Probe into missing $1.3 million ongoing; BPUB allegedly deposited money into wrong account

A large construction payment made by the Brownsville Public Utilities Board (BPUB) to the wrong party is currently under investigation by state and federal authorities.

The Cameron County District Attorney’s Office confirmed on Wednesday that it was investigating the incident.

Reports have swirled regarding the alleged missing $1.3 million since March, when a local blog reported the board intended to make the payment to Noble Texas Builders’ account but sent it to the wrong recipient after a person claiming to represent Noble allegedly called and informed BPUB the company had switched banks.

Officials have confirmed that a payment was sent to the wrong party, but declined to provide details.

Noble collaborated with ERO architects to construct BPUB’s new Annex Building, part of a $16.9 million project next to the board’s administrative office, which broke ground in September.

Rene Capistran, Noble’s president and CEO, said on Thursday he was uncertain whether BPUB received the alleged phone call but confirmed that the company submitted for payment on the ongoing project, contacting the board when they noticed it hadn’t been funded.

“When we contacted PUB, they informed us that the money had been deposited to the account. I don’t know the facts of where it went, but it wasn’t our account,” he said.

According to Capistran, Noble is cooperating with local, state, and federal law enforcement in the investigation. He verified that the board issued Noble a second check around a week later, for the same amount, which he estimated at $1.2 million.

An item up for vote on an April 13 board meeting agenda sought to grant BPUB General Manager and CEO John Bruciak permission to petition the Texas Attorney General’s Office to suspend the applicability of the Public Information Act requirements due to the state-wide disaster declaration. BPUB confirmed last month that it was still accepting and would work to fill such requests.

The board’s Community and Public Relation’s Coordinator Cleiri Quezada said the measure was intended to give BPUB the ability to stop filling records requests if necessary due to shelter in place and other requirements forcing staff to work remotely. On Thursday, Quezada said the board was working to prepare a statement regarding the missing money. As of press time, the statement had not been received.

The Brownsville Herald requested records from BPUB regarding the initial payment, an internal audit, and a second payment that was allegedly approved after Noble contacted the board about the missing money. On Thursday, special counsel for BPUB sent a copy of a letter addressed to Ken Paxton which determined that a draft audit regarding a special investigation into an ACH fund transfer and an FBI Internet Crime Complaint referral form receipt confirmation should not be released to the public at this time.

“This auditor’s report, as of the date of the request until present, has not been finalized and therefore is an “audit working paper” that was prepared by the BPUB Audit Manager for the BPUB Audit Committee and should not be released,” the document stated. “BPUB understands that this argument is temporal and that once the audit is finalized, the report would be subject to being released if it did not fall under another exception.”

The records request revealed that the ACH fund transfer serving as the basis for the Audit Manager’s report was referred to the FBI for a criminal investigation.

“The FBI has received the report and based on communication with FBI Agent Nicholas Myers, the matter is being investigated. It is BPUB’s position that any release of report or information requested at this time would interfere with the detection and investigation of this matter.”

Agenda items posted on BPUB’s website in recent weeks suggested that a matter was being investigated. On April 30, an item up for discussion in a closed meeting was to confer with the board’s legal counsel for advice, “among other possible topics, concerning board’s authority and obligations under City of Brownsville Charter and release of confidential information during an active investigation.”

On May 6, board members and Mayor Trey Mendez met in a special meeting closed to the public in which officials again discussed topics with legal counsel “concerning the release of certain confidential information during an active criminal and civil investigation”, according to the agenda and a recording of the meeting published by BPUB.

A May 5 statement given by City Commissioner, District 1 Nurith Galonsky at a May 5 City Commission meeting indicated officials are still piecing together details.

“It has been less than two months since the incident in question happened and the BPUB Board has decided to wait until the FBI investigation is concluded,” she wrote.

“If this is an instance of phishing, then BPUB has cyber security insurance that can cover most if all of the damages that the company has incurred. Alternatively, if the incident is a result of an ‘inside job’, then I trust that the FBI will identify everyone involved in the crime and prosecute them accordingly.”

Galonsky argued that the City Commission initiating its own audit or investigation at this time would be “premature or duplicative.” She noted that Mendez sits on the board and its Audit Committee and said it would be appropriate for the commission to ask both Mendez and Bruciak give an explanation of what they know.

She told the commission that BPUB’s auditor has “given recommendations on what policies and procedures should be adopted to avoid the same situation happening again. “There is no indication that BPUB is being poorly managed or impropriety is prevalent thereby necessitating an immediate intervention.”

The City of Brownsville declined to comment on the investigation.

“It is the policy of the COB to not comment on pending matters or matters that may be subject to litigation or Investigation,” wrote City Attorney Rene De Coss.