Feds raid Rio Hondo business, arrest 4 people in crude oil fraud case

McALLEN, Texas (ValleyCentral) — Federal agents raided a business near Rio Hondo on Wednesday and charged the owner with fraudulently importing crude oil.

Agents raided Arroyo Terminals, which buys and sells crude oil, Wednesday morning.

“We can confirm we were in the area working in coordination with our law enforcement partners,” Sally M. Sparks, a spokeswoman for the U.S. Drug Enforcement Administration, said in a statement.

State troopers remained at the Arroyo Terminals complex near Rio Hondo on April 24, 2025. (CBS 4 News Photo.)

Arroyo Terminals purchased about 7.7 acres near Rio Hondo in 2016, according to a deed filed with the Cameron County Clerk’s Office.

“The company specializes in domestic and cross-border acquisitions of various blends of crude oil,” according to the Arroyo Terminals website.

Arroyo Terminals stored the crude oil in large tanks near the Arroyo Colorado. Every few weeks, barges would transport the crude oil to buyers.

“The company owns and operates its own fleet of 30,000 barrel barges, which gives us unique capabilities to transport and market our crude oil product,” according to the Arroyo Terminals website.

A grand jury indicted James L. Jensen, who owns Arroyo Terminals, on April 17.

From 2022 to 2025, he purchased nearly 2,900 shipments of crude oil that had fraudulent customs paperwork, according to the indictment.

Arroyo Terminals purchased nearly 7.7 acres near Rio Hondo in 2016, according to a deed filed with the Cameron County Clerk’s Office. (CBS 4 News Photo)

The fraudulent paperwork claimed the crude oil was actually “waste of lube oils” and “petroleum distillates,” according to the indictment.

Agents with the FBI, the DEA, Homeland Security Investigations and the Criminal Investigations Division of the IRS worked on the case, which is being prosecuted by the U.S. Attorney’s Office for the Southern District of Texas.

“I understand the inquiry and appreciate the interest, but I do not have any additional information to provide,” Nina Pruneda, a spokeswoman for Homeland Security Investigations, said in a statement.

Agents raided Arroyo Terminals on Wednesday morning.

During the raid, agents placed workers in handcuffs and questioned them about the business, according to three employees who spoke with CBS 4 News on the condition of anonymity.

One employee said the FBI asked whether the crude oil was stolen.

“We don’t know about that,” the employee said. “We’re just in charge of unloading the trucks and loading the barges.”

Another employee agreed.

“When it comes to the aspect of knowing where this oil’s coming from or what company or what part of Mexico or anything like that, we were always out of the loop,” the employee said.

Agents took documents from the Arroyo Terminals building, according to a third employee, and requested passwords for the computers.

“When I went into the office to use the restroom, I did hear the FBI high-five and say: ‘We got ‘em,’” the employee said.

Along with Jensen, the grand jury indicted his wife and two of his sons, Maxwell and Zachary.

“They are looking forward to receiving the discovery and asserting their innocence in court,” said attorney Robert Louis Guerra of Brownsville, who represents Maxwell.

A lawyer who represents Zachary couldn’t be reached for comment Thursday. Court records don’t list attorneys for Jensen and his wife.

If convicted on the most serious charge against them, the Jensens face a maximum of 20 years in federal prison.