The indictment outlines the charges against the CEO of the immigrant shelter

Sept. 4—Ruben Gallegos Jr., the CEO of International Education Services, or IES, spent the weekend and Labor Day in federal custody after U.S. Magistrate Judge Ronald G. Morgan on Friday ordered him held without bond.

A federal grand jury on August 30 issued an indictment charging Gallegos with embezzlement and theft.

Among the charges and according to one section of the indictment, Gallegos was paid salaries well above the $183,000 cap with his 2017 salary at $435,416.88. The indictment also says others were paid high salaries, one at $506,0032.22 and another at $377,060.96 — also in violation of salary caps — but their names have been redacted from the document.

Gallegos served as CEO of IES from 2014 to 2018 until the federal government decided it would not renew its funding for the IES shelter. He was arrested Thursday on a bench warrant issued by Morgan for his arrest, according to federal court documents.

IES contracted with the Unaccompanied Alien Children Program and provided temporary shelter care and other related services to unaccompanied alien children, according to the federal indictment. IES received nearly all of its funding in the form of federal grants, and for each fiscal year from 2014 through 2018, it received millions of dollars in federal grant funds.

Count one of the indictments charges Gallegos with conspiracy and two counts of theft related to programs that receive federal funds.

According to the partially unsealed federal indictment on August 30, from 2014 to 2018, Gallegos knowingly conspired with another unnamed person to commit an offense against the United States, for “knowingly embezzling, stealing, obtaining by fraud of unauthorized and willful misappropriation of property valued at $5,000 or more and owned or under the care, custody, or control of an organization receiving more than $10,000 in federal assistance in any one-year period.”

The indictment alleges that from 2014 to 2017, Gallegos and another unnamed individual caused IES to use federal grant funds to pay themselves salaries that were hundreds of thousands of dollars above the salary cap imposed by federal regulations.

According to the indictment, the cap on Gallegos’ salary was $183,000. In a meeting in 2014, Gallegos told the defendants he wanted his salary increased by about $300,000, authorities said. With the defendants’ approval, IES paid him a salary of approximately $491,540.04 in violation of the $181,500 cap, according to authorities. The indictment says Gallegos received a $1,000 raise in 2015, bringing his salary to $492,001.62. His salary in 2017 was $435,416.88, authorities said.

The United States Congress prohibited the use of grant funds to pay wages above a certain percentage. In addition, federal regulations further limited the expenditure of grant funds.

The indictment also alleges that Gallegos, the defendants and IES failed to comply with federal regulations requiring competitive bidding and failed to comply with federal regulations setting rental cost limits on shorter-term transactions.

Gallegos, through a related entity, purchased property in San Benito at a cost of $100,000 that was to become the site of the IES San Benito shelter, according to the indictment. In 2014, the defendants submitted a grant application to the ORR (Office of Refugee Resettlement) seeking funds to operate the shelter, officials said. “Defendants falsely claimed that the shelter was operational and would serve approximately 1,040 children during FY-2015. The IES San Benito Shelter was not operational during FY-2015,” the indictment states.

In addition, Gallegos and others used federal IES grant funds to lease properties to themselves and others, “at rates in excess of the limits imposed by federal regulations,” officials said.

The indictment alleges that Gallegos and others took steps to conceal the scheme, including but not limited to using real estate holding companies to hide their ownership of properties they leased to IES. failed to report related party leases in audits; paid inflated wages and related leases as unspecified indirect costs; recorded disallowed construction costs as operating costs; and failed to disclose contracts for services with related parties.

The federal government is seeking to seize several properties on Maverick Road owned by Gallegos, the federal indictment says. One of the properties on Maverick Road is a small frame house with a large tract of land adjacent to it.

According to court documents, Gallegos’ case was set to go to trial before U.S. District Judge Rolando Olvera Jr., but Olvera on Friday recused himself from the case and reassigned it to U.S. District Judge Fernando Rodriguez Jr.

If convicted of Count One of the indictment, Gallegos faces up to five years in prison or a $250,000 fine and three years of supervised release. If convicted of Count Two of the indictment, he faces up to 10 years in federal prison or a $250,000 fine plus three years of supervised release.

Gallegos’ next court appearance is scheduled for Sept. 7 before Judge Morgan.

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