Feds: Real estate development company a front for laundering drug money

McALLEN — Marin Herrera and Reynaldo Flores Jr. founded New Millennium Developers in 2007 hoping to turn a patch of land off Glasscock Road into an exclusive residential subdivision.

But the foundation on which they built their business venture came from an illicit source, federal prosecutors said.

In a series of court hearings this week, government attorneys accused both men of laundering money for the Matamoros-based Gulf Cartel and funneling their own cut of the proceeds into their real estate development company.

“They have significant deposits (into their business accounts) but no withdrawals or payments to contractors or subcontractors,” U.S. Immigration and Customs Enforcement Agent Kevin Fornfeist testified Monday at a hearing for Flores. “We can’t prove any sales have actually been made.”

Federal agents arrested both Herrera, 56, of Mission, and Flores, 43, of Edinburg, earlier this month as part of a nationwide sting of domestic smugglers allegedly aiding Mexico’s drug cartels.

Dubbed “Project Deliverance,” the investigation netted more than 2,200 arrests across the country of individuals crucial to the drug trafficking syndicates’ infrastructure within the United States, the Justice Department said.

But as defense attorneys for Herrera and Flores argued in separate bond hearings this week, both men have legitimate claims to the sizeable wealth government attorneys say came from a criminal enterprise.

“My client is a businessman. He’s a good community member. He pays his taxes,” said Herrera’s attorney, Al Alvarez. “That’s what you call a successful person. You don’t begrudge that in a capitalist society.”

ICE agents first began targeting Herrera after a drug seizure in Atlanta uncovered $1.5 million that a cooperating witness connected to the Mission man.

Three more seizures totaling $1 million were also traced to Herrera, U.S. Internal Revenue Service investigator Luis Reyna testified at a bond hearing Thursday.

After the interception of the latest load of money, Herrera allegedly placed a phone call to Flores and promised to transfer the deeds to two Mission properties to him to make up for the missing sum.

Agents also found the accounting in New Millennium’s books suspicious. Since 2006, the business partners have placed more than $2 million in small cash and cashier’s check deposits in the company’s accounts and taken very little out, Reyna said.

“Real estate development typically involves larger amounts of dollars and a slower volume of deposits,” he testified Thursday. “It involves checks of a higher volume than a low-cash type of business like retail.”

Alvarez, Herrera’s attorney, said Thursday that the issues surrounding that money could easily be explained away. His client had obtained an $800,000 bank loan to fund the development of the Villa Real Estates subdivision and often collected rent payments for various rental properties in the form of cash, which he later deposited into his business.

But U.S. Magistrate Judge Peter Ormsby also questioned the nearly $500,000 Herrera’s business partner reported as income from a separate hay bailing business started after his recent release from a federal prison on previous drug charges.

“It would be a great thing if Mr. Flores came out of federal prison and made a success of himself as an American story,” he said. “But the extent of the wealth Mr. Flores has accumulated is surprising. It suggests there’s more than honest work going on here.”

Flores’ attorney Jack Wolfe maintained that his client’s business had benefited from a drought across the rest of the state that drove up prices for hay in the Rio Grande Valley.

“Somebody’s misfortune is another person’s gain,” he said. “Anything he could bale, he could sell.”

Ormsby ultimately denied both men bond, citing their strong ties to Mexico, and ordered them held in federal custody pending trial. Both men face money laundering conspiracy charges, punishable by up to 20 years in prison upon conviction. Herrera faces two additional counts of drug trafficking conspiracy.

As for Villa Real Estates — the Sharyland subdivision that started the New Millennium venture — government lawyers have moved to seize the 73 remaining lots.