Prosecuctors: Uresti's financial problems show he 'had motive to defraud'

State senator challenging prosecutors to keep topics off-limits in trial

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SAN ANTONIO - An attorney for state Sen. Carlos Uresti filed a motion to keep federal prosecutors from presenting certain evidence against him at trial -- including his loan history. Prosecutors fired back, claiming Uresti's personal finances show he "had motive to defraud" people of their money by getting them to invest in a Ponzi scheme.

A federal indictment accuses Uresti, Stanley Bates and Gary Cain of taking money from people for their Four Winds Logistics company. It claimed to buy and sell sand used in hydraulic fracking, then use it make oil.

Uresti's motion challenges nine topics it says should not be presented at trial. The first: alleged crimes, wrongs or other acts by Uresti. Prosecutors said they don't intend to introduce any such evidence.

The second issue includes statements by Bates and Cain that could implicate Uresti. The government said it would redact exhibits to prevent that, but did list audio and video recordings of Uresti among the evidence it would present at trial.

A third issue involves the existence of an investigation by the Securities and Exchange Commission, in which no criminal complaint has been filed. Prosecutors said it may use some of the testimony Uresti gave in a "lengthy deposition" to SEC investigators while "refraining from mentioning that this testimony came pursuant to an ongoing SEC investigation."

Uresti's attorney is also asking that prosecutors not be allowed to present media reports against Uresti.

"Use of media statements made by Uresti in some effort by the Government to attempt to prove that Uresti allegedly was untruthful during statements made to the press after the events made the basis of this Indictment concluded is not relevant to the charges brought here, unless Uresti testifies and is being impeached therewith," Uresti's motion said.

Prosecutors plan to use recorded interviews Uresti gave to newspaper reporters during which "Uresti admitted that he was not registered as a securities broker," prosecutors said. "Uresti also gave conflicting answers, untruths and vague responses which are all indicative of consciousness of guilt."

Another issue is the government's use of expert witnesses. Uresti's attorney challenged whether prosecutors met their obligation to disclose those witnesses and their opinions (prosecutors said they had).

The issue of Uresti's former attorney, Mikal Watts, being disqualified is also one Uresti doesn't want brought up at trial. Prosecutors said they didn't plan to get into that, but said the pair's relationship involving an earlier civil lawsuit that included an alleged victim of the Ponzi scheme likely would come up.

Uresti's attorney also asked that his financial history -- in particular his history of getting and repaying loans -- be excluded. It also challenged a government request to "prevent Uresti from demonstrating that he repaid the loan from (the victim) in full and with interest."

Prosecutors described four instances of loans it claims Uresti took out between between 2013-2015.

  1. A $40,000 loan from Four Winds, the fracking company the government alleges took millions of dollars from investors.
  2. A $200,000 loan from Watts against Uresti's legal fees in the civil lawsuit involving the victim in the fraud case.
  3. A mortgage loan in excess of $1 million -- a sign Uresti "was experiencing financial pressure (and thus had motive to defraud)." It said Uresti "had insufficient funds in his account to pay the very first mortgage payment for this loan."
  4. Personal financial statements, including the loans, prosecutors said were not disclosed but "shows consciousness of guilt and attempts by (Uresti) to hide his activities involving the specific charged transactions."

Uresti had been in a dispute with his homebuilder over the quality of the property.

"The government calling Uresti's homebuilder can have only one purpose -- to disparage Uresti on an unrelated, collateral matter," Uresti's lawyer said.

Prosecutors said they did not intend to offer evidence related to that.

The last issue is described as "non-related personal matters." Uresti's lawyer cites the "government's almost prurient fascination (of) non-related personal matters of the Defendant Uresti and other defendants." While Uresti's motion did not detail what those matters might be, prosecutors said they would "explore the various relationships between the defendants and victims in this case."

It also cited the charges against Uresti and Bates that include "making false material statements and false material omissions to victims in this case. The relationships between the various parties are integral to understanding why those victims would rely on those statements, trust the defendants, and the import of the various material omissions. At its core, this is a case about relationships, trust, lies and omissions."

A judge is expected to hear these issues in court next week. The case is set for trial October 23.

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