Federal prosecutors: Carlos Uresti's financial woes are 'result of his criminal choices'

Fraud victims owed more than $6 million in restitution from Uresti


SAN ANTONIO – The only interest federal prosecutors have in former state Sen. Carlos Uresti's financial status is whether he pays his victims the more than $6 million in restitution they're owed, a court document filed Friday said.

The government's response to Uresti's request to ease a restraining order -- which his estranged wife also requested -- said Uresti forfeited rights to control over his assets after he was sentenced to 12 years in prison for his role in a Ponzi scheme that defrauded investors. He was ordered to pay the victims more than $6.3 million.

"The Government has been extremely reasonable with the Urestis, both of whom want to retain control of property that rightfully belongs to victims the Defendant defrauded," prosecutors wrote. "By Congressional mandate and federal law, these victims take priority despite the financial consequences to the Defendant's family, an unfortunate result of his criminal choices."

After the February conviction, prosecutors obtained a restraining order which kept Uresti and his family, representatives, attorneys and companies, among others, from selling, transferring, moving or otherwise getting rid of his assets.

"Defendant Carlos Uresti misunderstands the nature of his property interests and the effect of the lien that automatically arose by law," the prosecutors wrote. "The United States has an obligation to enforce the sentence imposed by this Court and to protect the rights of victims, including their right to receive 'full and timely restitution' under federal law."

Uresti's wife, Margaret, filed for divorce about one week after Uresti was convicted. Prosecutors intervened in that state court proceeding.

"Divorce is a common asset protection device in cases where restitution is anticipated, and defendants will routinely agree to a final decree in which the non-debtor spouse receives all of the assets while the defendant receives all the debt. In these instances, the purpose of the divorce is largely to avoid the lien that will arise at sentencing ... enabling the Government to seek to apply that property to a defendant's restitution debt," a court filing said.

Last week, Carlos Uresti filed a request with the court to ease that restraining order, claiming he "doesn't have money to survive." It said the restraining order is preventing the state from sending his retirement checks, which are also in dispute in the divorce proceedings.

Wednesday, Margaret Uresti's attorney filed a separate request for relief from the restraining order, claiming it is preventing them from finalizing their divorce.

Prosecutors said they have met with the Urestis "on multiple occasions, attempting to reach a global resolution for the division and liquidation of Defendant's assets. The intent was to provide partial restoration to the victims while permitting the Defendant and his spouse to finalize their divorce. The attempts have not been successful. The Defendant and his spouse maintain unreasonable expectations, failing to acknowledge the Government's obligation to victims and its secured interest in Defendant's property and property rights."

Prosecutors plan to garnish Uresti's pension from his tenure in the Texas Senate -- taking 25 percent of it to pay restitution. Prosecutors did not object to Uresti's request to buy retirement credits from the state, which would increase what he earns from that program. The retirement is Carlos Uresti's only source of income, according to Margaret Uresti.

"Without these checks, Mr. Uresti cannot provide the necessary and normal monthly living expenses which, pursuant to the restraining order, Ms. Margaret Uresti is entitled to receive," Margaret Uresti's request said.

That's not the concern of prosecutors.

"The Government must preserve what little property the Defendant has remaining to ensure something is returned to them," prosecutors said.

A judge is expected to consider the requests on Tuesday.