Federal prosecutor: Uresti borrowed money from Watts against lawsuit settlement

Woman at center of lawsuit called 'most significant victim' in fraud case

By Nicole Perez - Executive Producer

SAN ANTONIO - A federal prosecutor called a woman who was represented by State Sen. Carlos Uresti "the most significant victim of (Uresti's) alleged criminal conduct. She did not ask to be involved in this case but she is."

The characterization was revealed in a court document filed Friday challenging attorney Mikal Watts' request to overturn a judge's ruling removing him from representing Uresti in a fraud case.

The prosecutor, Joseph Blackwell, said the woman, Denise Cantu, hired Uresti to represent her in a lawsuit she filed after two of her children were killed in a car accident in August 2010. It said Uresti brought Watts and his law firm into the suit.

"Factually, there is no dispute that Mr. Watts and his firm were Ms. Cantu's attorneys (along with the defendant) in this civil litigation," the document said.

Uresti, Stanley Bates and Gary Cain are charged with operating a Ponzi scheme with their Four Winds Logistics company, which marketed hydraulic fracturing (fracking) sand for oil production.

Here's how Blackwell said Cantu was victimized in the case:

  • Uresti borrowed $200,000 from Watts against Cantu's settlement;
  • Cantu received her settlement in a lump sum;
  • Within less than three months of obtaining the settlement, Uresti received $25,000 from Cantu;
  • Cantu eventually invested approximately $900,000 into Four Winds Logistics -- an amount described as a "significant remainder" of Cantu's settlement;

After his arrest, Uresti hired Watts to represent him, prompting a request by the government to remove Watts because of connection to the Cantu case. In July, a judge ruled Watts could not represent Uresti. Earlier this month, Watts called his dismissal a "giant waste of judicial resources" and asked that order to be overturned.

In response, the prosecutor said the civil case and criminal case were related.

"The indictment specifically refers to the underlying civil suit as it was the starting point for the charges in this case. Within a few short months after obtaining the settlement, Uresti sought and obtained a portion of that settlement from Ms. Cantu. Some of this money was paid back over the subsequent months including past the time that Ms. Cantu invested into Four Winds. Uresti's ability to convince Ms. Cantu to invest in these schemes arose from the relationship he developed during the underlying civil suit. A reasonable person would see the two as factually connected," Blackwell wrote.

A judge has not ruled on the issue of whether Watts can represent Uresti again.

The document said three others who defrauded Cantu and others have pleaded guilty. It did not name the other defendants. Online court records show Bates and Cain have entered not guilty pleas. The case is set for trial in October.

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