McAllen hotelier Sunil Wadhwani on Friday pleaded guilty in federal court for his part in a bribery scheme related to the construction of a Motel 6 in Weslaco.
Wadhwani changed his plea to guilty as part of a deal with federal prosecutors after originally pleading not guilty when the indictment against him was unsealed in October.
In exchange for Wadhwani’s guilty plea to count one of the indictment — conspiracy to commit honest services wire fraud — prosecutors have agreed to lower the “offense level” of the crime by two levels. The government also agreed to dismiss the second count against Wadhwani — honest services wire fraud.
Wadhwani will also forfeit $4,000 that he “agrees was involved in the commission of the crime,” Assistant U.S. Attorney Roberto “Bobby” Lopez Jr. said during the rearraignment hearing Friday.
Wadhwani admitted he paid bribes in 2013 to at least one Weslaco public official in order to garner a $300,000 economic incentive agreement from the Economic Development Corporation of Weslaco to construct the Motel 6.
Prosecutors revealed that official was former District 4 Commissioner Gerardo “Jerry” Tafolla, who had previously been identified in the indictment as “Commissioner A.” At the time, Tafolla also served on the EDC board of directors.
The government alleges the scheme was facilitated through Wadhwani’s codefendant, Weslaco businessman Ricardo Quintanilla, as well as former Rio Grande City Municipal Judge Leonel “Leo” Lopez Jr., who was previously identified in the indictment as “Person B.”
Quintanilla — who is also a defendant in a separate federal bribery case involving the Weslaco water treatment plant — has pleaded not guilty to the charges against him. Meanwhile, Lopez and Tafolla each pleaded guilty to federal programs bribery last spring and await sentencing.
After a meticulous process during which U.S. District Judge Ricardo H. Hinojosa ascertained whether Wadhwani understood his rights to trial and to plead not guilty, as well as the loss of certain rights his guilty plea entailed, the judge asked if he still wished to change his plea.
Wadhwani said yes, and asked to address the court.
“It was a bad mistake on my part, Your Honor,” Wadhwani said.
“One other thing … everybody got money from the EDC; I was just in the wrong place at the wrong time,” he said, before adding that his hotel has generated approximately $2 million in revenue for the city of Weslaco, and has created nearly 60 jobs.
“You want to say … it is beneficial to the city, but at the same time it is a crime?” Hinojosa asked, before remarking that such postulations are better saved for Wadhwani’s sentencing hearing.
Prosecutors say Wadhwani paid “at least $4,000” in bribes to facilitate the approval of the incentive agreement by the EDC and the Weslaco City Commission, and that he and others pressured the EDC via email correspondence to approve — and then disburse — the funds in two $150,000 lump sums.
“Typically, when the Weslaco Economic Development Corporation gives out grant money, Your Honor, that money is paid out over large periods of time, not front-loaded and given out in quick succession,” Roberto Lopez said.
Indeed, the EDC originally laid out a proposal to disburse the funds in $50,000 increments over the course of five years, and later offered a plan that would have resulted in $25,000 increments before releasing larger payments at the end of the incentive term.
In court documents, the government alleges that some of Wadhwani’s coconspirators went as far as restructuring the makeup of the EDC’s board of directors and stacked it with participants of the conspiracy, including Tafolla.
The reconfigured board ultimately removed two EDC directors who had overseen the proposals to incrementally disburse the incentive before finally approving the two lump sum plan.
Though Wadhwani’s guilty plea came with a new admission that he paid a bribe to Tafolla, both he and prosecutors were mum on bribes referenced in the indictment which were allegedly paid to Quintanilla and Leo Lopez.
Hinojosa accepted Wadhwani’s guilty plea and set sentencing for July 30. He faces up to 20 years in prison, up to a $250,000 fine, and may be ordered to pay financial restitution, Hinojosa said.
A trial date for Quintanilla has yet to be set.
In the related case regarding the Weslaco water plant, Quintanilla and his codefendants — Arturo “A.C” Cuellar and Daniel J. Garcia — are set to go to trial July 2, court records show.
Correction: This article has been updated to correct the identification of Leonel Lopez Jr. by prosecutors as “Person B.”