Bank sues Judicial candidate over $100,000 loan

EDINBURG - A local bank filed a lawsuit against state district judge candidate Jesse Contreras on Friday claiming that he failed to pay a nearly $100,000 debt.

The suit asks the 139th state District Court to force Contreras to pay the debt using earnings from his law firm, which were used as collateral for the Jan. 10, 2008, loan.

The lawsuit is the latest political hurdle for the Democrat, who is running against Republican Daniel Rios for the bench of the newly created 449th state District Court.

In the last six weeks, Contreras has been arrested on suspicion of driving while intoxicated, accused of backing out of a debate and had a local watchdog group file an ethics complaint against him with the state.

When called for comment on this latest setback, he referred all questions to his attorney, Justino Garza.

Garza said he would contact The Monitor after speaking with his client but never called back Friday evening. He did not answer further calls to his cell phone.

In a letter sent Thursday to Texas National Bank's attorney, Garza pleads for patience.

He writes that it is not Contreras' intent to renege on the note and that he takes the obligation seriously.

Garza goes on to write that winning the election "is important to both the Candidate and the bank."

"I think everyone agrees that it be (sic) substantially easier and faster for Mr. Contreras to pay off his campaign debt if he were to win the race," Garza writes.

State district judges are paid a minimum of $125,000 a year.

"With all due respect to the bank, the bank needs Mr. Contreras on the campaign trail getting out the vote, and not on the sidelines trying to raise money in the middle of early voting," Garza continues.

The letter goes on to say that Contreras is confident he can raise additional political funds after the election to pay off his obligation.

But it's unclear whether the loan - which has an outstanding balance of $98,552, according to the suit - was for business or political purposes.

In campaign finance filings, Contreras lists a $65,000 loan from Texas National Bank dated Aug. 6, 2007, and a $35,000 loan from the bank dated Jan. 11, 2008. The loan described in the lawsuit was issued Jan. 10, 2008, according to a bank promissory note.

The filings also list a $40,000 loan from First National Bank dated Feb. 21, 2008.

But a copy of the $100,000 loan included with the suit lists the borrower as the Law Office of Jesus Contreras - the candidate's business.

According to the Texas Ethics Commission, a candidate can only use political funds to pay his own business for its actual expenses incurred with the campaign.

Campaign finance documents do not show that the law firm has made any loans or contributions to Contreras' campaign, nor has the firm received any expenditure from the campaign.

Neither Contreras nor Garza would comment on the situation to clarify whether the loan was for the business, as the bank's promissory note states, or for the campaign, as campaign finance records suggest.

Rios seized on news of the lawsuit to attack his opponent.

"The loan document clearly shows it's a loan to his law office, but the response in the letter demonstrates it's campaign money we're talking about," said Rios, highlighting the ambiguity of the situation.

Texas National Bank's loan calls for Contreras to make 11 monthly payments of $2,232 beginning Feb. 9, 2008, and a balloon payment of $86,758 due Jan. 9, 2009. The loan is payable on demand, meaning the bank has the discretion to require full payment even before the date originally scheduled.

Monitor staff writer Jeremy Roebuck contributed to this report.