidalgo County 7. The United is States Government defines Hidalgo County “persistently poor” if 20 percent or thirty years as “persistently poor. more of its population ”1 A county lived in poverty over the last (measured by the 1980, 1990, and 2000 decennial censuses and 2007-11 American Community Survey 5-year estimates)? Most counties Only 11.2 are not poor. percent of all counties nationwide meet the definition.3 8. Because 1 See it is poor, Hidalgo County struggles t0 meet its citizens’ basic needs.4 USDA Economic Research Service, ERS County Typology Codes, 2015 Adding to Edition, https://www.ers.usda.gOV/topics/rural-economy-population/rural-p0Verty-we11-being/geographyof—poverty/. 2 USDA Economic Research Service, Geography ofPoverty, Rural Poverty & Well Being, https://www.ers.usda.gOV/topics/rural-economy-population/rural-p0Verty-we11-being/geographyof—poverty/. 3 Id. 4 See, e.g,, Chris McGreal, America American Dream, The Guardian, November ’S Poorest Border Town: 19, N0 Immigration Papers, N0 201 5, https://Www.theguardian.com/us-news/ZO1 5/nov/ 1 9/americas-poorest-border—town-no-immigrati on-papers—no-american-dream. Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez infrastructure its demands, Hidalgo County’s population more than doubled from 383,545 in 19905 to 774,769 in at 20 1 0.6 The Government estimates Hidalgo County’s 20 1 6 population 828,334.7 Hidalgo County Addresses Flooding 9. Tropical events and severe storms cause frequent a already distressed community.8 what is now known Made Plaintiff System (“MDS”) 1 (“HCDDI ” implement the NCRS drainage plan. But without federal I 0fthe proj ect.9 It therefore County’s flooding problems.” 5 agricultural as the Natural Resource Conservation Service Hidalgo County Drainage District N0. fund Phase home, and in response t0 Hurricane Beulah, a three phase plan t0 create a Master Drainage 10. street, commissioned in in 1969 study by (“NCRS”) proposed a Hidalgo County. 0r “the District”) wanted to dollars, i111 flooding it could not afford t0 fully 974 a interim plan to address the Voters approved a $26 million bond issuance in 1975.“ United States Bureau, I990 Census: Population ofTexas Counties, Census of Population and Housing, available at https://www.tsl.texas.gov/ref/abouttX/popcnty1 .html. 6 United States Census Bureau, 201 0 Census, Community Facts, https://factfinder.census.g0V/faces/naV/jsf/pages/community_facts.Xhtml?src=bkmk. 7 United States Census Bureau, 2012—201 6 American Community Survey 5- Year Estimates, Community Fact, https://factfinder.census. gOV/faces/tableservices/j sf/pages/productview.xhtml?pid=AC S_1 6_5YR _BOlOO3&prodType=table. 8 See Turner, Collie, & Braden, Inc., Engineering Report t0 Hidalgo District No. I Flood Protection Plan for Hidalgo County, Texas, , County Drainage September 1997, available at: http ://Www.twdb.texas.gOV/publications/reports/contracted_reports/doc/974832 9 1 6 .pdf. See Hidalgo County Drainage District N0. 1, History oindaZgo County Drainage District N0. I About the District, http://hcdd1 .org/page/History_of_District. , 1° “ Id. Id. Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez Construction ofMDS Phase I started in 1981 and was eventually finished With local money only.” 11. Looking t0 in the ‘805 Phase II, State and local stakeholders commissioned more studies of the and ‘90s” Those studies culminated study zeroed in on two maj or problems: the in the MDS ’ s MDS 1997 Collie and Braden report.” The capacity and the lack 0f adequate lateral drainage t0 access the system.” 12. The District completed its debt for bond service on the Phase I four million dollars how to Godfrey Garza, Godfrey Garza, he was from, 18. He Jr. hails from Jr. execute Phase II of the Detroit, Michigan and moved Mr. Garza, Manager. In hiring Godfrey Garza, District’s best interest. Jr. Drainage to the Rio Grande Valley when Up Jr., Melden & Hunt in McAllen. in 0r around 1996 as the District’ s started his career at the District trusted until in or to act at all times in the Jr.’s operation. however, in October 0f 2000, Godfrey Garza, District: that him around 2006 or 2007, Godfrey Garza, management consisted only of maintenance and that, District graduated from McAllen High School and attended, but did not graduate UT Pan American. Before MDS. Becomes Manager 0f the He cycled through another firm before landing at HCDDl 14. 200 1. With about from the issue and another five million dollars from the County, the left District started looking at 13. ‘75 issue in Jr. made a curious pitch to the he resign as manager and that his company, Integ Corporation, be ‘2 Id. 13 See Turner, Collie, District N0. 1. 14 Id. 15 Id. & Braden, Inc., Engineering Report t0 Hidalgo County Drainage Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez hired in his place. This was Godfrey Garza, Jr.’s first violation of the duties he owed the District. It was not in the District’s best interest to have a supposed “independent contractor” as opposed to an employee of the District. At least not when the “independent” contractor was not itself going to hire personnel, invest in a business, or risk its own losses in managing the district. 15. On October 3, 2000, Godfrey Garza, Jr. went from a earning a salary of $71,715 as an employee to taking home total compensation of $82,220 overnight. 16. Nothing about Godfrey Garza, Jr.’s relationship with the District, however, changed after the alleged transition to contractor. He remained an in-fact employee: (1) the District supplied all Garza’s and Integ’s “tools of the trade” (computers, clerical help, financial management, personnel); (2) Integ/Godfrey Garza, Jr. made no investment relative to the District; (3) Integ/Godfrey Garza, Jr.’s opportunity for profit and loss was determined by and dependent on the District; (4) Integ/Godfrey Garza, Jr. lacked any particularized skill or initiative required in performing the job; (5) the relationship lasted fourteen years; (6) Godfrey Garza, Jr. maintained and used a District email address to conduct District business; (7) in signing letters and emails, Godfrey Garza, Jr. held himself out individually as the District’s director, and did not include Integ on his signature blocks; (8) Godfrey Garza, Jr. paid no wages to anyone under his supervision in relation to District business; (9) Integ had no licensed engineers and used the District’s; and (10) Godfrey Garza, Jr. was not free to determine the manner in which he did his work. 17. Godfrey Garza, Jr.’s guaranteed compensation continued to rise: Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez Year Compensation“ 2002 $97,200 2004 $121,200 2006 $123,192 2007 $123,192 plus 1.5% of actual construction costs of Phase Not satisfied with 18. a handsome around February of 2007. Phase II in return for hoodwinked Nevermind affairs. to Jr.’s told the board he construction was already t0 fee The pitch in or manage construction 0f MDS costs. firm See Ex. A. representative was a “good deal” contractually obligated to tell Jr. the board for the District. Id. manage Phase District trusted Garza, Garza, II Jr. the District’s called for others As Will become was severely misplaced. 2007, Godfrey Garza, Jr. represented to the District: a. That he would take 1.5% of actual construction costs related t0 Phase b. That an outside auditor would provide “checks and balances” 0n the arrangement. c. That ifin three years the contracts 0r the bonds were not completed, and his contract get paid “only for These intentional misrepresentation were ‘6 / wanted made another dubious that the contracts eventually entered into for On or about February 6, 20. Jr. local engineering management was not renewed, he would Garza Godfrey Garza, perform construction management. evident, that trust 19. salary, by having a that Garza, Jr. Nevermind II 1.5% of actual project construction the board Godfrey Garza, He MDS These amounts only reflect amounts the false. what was The only. built.” District justifiably relied District paid for management 0f the Integ earned tens of thousands of dollars over the years under side consulting agreements. II on the District. Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez representations t0 its detriment and suffered damages as a result. The 2006 Bond Election 2 1. In 0r around 2005, the District looked into going forward with cost the to was almost $500 million. Recognizing that Board authorized a bond referendum fund both Phase for was too much Naie" to bear for local taxpayers, one hundred million and other proj ects. The Phase II MDS Phase II. The estimated dollars. The bonds were proj ects were: II Date Started Date Ended 10/3 1/2006 N/A W-Ol-OO (Weslaco Drain) 3/13/2017 N/A J-02-00 (Monte Cristo) 10/3 1/2006 N/A Alamo Drain 3/2 1/2007 2008 McAllen-Pharr South Drain 9/27/2005 N/A Jackson Drain 1 1/7/2006 N/A Penitas Drain 10/ 1 3/2005 N/A Goodwin Drain 7/5/2005 Unknown, Project Completed by TxDOT Linda Vista Drain 7/5/2005 Unknown, Proj ect Completed by TXDOT 9/27/2005 20 1 0 Detention Pnds N/A N/A Raymondville Drain 2000 N/A W-06-00 (La Mission 22. Inlet Villa) Drain Each project needed to be planned and engineered. In all cases Where “Date Ended” is “N/A,” n0 actual construction ever happened. Significant engineering work costing millions of dollars, however, was done on some of the projects. The Border Wall 17 Collectively hereinafter, the “Phase II projects.” Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez 23. In the spring of 2007, federal government workers alerted property owners across the Rio was going owners’ land.” The Department ofHomeland Security (“DHS”) had only a year t0 build 60 miles of fence in the Grande Valley that a border fence t0 cut across the Valley.” The rush to build the fence turned into a gold rush for Godfrey Garza, 24. While the District had earmarked some 0f the 2006 bond funds those levee improvements were separate and apart from the bond funds percentage of ($ 10 million) were supposed t0 go for levee improvements, MDS Phase to levee Jr. II. Only ten percent of improvement. Even though the funds dedicated t0 levees was 10w, there was no doubt that Hidalgo total County’s levees needed work. 25. The interests DHS DHS appeared t0 agreed t0 improve a series 0f levees and build structures. Id. pay the to the of the District and the its intersect. much After fence on top of the newly fortified The levee improvements would be funded both by DHS and the District’s share, DHS project. Godfrey Garza, Jr. negotiation, recommended re-routing the District. To 2006 bond money This federal project consisted of the following levee segments: 1. DHS 0-4A 2. DHS 0-4C 3. DHS 0—5 Kiah Collier and Julian Aguilar, The Taking: How thefederal government abused its power t0 seize propertyfor a borderfence, The Texas Tribune, Dec. 14, 18 T. Christian Miller, 2017, https ://www.texastribune org/20 1 7/ 1 2/ 1 4/b order-land-grab—governm ent-abused—power—seize-pro . perty-fence/ 19 . became a T. Christian Miller, multimillionaire amid Kiah Collier and Julian Aguilar, the rush t0 build a borderfence, How a South Texas bureaucrat The Texas Tribune, Dec. 29, 2017, https ://Www.texastribune 0rg/20 1 7/ 1 2/2 9/how-south-texas-bureaucrat-became-multimillionaire-a . mid—rush—build—bor/ Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez The Illicitly 26. 4. DHS 0—6A 5. DHS 0-6BC 6. DHS 0—7 7. DHS 0-8 8. DHS 0-9 PHI 9. DHS 0-9 PH II 10. DHS 0—1020 First Scheme t0 Defraud the Getting Paid 0n Projects and District Work t0 Which the Contract Did Not Apply After the ‘06 bond funds issued, preliminary engineering Phase earlier for the II proj ects. It became pass before construction started. Under costs” means its clear that, for Garza wanted to would not make make money. “actual” construction costs really work began on the dates stated many of the proj ects, years would plain and ordinary meaning, “actual construction costs for building something tangible. construction costs” Garza 27. and the Federal Government: his Without money being spent on “actual commission. He So he lied. meant “all costs.” told the District Financial He wanted Officer that a piece of the engineering work and the building work. 28. On or about April 11, 2008, Integ and Godfrey Garza, Jr. invoiced the District for $1 19,861.72. EX. B. The invoice charged 1.5% 0f costs, most 0f which were not actual construction costs. In submitting the invoice, Integ, and Godfrey Garza, US Postal Jr. caused a check Service for the invoice amount within a few days 0f the to be mailed through the 2° Collectively hereinafter, the “federal project,” the “federal levee proj ect,” or the project.” “DHS Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez invoice date. Integ, Annie Garza and/or Godfrey Garza, Jr. delivered the invoice that caused the check to be mailed. 29. On or about May 28, 2008, Integ and Godfrey Garza, Jr. invoiced the District for $66,442.95. Ex. C. The invoice charged 1.5% of costs, most of which were not actual construction costs. In submitting the invoice, Integ, and Godfrey Garza, Jr. caused a check to be mailed through the US Postal Service for the invoice amount within a few days of the invoice date. Integ, Annie Garza and/or Godfrey Garza, Jr. delivered the invoice that caused the check to be mailed. 30. On or about September 26, 2008, Integ and Godfrey Garza, Jr. invoiced the District for $73,214.00. Ex. D. The invoice charged 1.5% of costs, most of which were not actual construction costs. In submitting the invoice, Integ, and Godfrey Garza, Jr. caused a check to be mailed through the US Postal Service for the invoice amount within a few days of the invoice date. Integ, Annie Garza and/or Godfrey Garza, Jr. delivered the invoice that caused the check to be mailed. 31. On or about February 25, 2009, Integ and Godfrey Garza, Jr. invoiced the District for $197,528.00. Ex. E. The invoice charged 1.5% of costs, most of which were not actual construction costs. In submitting the invoice, Integ, and Godfrey Garza, Jr. caused a check to be mailed through the US Postal Service for the invoice amount within a few days of the invoice date. Integ, Annie Garza and/or Godfrey Garza, Jr. delivered the invoice that caused the check to be mailed. 32. On or about February 25, 2009, Integ and Godfrey Garza, Jr. invoiced the District for $1,673,434.93. Ex. F. The invoice charged 1.5% of total costs, as opposed to actual construction costs, for work done on the federal project. In submitting the invoice, Integ, Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez Annie Q. Garza, and Godfrey Garza, Jr. caused a check to be mailed through the US Postal Service for the invoice amount within a few days of the invoice date. 33. On or about May 21, 2009, Integ and Godfrey Garza, Jr. invoiced the District for $55,311.77. Ex. G. The invoice charged 1.5% of costs, most of which were not actual construction costs. In submitting the invoice, Integ, and Godfrey Garza, Jr. caused a check to be mailed through the US Postal Service for the invoice amount within a few days of the invoice date. Integ, Annie Garza and/or Godfrey Garza, Jr. delivered the invoice that caused the check to be mailed. 34. On or about May 21, 2009, Integ and Godfrey Garza, Jr. invoiced the District for $765,719.20. Ex. H. The invoice charged 1.5% of total costs, as opposed to actual construction costs, for work done on the federal project. In submitting the invoice, Integ, and Godfrey Garza, Jr. caused a check to be mailed through the US Postal Service for the invoice amount within a few days of the invoice date. Integ, Annie Garza and/or Godfrey Garza, Jr. delivered the invoice that caused the check to be mailed. 35. On or about June 24, 2009, Integ and Godfrey Garza, Jr. invoiced the District for $226,976.17. Ex. I. The invoice charged 1.5% of total costs, as opposed to actual construction costs, for work done on the federal project. In submitting the invoice, Integ, and Godfrey Garza, Jr. caused a check to be mailed through the US Postal Service for the invoice amount within a few days of the invoice date. Integ, Annie Garza and/or Godfrey Garza, Jr. delivered the invoice that caused the check to be mailed. 36. On or about January 6, 2010, Integ and Godfrey Garza, Jr. invoiced the District for $244,858.67. Ex. J. The invoice charged 1.5% of total costs, as opposed to actual construction costs, for work done on the federal project. In submitting the invoice, Integ, Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez and Godfrey Garza, Jr. caused a check to be mailed through the US Postal Service for the invoice amount within a few days of the invoice date. Integ, Annie Garza and/or Godfrey Garza, Jr. delivered the invoice that caused the check to be mailed. 37. On or about June 15, 2010, Integ and Godfrey Garza, Jr. invoiced the District for $111,921.43. Ex. K. The invoice charged 1.5% of total costs, as opposed to actual construction costs, for work done on the federal project. In submitting the invoice, Integ, and Godfrey Garza, Jr. caused a check to be mailed through the US Postal Service for the invoice amount within a few days of the invoice date. Integ, Annie Garza and/or Godfrey Garza, Jr. delivered the invoice that caused the check to be mailed. 38. On or about November 23, 2010, Integ and Godfrey Garza, Jr. invoiced the District for $24,756.77. Ex. L. The invoice charged 1.5% of total costs, as opposed to actual construction costs, for work done on the federal project. In submitting the invoice, Integ, and Godfrey Garza, Jr. caused a check to be mailed through the US Postal Service for the invoice amount within a few days of the invoice date. Integ, Annie Garza and/or Godfrey Garza, Jr. delivered the invoice that caused the check to be mailed. 39. On or about June 21, 2011, Integ and Godfrey Garza, Jr. invoiced the District for $29,083.22. Ex. M. After credits, the District paid $27,116.62 on the invoice. Id. The invoice charged 1.5% of total costs, as opposed to actual construction costs, for work done on the federal project. In submitting the invoice, Integ, and Godfrey Garza, Jr. caused a check to be mailed through the US Postal Service for the invoice amount within a few days of the invoice date. Integ, Annie Garza and/or Godfrey Garza, Jr. delivered the invoice that caused the check to be mailed. 40. On or about October 13, 2011, Integ and Godfrey Garza, Jr. invoiced the District for Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez $9,609.44. Ex. N. The invoice charged 1.5% of total costs, as opposed to actual construction costs, for work done on the federal project. In submitting the invoice, Integ, and Godfrey Garza, Jr. caused a check to be mailed through the US Postal Service for the invoice amount within a few days of the invoice date. Integ, Annie Garza and/or Godfrey Garza, Jr. delivered the invoice that caused the check to be mailed. 41. On or about January 20, 2012, Integ and Godfrey Garza, Jr. invoiced the District for $1,295.41. Ex. O. The invoice charged 1.5% of total costs, as opposed to actual construction costs, for work done on the federal project and non-construction costs for MDS Phase II. In submitting the invoice, Integ, and Godfrey Garza, Jr. caused a check to be mailed through the US Postal Service for the invoice amount within a few days of the invoice date. Integ, Annie Garza and/or Godfrey Garza, Jr. delivered the invoice that caused the check to be mailed. 42. From on or about September 4, 2013 to on or about January 28, 2014, Integ and Godfrey Garza, Jr. attempted to be paid approximately $84,000.00 as 1.5% compensation for the Raymondville Drain project. Ex. P. Unfortunately, while the work was related to a Phase II project, Integ and Godfrey Garza, Jr. were again trying to be paid on engineering fees instead of actual construction costs. Integ and Godfrey Garza, Jr. were told that in order to be paid the item would have to be placed on an open meeting agenda. Integ and Godfrey Garza, Jr. did not want to discuss the item at a public meeting 43. Every time Integ and Godfrey Garza, Jr. invoiced the District, they represented the invoices were true and correct, were for actual construction costs, and were related to MDS Phase II. Those representations were false, the District relied on the representations to its detriment, and the District suffered damages because of the misrepresentations. Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez 44. Every time Integ, Godfrey Garza, Jr. and Annie Garza delivered an Integ invoice to the District, they also represented the invoices were true, correct, and valid. 45. Integ, Godfrey Garza, Jr. and Annie Q. Garza caused to be placed all checks made in payment of the invoices identified above through January 20, 2012 on the District’s “consent agenda.” The “consent agenda” is a group of administrative items voted on in a block. No discussion takes place on the items individually. As District Manager, Integ and Godfrey Garza, Jr. were authorized to decide what items were placed on the agenda and whether the items were placed on the regular or consent agenda. 46. Godfrey Garza, Jr. caused all of the checks made to pay the above-identified invoices through the consent agenda. Godfrey Garza, Jr. did that knowing Directors would not look at the individual checks, and knowing he had the trust of the Directors. By placing check registers that included payments to Integ/Godfrey Garza, Jr. on the consent agenda, Godfrey Garza, Jr. and Integ represented the checks were proper in all respects and in payment of valid debts. These representations were false. 47. It is important to note here that government operates through a vast group of hardworking public servants. A governing body provides oversight but, at the end of the day, the governing body has to trust its managers and rely on its managers’ judgment. If a governing body had to review every administrative matter and check, the body would never be able to get any actual policy work done. 48. Beyond placing checks on the consent agenda, Integ and Godfrey Garza, Jr. directed District staff to procure his checks in a way that would avoid detection by the county auditor. Specifically, in or around 2007, he specifically said he did not want Integ’s checks reviewed by the county auditor. Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez The Second Scheme to Defraud the District and Federal Government: Bribery Through Valley Data 49. Valley Data Collection Services, Inc. (“VDCS”) registered as a corporation with the Texas Secretary of State on June 24, 2004. The stated aim ofVDCS was to perform data collection used by surveyors and other persons interested in land parcels. At its inception, that could be Jonathan Garza (“Jonathan Garza”) and Godfrey Garza, Garza, III”) owned VDCS. Ownership was transferred (Godfrey Garza, 50. The real machine. Jr.’s Annie Garza (“Annie Q. Garza”) purpose 0f VDCS eventually turned t0 a kickback vehicle and As manager, Integ/Godfrey Company-Houston, (collectively, “DEC”) Jr.’s Garza, Jr. LLC and disclose that his family’s negotiated prime contracts for the District Dannenbaum Engineering Company-McAllen, LLC VDCS was hired; or (2) that VDCS was owned by Godfrey Integ and Godfrey Garza, company would be paid on affirmative duty to disclose they contracted With VDCS Jr. had an affirmative duty District projects. and that VDCS Jr.’s family. Between 2006 and 2014, VDCS sent the following invoices“: Date Amount Contractor Project 6/16/2006 $7,060.00 Tedsi Mile 6 9/7/2006 $7,060.00 Tedsi Mile 6 21 laundering VDCS as a subcontractor 0n several District proj ects. Nobody hired immediate family. Godfrey Garza, money Dannenbaum Engineering Company, Dannenbaum Engineering disclosed to the District: (1) that 51. (“Trey Garza” or “Godfrey wife) in 0r around 2012. With engineering firms. Garza, to III A11 invoices are attached as Exhibit P. DEC to had an was owned by Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez RR Crossing 10/3 1/2006 $3,662.80 Tedsi Canton 11/2/2006 $36,239.20 Tedsi Trenton Road 11/30/2006 $ 102,060.00 Tedsi J-02 11/30/2006 $76,239.80 Tedsi W-Ol La 12/29/2006 $29,160.00 Tedsi Monte Cristo 2/7/2007 $ 14,580.00 Tedsi Monte Cristo 2/1 5/2007 $60,991 .84 Tedsi W-Ol La Villa 2/20/2007 $ 1 5,274.96 Tedsi W-Ol La Villa 4/25/2007 $8,781 .00 Tedsi Not Stated 4/30/2007 $39,823.00 Tedsi Consulting 6/ 1 9/2007 $ 1 7,067.00 Tedsi W-06 7/30/2007 $26,505.00 Tedsi Mile 2 9/12/2007 $1 13,500.00 DEC Common Levee 10/1 1/2007 $ 10,500.00 L&G Common Levee 11/27/2007 $21,000.00 L&G Phase 11/28/2007 $1 13,500.00 DEC Common Levee 12/ 1 2/2007 $ 1 5,250.00 L&G Common Levee 1/9/2008 $22,000.00 Tedsi Monte 1/29/2008 $4,000.00 Tedsi La 2/1 8/2008 $22,000.00 Tedsi Monte 3/20/2008 $2,500.00 Tedsi Weslaco Drain 3/3 1/2008 $ 12,500.00 L&G Levee 4/22/2008 $5,500.00 L&G 0-7 4/22/2008 $6,500.00 L&G 0-8 4/30/2008 $5,000.00 L&G 10 4/30/2008 $7,750.00 L&G 09 5/13/2008 $2,000.00 L&G 8 5/13/2008 $2,500.00 L&G 9 II Villa and J-02 Levee Cristo Villa Cristo Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez 5/15/2008 $1,000.00 L&G 7 5/19/2008 $1,500.00 L&G 10 6/16/2008 $2,200.00 DL 0-7A 6/16/2008 $3,575.00 DL 0-9a 6/16/2008 $5,500.00 DL O-IOA 6/16/2008 $1 1,000.00 L&G 6 6/20/2008 $13,750.00 DL 0-6B 6/20/2008 $21,175.00 DL 0-6C 6/20/2008 $71,225.00 DL 0-6A 4/7/2009 $41,000.00 Tedsi Mile 2 5/21/2009 $4,600.00 Tedsi Mile 2 9/23/2009 $1,000.00 L&G Pump House 2/26/2010 $29,525.76 Tedsi J09 3/3 1/2010 $84,522.24 Tedsi J09 4/27/20 1 0 $5,248.00 Tedsi Bentsen Palm 5/26/2010 $25,344.00 Tedsi J—09 8/6/2010 $15,000.00 Tedsi J-09 10/30/2010 $50,200.00 Tedsi J-09 11/30/2010 $16,300.00 Tedsi J-09 1/19/2011 $64,000.00 Tedsi J—09 $ 1 6,375 .00 Tedsi Edinburg 11/1 8/2011 $993.40 Tedsi J-09 11/18/2011 $1,293.40 Tedsi J-09 10/3 0/201 1 WWTP 1/3 0/201 1 $ 1 3, 1 00.00 Tedsi Edinburg WWTP 12/22/201 1 $3,275.00 Tedsi Edinburg WWTP 12/30/2011 $37,500.00 Tedsi J-09 7/26/2012 $3,750.00 Tedsi J-09 10/3 1/2012 $4,913.20 Tedsi J—09 1 Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez 11/15/2012 $3,800.00 Tedsi Mile 2 12/28/2012 $1,600. 10 Tedsi Owassa $800.00 Tedsi J-09 $1,923.20 Tedsi Edinburg Master 1/1 1/2013 3/25/2013 Drainage Plan 3/26/2013 $16,150.00 Tedsi Mile 2 4/29/2013 $33,586.85 Tedsi S. Mercedes Drain, et al. 5/3/2013 $1 1,073.61 Tedsi IBWC Pumps 6/14/2013 $3,000.00 Tedsi IBWC Pumps 6/24/2013 $3,729.65 Tedsi S. Mercedes Drain, a1. 8/12/2013 $ 12,522.00 Tedsi Edinburg WWTP 10/17/2013 $ 12,522.00 Tedsi Edinburg WWTP 10/25/2013 $27,520.00 Tedsi J-09 11/6/2013 $13,760.00 Tedsi J-09 11/29/2013 $17,200.00 Tedsi J—09 12/6/2013 $7,667.00 Tedsi Mile 2 12/17/2013 $7,123.75 Tedsi Spanish Palms 12/30/2013 $ 10,320.00 Tedsi J-09 2/28/2014 $38,400.00 Tedsi Edinburg Master Drainage Plan 3/3 1/20 14 $ 14, 1 90.00 Tedsi Edinburg Master Drainage Plan 4/22/2014 $29,919.48 Tedsi J-09 5/2/2014 $7,000.00 Tedsi J-09 8/6/2014 $6,204.74 Tedsi J—09 et Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez 10/1 7/20 14 $6,300.00 Tedsi Mile 2 9/5/20 1 3 $ 12,896.00 LeFevre Weslaco Lateral 52. Those invoices total Godfrey Garza, ownership 53. $1,658,577.98 paid by the District’s taxpayers to a company Jr.’s family, and in which, after 2012, Godfrey Garza, Jr. owned by himself had an interest. Annie Q. Garza, Jonathan Garza, and Godfrey Garza, III all caused some or all 0fthe above invoices t0 be sent t0 the identified contractors by hand delivery, email, and/or facsimile. As owners, all three also caused checks to be mailed via the US Postal Service in payment of the invoices. 54. Godfrey Garza, never disclosed his ownership interest (nor that of his family) in Jr. even though he had contractual, listed contractors all Godfrey Garza, Jr. law, and statutory duties to do so. had contracts with the pressured and/or asked the contractors to hire The above- by Godfrey Garza, District negotiated VDCS. Godfrey argued to the District Board for the contractors to be awarded proj ects hire 55. Jr. common VDCS if they Jr. Garza, agreed to VDCS. When Godfrey Garza, Jr. recommended to the District that contracts be awarded to DEC, he represented to the District the contracts were fair and reasonable, and that entering into the contracts was in the best interests of the District. He also represented that he did not have a conflict of interest in negotiating with and selecting representations to Garza, its DEC. The District relied 0n those detriment and entered into the prime contracts in reliance 0n Godfrey Jr.’s representations. kickback t0 Godfrey Garza, Jr. As a result, District money was funneled t0 VDCS as a VDCS was paid more than fair market value for its supposed Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez services, and in fact did not render some of the services for which it charged. 56. Integ, VDCS, Annie Q. Garza, Jonathan Garza, Godfrey Garza, III, DEC, and Godfrey Garza, Jr. all conspired to make the kickbacks happen. Specifically VDCS, Annie Q. Garza, Jonathan Garza and Godfrey Garza, III all caused the above-listed invoices to be submitted when they knew the received payments were Godfrey Garza, Jr.’s kickbacks. VDCS, Annie Q. Garza, Jonathan Garza, and Godfrey Garza, III deposited the illicitly gotten money into federally insured bank accounts. They then funneled some of the money back to Integ and Godfrey Garza, Jr. disguised as rent and loan payments, in effect laundering the money. It was Integ and Godfrey Garza, Jr.’s job in the conspiracy to make sure VDCS got hired and paid above market value or that nobody looked at VDCS’s actual qualifications. 57. Integ and Godfrey Garza, Jr. intentionally bypassed District procurement requirements in order to get him and Integ paid, and to hide DEC’s, VDCS’s, AG’s, TG’s and JG’s involvement in the scheme. 58. In furtherance of the conspiracy, Godfrey Garza, Jr., DEC’s agent, and other engineering firm representatives met at Lanskey & Brat in McAllen, Texas before the prime contracts that resulted in payments to VDCS were entered into by the District. At Lanskey & Brat, Godfrey Garza, Jr. met with all firms in one room and then sometimes met one on one with individual representatives in a different part of the restaurant. During the joint sessions, Godfrey Garza, Jr. explained what projects were coming up and what work needed to be done. The individual sessions were to strike a deal on hiring VDCS and setting the stage for kickbacks in return for selection as a contractor. Before the Board ever voted on awarding a contract, Godfrey Garza, Jr. had already told the firms which projects they would be awarded. Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez and Godfrey Garza, Jr. caused a check to be mailed through the US Postal Service for the invoice amount within a few days of the invoice date. Integ, Annie Garza and/or Godfrey Garza, Jr. delivered the invoice that caused the check to be mailed. 37. On or about June 15, 2010, Integ and Godfrey Garza, Jr. invoiced the District for $111,921.43. Ex. K. The invoice charged 1.5% of total costs, as opposed to actual construction costs, for work done on the federal project. In submitting the invoice, Integ, and Godfrey Garza, Jr. caused a check to be mailed through the US Postal Service for the invoice amount within a few days of the invoice date. Integ, Annie Garza and/or Godfrey Garza, Jr. delivered the invoice that caused the check to be mailed. 38. On or about November 23, 2010, Integ and Godfrey Garza, Jr. invoiced the District for $24,756.77. Ex. L. The invoice charged 1.5% of total costs, as opposed to actual construction costs, for work done on the federal project. In submitting the invoice, Integ, and Godfrey Garza, Jr. caused a check to be mailed through the US Postal Service for the invoice amount within a few days of the invoice date. Integ, Annie Garza and/or Godfrey Garza, Jr. delivered the invoice that caused the check to be mailed. 39. On or about June 21, 2011, Integ and Godfrey Garza, Jr. invoiced the District for $29,083.22. Ex. M. After credits, the District paid $27,116.62 on the invoice. Id. The invoice charged 1.5% of total costs, as opposed to actual construction costs, for work done on the federal project. In submitting the invoice, Integ, and Godfrey Garza, Jr. caused a check to be mailed through the US Postal Service for the invoice amount within a few days of the invoice date. Integ, Annie Garza and/or Godfrey Garza, Jr. delivered the invoice that caused the check to be mailed. 40. On or about October 13, 2011, Integ and Godfrey Garza, Jr. invoiced the District for Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez had an interest. Godfrey Garza, Jr. never informed the district his family’s company was being paid on District jobs. 65. Under the 2006 contract, DEC and VDCS entered into various work authorizations(“WA”) and supplemental agreements (“SA”) to carry out the contract’s purpose. The following WA’s and SA’s were entered into and each was for surveying, topographic, and right ofway services: Contract/Agreemen Date Amount SA#1 to WA#1 11/7/2006 $199,890.27 SA#1 to WA#2 4/24/2007 $441,573.30 SA#1 t0 WA#4 8/28/2007 $280,01 1.50 SA#1 t0 WA#S 2/20/2008 $52,800.00 SA#2 to WA#S 2/20/2008 $2,600.00 SA#1 to WA#7 2/20/2008 $72,900.00 SA#2 t0 WA#7 2/20/2008 $3,645.00 SA#6 t0 WA#7 6/3/2008 $2,400.00 SA#1 to WA#8 2/20/2008 $96,000.00 SA#2 to WA#8 2/20/2008 $4,800.00 SA#1 t0 WA#9 2/20/2008 $1 16,100.00 SA#2 t0 WA#9 2/20/2008 $5,805.00 SA#6 to WA#9 6/3/2008 $1 1,928.00 SA#1 to WA#IO 2/20/2008 $72,900.00 SA#2 t0 WA#IO 2/20/2008 $3,645.00 SA#6 t0 WA#IO 6/3/2008 $6,000.00 SA#2 to WA#12 (for 6A) 5/27/2008 $77,700.00 SA#3 to WA#12 (for 6A) 5/27/2008 $3,885.00 22 The Supplemental Agreements are attached as Exhibit U. Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez SA#2 t0 WA#13 (for 6B) 5/27/2008 $15,000.00 SA#3 t0 WA#13 (for 6B) 5/27/2008 $750.00 SA#2 to WA#14 (for 6C) 5/27/2008 $23,100.00 SA#3 to WA#14 (for 6C) 5/27/2008 $1,155.00 Total: 66. $1,494,588.07 Godfrey Garza, Jr. presented every one of the above SA’s and Directors near the dates stated above and never disclosed presenting the were fair DEC’s use of VDCS transactions, recommended they be approved. and that District, that none 0f his family Jr. Board of to the In doing so, he or his family’s ownership interest in WA’s and SA’s t0 the Board, Godfrey Garza, and reasonable for the WA’s VDCS. By represented the agreements he did not have any conflict of interest in the members would receive money from the transactions. 67. 68. By signing the SA’s, DEC represented that the transactions did not cause any conflict of interest, that DEC would obtain the District’ s written authorization before paying VDCS any money, and that the transactions did not include In cruel irony, Godfrey Garza, Jr. any kickback 0r bribery monies. improperly got a percentage of the prime contractors, including DEC, that in turn was paid t0 invoices, Godfrey Garza, as a percentage of Jr./Integ represented that work done by Godfrey Garza, interest in negotiating and because Godfrey Garza, Jr. later Jonathan Garza, Annie Q. Garza and VDCS from DEC to the submitting their Godfrey Garza, Jr.’s family. directly family would benefit through funds paid to By no money would be paid by the paying inflated rates to would benefit VDCS. money paid Jr. District had an and the other contractors 1.5% and because his (some of which Godfrey Garza, III, his deal, VDCS routed back t0 Godfrey Garza, Jr. and/or Integ Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez When Integ and Godfrey Garza, Jr. presented their through sham loan and rent payments). invoices to the District, they ended up getting 1.5% of Godfrey Garza, 69. Jr. If Godfrey Garza, misrepresented Jr., not have paid on the 70. By VDCS had charged money paid to VDCS because for “actual construction costs.” DEC or Integ had disclosed their illicit relationships, Plaintiff would WA’s. presenting the SA’s to the District, mailed through the US Postal Service. DEC caused checks in payment of the SA’s to be By presenting the SA’s t0 the Board, Godfrey Garza, and Integ also caused checks in payment 0fthe SA’s Jr. all t0 be mailed through the US Postal Service. The Construction Management Scam 71. By asking the Board to pay him for construction construction management, Godfrey Garza, Jr. management and charging for later represented the services were fairly priced, reasonable, and necessary to the District. 72. In fact, Godfrey Garza, Jr. construction management. negotiated a contract With On the federal project alone, following SA’s that constituted payment t0 Contract/Agreement” DEC DEC that required Godfrey Garza, for construction Date Amount t0 WA#3 4/14/2008 $237,643.08 SA#4 t0 WA#3 4/14/2008 $213,926.85 SA#5 to WA#3 4/14/2008 $551,533.48 SA#5 to WA#4 4/14/2008 $3 1 1,058.68 SA#4 t0 WA#S 4/14/2008 $267,847.83 Attached as Exhibit U. to do presented the management: SA#2 23 Jr. DEC Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez SA#5 t0 WA#6 4/14/2008 $50,750.00 SA#4 t0 WA#7 4/14/2008 $1 12,043.25 SA#7 to WA#7 6/3/2008 $27,260.00 SA#4 to WA#8 4/14/2008 $404,600.64 SA#4 t0 WA#9 4/14/2008 $481,785.99 SA#7 t0 WA#9 6/3/2008 $14,910.00 SA#4 to WA#IO 4/14/2008 $296,520.68 SA#7 to WA#IO 6/3/2008 $21,022.60 SA#1 t0 WA#ll 4/14/2008 $44,017.90 SA#1 t0 WA#12 4/14/2008 $392,370.44 SA#1 to WA#13 4/14/2008 $80,031.33 SA#1 to WA#14 4/14/2008 $153,009.31 Total: 73. $3,660,332.06 Godfrey Garza, above. in Jr. presented these SA’s t0 the District board services. By presenting the SA’S t0 the District, checks in payment 0fthe SA’s to be sent through the to 74. or near the dates stated By doing so, he represented the SA’s were in payment ofnecessary services and not payment of duplicated SA’s at t0 the Board, Godfrey Garza, be mailed through the US In reality, Godfrey Garza, services. Jr. US Postal in the payment 0fthe SA’s Postal Service. Jr. and Integ did not perform the construction management Integ had no full time employees other than Godfrey Garza, only other employee was Annie Garza, working With the caused By presenting Service. and Integ also caused checks DEC District, Integ Jr. In fact, Integ’s who only did part time clerical work. and Godfrey Garza, Jr. In addition t0 also served as the Hidalgo Regional Mobility Authority and supposedly managed a project for the County RMA at the same Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez time. There is no way one person actually could have done all the work that Integ billed for. Godfrey Garza, Junior and Integ were paid approximately $600,000.00 for the work allegedly done for the RMA during the same time it was billing millions of dollars to the District. See Ex. Y. Godfrey Garza, Jr. Hides His Fraud 75. On or about June 3, 2014; April 16, 2013; December 31, 2011;December 31, 2013; and October 14, 2009, Godfrey Garza lied on questionnaires designed to detect fraud and conflicts of interest. Ex. W. 76. Because of those lies, the District did not detect the fraud and/or the scope of the fraud for years. 77. Plaintiff pleads that limitations and laches do not apply in this case because Godfrey Garza, Jr. has unclean hands and because he took affirmative steps to hide his misdeeds. V. CAUSES OF ACTION Count 1: Violation of the Racketeer Influenced Corrupt Organizations Act 78. Plaintiff in incorporates the foregoing by reference. 79. Integ, Godfrey Garza, Jr., VDCS, Annie Q. Garza, Godfrey Garza, III, and DEC violated 18 U.S.C. § 1962(c) by being associated with an enterprise engaged in or the activities of which affect interstate or foreign commerce to conduct or to participate, directly or indirectly, in the conduct of such enterprise affairs through a pattern of racketeering activity. 80. Integ, Godfrey Garza, Jr., VDCS, Annie Q. Garza, Godfrey Garza, III, and DEC violated 18 U.S.C. § 1962(d) by conspiring to violate § 1962(c). Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez 81. A RICO Act claim under 18 U.S.C. §§ 1962(c) and (d) requires a plaintiff to prove: (1) a person engaged in (2) a pattern of racketeering activity connected to (3) the conduct or control of an enterprise. 82. Person: All of the Defendants are “persons” under 18 U.S.C. 1961(3). Each Defendant is an “individual or entity capable of holding a legal or beneficiary interest in property.” 83. Racketeering Activity: A "racketeering activity" as defined by 18 U.S.C. § 1961(1) includes, inter alia, any act or threat involving bribery which is chargeable under State law and punishable with imprisonment for more than one year and any act which is indictable under 18 U.S.C. § 201, 18 U.S.C. §1341, 18 U.S.C. § 1343, 18 U.S.C. § 1513(b); 18 U.S.C. § 1952; and 18 U.S.C. § 1957. 84. Texas Penal Code § 36.02 (State Law Bribery): Integ, Godfrey Garza, Jr. (for himself and Integ), VDCS, Annie Q. Garza, Godfrey Garza, III, and DEC committed the "racketeering activity" of bribery under Section 36.02 of the Texas Penal Code and the crime is punishable with imprisonment for more than one year. Integ, Godfrey Garza, Jr. (for himself and Integ), VDCS, Annie Q. Garza, Godfrey Garza, III, and DEC intentionally or knowingly offered, conferred, or agreed to confer on another or solicited, accepted, or agreed to accept from another a benefit in the form of money and property for the consideration of the recipient's decision, opinion, recommendation, vote or other exercise of discretion as a public servant, party official, or voter. Integ and Godfrey Garza, Jr. were public servants or public officials per their roles as General Managers of the District. 85. Additionally, Integ, Godfrey Garza, Jr., VDCS, Annie Q. Garza, Godfrey Garza, III, and DEC intentionally or knowingly offered, conferred, or agreed to confer on another or solicited, accepted, or agreed to accept from another a benefit (in the form of money routed Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez through VDCS) because the benefit was offered, conferred, solicited, accepted, or agreed to pursuant to an express agreement to grant DEC contractor status and DEC would not have been granted such status or contracts but for the benefit. 86. 18 U.S.C. § 201 (Bribery): DEC (by hiring VDCS, by paying VDCS an inflated price, by ordering Dos Logistics to hire VDCS, by paying VDCS for services it was not qualified to render, and by paying VDCS for services it did not provide) directly or indirectly gave money and property to Godfrey Garza, Jr. and Integ with the intent to influence Godfrey Garza, Jr.’s and Integ’s official acts in recommending or approving DEC’s contractor status. Furthermore, Godfrey Garza, Jr. and Integ accepted such payments with the requisite intent. DEC made these transfers of money and property with the requisite intent. 87. Godfrey Garza, Jr. and Integ are "public officials" as contemplated by 18 U.S.C. 201. A person that occupies a position of public trust with official federal funds or responsibilities is considered a "public official" for purposes of 18 U.S.C. § 201. Godfrey Garza, Jr. and Integ held positions of public trust with official federal funds or responsibilities in the sense that Godfrey Garza, Jr. was responsible for overseeing the spending of federal funds awarded to the District. 88. Integ and Godfrey Garza, Jr., as the District’s General Manager, were charged with advising the Board of Directors to make decisions regarding drainage programs and projects for the District’s taxpayers. While the Board makes final decisions regarding District priorities, policies, personnel, expenditures, and growth management, Integ and Godfrey Garza, Jr. were trusted to give the Board sound advice uncluttered by graft and conflicts of interest. Thus, Godfrey Garza, Jr. and Integ held a position of public trust. 89. Additionally, Godfrey Garza, Jr.’s position as General Manager included the management Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez of federal funds or responsibilities. The District’s budget with respect to the federal project was funded primarily from two sources: local funding (bond proceeds and local taxes) and federal funding. Federal funds were provided to the District specifically for the federal project through DHS Award Number DHS-CBP-08-112-001. This was a an award paid in part via the federal American Recovery and Reinvestment Act. Also. At all relevant times, it was Godfrey Garza, Jr.’s responsibility to supervise the expenditure of these federal funds. Specifically, Godfrey Garza, Jr. and Integ were charged with overseeing DHS money on levee improvements that would support a border fence. Accordingly, Integ and Godfrey Garza, Jr. qualify as public officials under 18 U.S.C. 201 because as part of their responsibilities they recommended how federal funds provided to the District were allocated and spent, and because they oversaw the spending and allocation. 90. The Defendants are engaged in interstate acts of commerce and the acts alleged herein have a potential effect on commerce. 91. 18 U.S.C. § 1341 (Mail Fraud): Integ, Godfrey Garza, Jr., VDCS, DEC, Annie Q. Garza, Godfrey Garza, III and Jonathan Garza devised a scheme or artifice to defraud by means of transferring payments and other things through the U.S. Mail Integ, Godfrey Garza, Jr., VDCS, DEC, Annie Q. Garza, Godfrey Garza, III and Jonathan Garza all caused payments to be made through the mail. The District made payments through the mail to DEC and Integ based on fraudulent invoices delivered by Integ, Godfrey Garza, Jr., Annie Q. Garza and DEC. The Integ invoices were fraudulent because, among other things, they billed for work Integ and Godfrey Garza, Jr. did not do; they billed for construction management when DEC and other contractors were actually doing construction management; and for the other reasons set out in Part IV. Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez 92. DEC made payments through the mail based on fraudulent invoices that were sent or caused to be sent by VDCS, Annie Q. Garza, Godfrey Garza, III and Jonathan Garza. The VDCS invoices were fraudulent because they were in reality bills for bribes and kickbacks. 93. Integ and Godfrey Garza, Jr.’s mail fraud included acceptance of payments from the District that but for his fraud would not have been mailed. The scheme to defraud was with the intent to deprive another of the intangible right of honest services of Integ and Godfrey Garza, Jr.. 94. VDCS, Godfrey Garza, III, Annie Q. Garza, and JG’s mail fraud included acceptance of payments from DEC through the mail that but for Defendants’ fraud and bribery would not have been mailed. The payments constituted bribes and kickbacks to Integ and Godfrey Garza, Jr.. The scheme to defraud was with the intent to deprive another of the intangible right of honest services of Integ and Godfrey Garza, Jr.. 95. 18 U.S.C. § 1343 (Wire Fraud): Integ, Godfrey Garza, Jr., VDCS, Annie Q. Garza, Godfrey Garza, III and Jonathan Garza devised a scheme or artifice to defraud by means of wire, radio, or television communication in interstate commerce. Integ and Godfrey Garza, Jr. caused to be made payments by the District that were based on fraudulent invoices. The payments were made by check. Funds were then transferred between financial institutions or within financial institution by means of wire communications. Payments from DEC to VDCS were then turned over to Integ and Godfrey Garza, Jr. as bribes and kickbacks. Integ, VDCS, Annie Q. Garza, Godfrey Garza, III and Jonathan Garza all accepted illicit payments. The payments from DEC to VDCS were made by check. Funds were then transferred between or within financial institutions by means of wire communications. DEC, VDCS, Annie Q. Garza, Jonathan Garza, and Godfrey Garza, III made the payments, and Godfrey Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez The Second Scheme to Defraud the District and Federal Government: Bribery Through Valley Data 49. Valley Data Collection Services, Inc. (“VDCS”) registered as a corporation with the Texas Secretary of State on June 24, 2004. The stated aim ofVDCS was to perform data collection used by surveyors and other persons interested in land parcels. At its inception, that could be Jonathan Garza (“Jonathan Garza”) and Godfrey Garza, Garza, III”) owned VDCS. Ownership was transferred (Godfrey Garza, 50. The real machine. Jr.’s Annie Garza (“Annie Q. Garza”) purpose 0f VDCS eventually turned t0 a kickback vehicle and As manager, Integ/Godfrey Company-Houston, (collectively, “DEC”) Jr.’s Garza, Jr. LLC and disclose that his family’s negotiated prime contracts for the District Dannenbaum Engineering Company-McAllen, LLC VDCS was hired; or (2) that VDCS was owned by Godfrey Integ and Godfrey Garza, company would be paid on affirmative duty to disclose they contracted With VDCS Jr. had an affirmative duty District projects. and that VDCS Jr.’s family. Between 2006 and 2014, VDCS sent the following invoices“: Date Amount Contractor Project 6/16/2006 $7,060.00 Tedsi Mile 6 9/7/2006 $7,060.00 Tedsi Mile 6 21 laundering VDCS as a subcontractor 0n several District proj ects. Nobody hired immediate family. Godfrey Garza, money Dannenbaum Engineering Company, Dannenbaum Engineering disclosed to the District: (1) that 51. (“Trey Garza” or “Godfrey wife) in 0r around 2012. With engineering firms. Garza, to III A11 invoices are attached as Exhibit P. DEC to had an was owned by Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez RR Crossing 10/3 1/2006 $3,662.80 Tedsi Canton 11/2/2006 $36,239.20 Tedsi Trenton Road 11/30/2006 $ 102,060.00 Tedsi J-02 11/30/2006 $76,239.80 Tedsi W-Ol La 12/29/2006 $29,160.00 Tedsi Monte Cristo 2/7/2007 $ 14,580.00 Tedsi Monte Cristo 2/1 5/2007 $60,991 .84 Tedsi W-Ol La Villa 2/20/2007 $ 1 5,274.96 Tedsi W-Ol La Villa 4/25/2007 $8,781 .00 Tedsi Not Stated 4/30/2007 $39,823.00 Tedsi Consulting 6/ 1 9/2007 $ 1 7,067.00 Tedsi W-06 7/30/2007 $26,505.00 Tedsi Mile 2 9/12/2007 $1 13,500.00 DEC Common Levee 10/1 1/2007 $ 10,500.00 L&G Common Levee 11/27/2007 $21,000.00 L&G Phase 11/28/2007 $1 13,500.00 DEC Common Levee 12/ 1 2/2007 $ 1 5,250.00 L&G Common Levee 1/9/2008 $22,000.00 Tedsi Monte 1/29/2008 $4,000.00 Tedsi La 2/1 8/2008 $22,000.00 Tedsi Monte 3/20/2008 $2,500.00 Tedsi Weslaco Drain 3/3 1/2008 $ 12,500.00 L&G Levee 4/22/2008 $5,500.00 L&G 0-7 4/22/2008 $6,500.00 L&G 0-8 4/30/2008 $5,000.00 L&G 10 4/30/2008 $7,750.00 L&G 09 5/13/2008 $2,000.00 L&G 8 5/13/2008 $2,500.00 L&G 9 II Villa and J-02 Levee Cristo Villa Cristo Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez 5/15/2008 $1,000.00 L&G 7 5/19/2008 $1,500.00 L&G 10 6/16/2008 $2,200.00 DL 0-7A 6/16/2008 $3,575.00 DL 0-9a 6/16/2008 $5,500.00 DL O-IOA 6/16/2008 $1 1,000.00 L&G 6 6/20/2008 $13,750.00 DL 0-6B 6/20/2008 $21,175.00 DL 0-6C 6/20/2008 $71,225.00 DL 0-6A 4/7/2009 $41,000.00 Tedsi Mile 2 5/21/2009 $4,600.00 Tedsi Mile 2 9/23/2009 $1,000.00 L&G Pump House 2/26/2010 $29,525.76 Tedsi J09 3/3 1/2010 $84,522.24 Tedsi J09 4/27/20 1 0 $5,248.00 Tedsi Bentsen Palm 5/26/2010 $25,344.00 Tedsi J—09 8/6/2010 $15,000.00 Tedsi J-09 10/30/2010 $50,200.00 Tedsi J-09 11/30/2010 $16,300.00 Tedsi J-09 1/19/2011 $64,000.00 Tedsi J—09 $ 1 6,375 .00 Tedsi Edinburg 11/1 8/2011 $993.40 Tedsi J-09 11/18/2011 $1,293.40 Tedsi J-09 10/3 0/201 1 WWTP 1/3 0/201 1 $ 1 3, 1 00.00 Tedsi Edinburg WWTP 12/22/201 1 $3,275.00 Tedsi Edinburg WWTP 12/30/2011 $37,500.00 Tedsi J-09 7/26/2012 $3,750.00 Tedsi J-09 10/3 1/2012 $4,913.20 Tedsi J—09 1 Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez 11/15/2012 $3,800.00 Tedsi Mile 2 12/28/2012 $1,600. 10 Tedsi Owassa $800.00 Tedsi J-09 $1,923.20 Tedsi Edinburg Master 1/1 1/2013 3/25/2013 Drainage Plan 3/26/2013 $16,150.00 Tedsi Mile 2 4/29/2013 $33,586.85 Tedsi S. Mercedes Drain, et al. 5/3/2013 $1 1,073.61 Tedsi IBWC Pumps 6/14/2013 $3,000.00 Tedsi IBWC Pumps 6/24/2013 $3,729.65 Tedsi S. Mercedes Drain, a1. 8/12/2013 $ 12,522.00 Tedsi Edinburg WWTP 10/17/2013 $ 12,522.00 Tedsi Edinburg WWTP 10/25/2013 $27,520.00 Tedsi J-09 11/6/2013 $13,760.00 Tedsi J-09 11/29/2013 $17,200.00 Tedsi J—09 12/6/2013 $7,667.00 Tedsi Mile 2 12/17/2013 $7,123.75 Tedsi Spanish Palms 12/30/2013 $ 10,320.00 Tedsi J-09 2/28/2014 $38,400.00 Tedsi Edinburg Master Drainage Plan 3/3 1/20 14 $ 14, 1 90.00 Tedsi Edinburg Master Drainage Plan 4/22/2014 $29,919.48 Tedsi J-09 5/2/2014 $7,000.00 Tedsi J-09 8/6/2014 $6,204.74 Tedsi J—09 et Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez 10/1 7/20 14 $6,300.00 Tedsi Mile 2 9/5/20 1 3 $ 12,896.00 LeFevre Weslaco Lateral 52. Those invoices total Godfrey Garza, ownership 53. $1,658,577.98 paid by the District’s taxpayers to a company Jr.’s family, and in which, after 2012, Godfrey Garza, Jr. owned by himself had an interest. Annie Q. Garza, Jonathan Garza, and Godfrey Garza, III all caused some or all 0fthe above invoices t0 be sent t0 the identified contractors by hand delivery, email, and/or facsimile. As owners, all three also caused checks to be mailed via the US Postal Service in payment of the invoices. 54. Godfrey Garza, never disclosed his ownership interest (nor that of his family) in Jr. even though he had contractual, listed contractors all Godfrey Garza, Jr. law, and statutory duties to do so. had contracts with the pressured and/or asked the contractors to hire The above- by Godfrey Garza, District negotiated VDCS. Godfrey argued to the District Board for the contractors to be awarded proj ects hire 55. Jr. common VDCS if they Jr. Garza, agreed to VDCS. When Godfrey Garza, Jr. recommended to the District that contracts be awarded to DEC, he represented to the District the contracts were fair and reasonable, and that entering into the contracts was in the best interests of the District. He also represented that he did not have a conflict of interest in negotiating with and selecting representations to Garza, its DEC. The District relied 0n those detriment and entered into the prime contracts in reliance 0n Godfrey Jr.’s representations. kickback t0 Godfrey Garza, Jr. As a result, District money was funneled t0 VDCS as a VDCS was paid more than fair market value for its supposed Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez services, and in fact did not render some of the services for which it charged. 56. Integ, VDCS, Annie Q. Garza, Jonathan Garza, Godfrey Garza, III, DEC, and Godfrey Garza, Jr. all conspired to make the kickbacks happen. Specifically VDCS, Annie Q. Garza, Jonathan Garza and Godfrey Garza, III all caused the above-listed invoices to be submitted when they knew the received payments were Godfrey Garza, Jr.’s kickbacks. VDCS, Annie Q. Garza, Jonathan Garza, and Godfrey Garza, III deposited the illicitly gotten money into federally insured bank accounts. They then funneled some of the money back to Integ and Godfrey Garza, Jr. disguised as rent and loan payments, in effect laundering the money. It was Integ and Godfrey Garza, Jr.’s job in the conspiracy to make sure VDCS got hired and paid above market value or that nobody looked at VDCS’s actual qualifications. 57. Integ and Godfrey Garza, Jr. intentionally bypassed District procurement requirements in order to get him and Integ paid, and to hide DEC’s, VDCS’s, AG’s, TG’s and JG’s involvement in the scheme. 58. In furtherance of the conspiracy, Godfrey Garza, Jr., DEC’s agent, and other engineering firm representatives met at Lanskey & Brat in McAllen, Texas before the prime contracts that resulted in payments to VDCS were entered into by the District. At Lanskey & Brat, Godfrey Garza, Jr. met with all firms in one room and then sometimes met one on one with individual representatives in a different part of the restaurant. During the joint sessions, Godfrey Garza, Jr. explained what projects were coming up and what work needed to be done. The individual sessions were to strike a deal on hiring VDCS and setting the stage for kickbacks in return for selection as a contractor. Before the Board ever voted on awarding a contract, Godfrey Garza, Jr. had already told the firms which projects they would be awarded. Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez District made millions of dollars in improper payments. Count 4: Breach of Contract 121. Defendant Integ Corporation breached its contract with the District by: a. Paying itself 1.5% of the construction costs related to the federal project, when the contract only provided for payments related to construction management on the Phase II project; b. Not actually performing the construction management services for which it caused the District to pay millions of dollars; c. Not disclosing the conflicts of interest inherent with the subcontracts with Valley Data Collection Specialists, Inc. and the kickback scheme. d. The District sues to recover the millions of dollars in damages caused by these breaches of contact, as well as its attorneys’ fees. Count 5: Civil Conspiracy 122. Defendants Integ Corporation, Godfrey Garza, Jr., Valley Data Collection Specialists, Inc., Annie Q. Garza, Godfrey Garza, III, and Jonathan Garza entered into a civil conspiracy to defraud the District and cause Integ Corporation and Godfrey Garza, Jr. to violate their duties. This civil conspiracy included having DEC and other countractsors route kickbacks as subcontractor payments to Valley Data Collection Specialists, Inc., and then distributing those funds to the Godfrey Garza, Jr., Annie Q. Garza, Godfrey Garza, III, and Jonathan Garza. The unlawful, overt acts included failure to disclose the conflicts inherent in the use of a family-owned subcontractor, representing to the District that payments were for work Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez performed by contractors, when millions of dollars were actually going to be routed as kickbacks through the subcontractor scheme, and in submitting invoices to contractors for unnecessary work that was not fully performed or disclosed to the District. This civil conspiracy proximately caused millions of dollars in damages to the District. Unjust Enrichment 123. It would be unconscionable for Defendants to retain the benefits obtained through their illegal and unethical schemes (including the payments related to the federal project and the kickbacks made through Valley Data Collection Specialists). The District seeks to recover the millions of dollars in unjust enrichment paid, directly or indirectly, to Defendants. Constructive Trust 124. Defendants hold all of the assets and funds obtained through their scheme, fraud, conspiracy, and breach of fiduciary duty in constructive trust for the benefit of the district. The District seeks title to the assets and funds held in constructive trust. VI. DAMAGES 125. Plaintiff seeks to recover compensatory damages from Defendants. These damages include the assets obtained through their scheme, the funds improperly paid to Integ Corporation for services not actually performed, funds paid to Integ Corporation related to the federal project, and funds paid to Valley Data Collection Specialists as kickbacks/improper subcontractor payments. Defendants acted with fraud, malice, and gross negligence. Therefore, Plaintiff also seeks an assessment of exemplary damages against each defendant. Plaintiff also seeks to recover prejudgment interest, postjudgment interest, court costs, and attorneys’ fees. Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez 126. Plaintiff’s damages exceed the Court’s jurisdictional minimum. VII. JURY DEMAND 127. Plaintiff demands a jury trial. VIII. CONCLUSION 128. Plaintiff asks the Court to enter judgment against Defendants, jointly and severally, for compensatory damages, against each Defendant for exemplary damages, and against Defendants, jointly and severally, for attorneys’ fees, prejudgment interest, postjudgment interest, and court costs. Electronically Filed 1/25/2018 12:48 PM Hidalgo County District Clerks Reviewed By: Marcos Lopez Respectfully submitted, Michael J. Blanchard Texas Bar No. 24036231 /s/ COWEN MASK BLANCHARD 6243 IH-lO West, Suite 801 San Antonio, Texas 78201 Telephone: (2 1 0) 94 1 - 1 301 Facsimile: (956) 504-3674 E-Mail for Service: efilings@cmbtria1.com CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing has been delivered, in the all counsel of record in accordance the applicable Rules 0f Civil Procedure on required manner, to January 25, 2018: Ethan L. Shaw Justin Fishback SHAW COWART, LLP 1609 Shoal Creek B1Vd., Austin, TX 78701 Ste. 100 Marcus C. Barrera 10113 N. & Associates. P.C. 10th St, Ste. A McAllen, TX Barena, Sanchez 78504 Dennis Ramirez Law Office 0f Dennis Ramirez, 111 N. 17th Street Suite PLLC D Donna, TX 78537 John W. Newton, III ROACH & NEWTON, L.L.P. One Westchase Center 10777 Westheimer Rd., Suite 212 TX 77042 Houston, /s/ Michael J. Blanchard