Mission city councilman accused of paying kickbacks

McAllen, TEXAS (ValleyCentral) — A pharmacist who serves on the Mission City Council paid kickbacks to a local doctor, according to the U.S. Attorney’s Office for the Southern District of Texas.

Dr. Francisco Zarzar, a local pediatrician, sent prescriptions to a pharmacy owned by Mission City Councilman Jose Alberto “Beto” Vela, according to a civil forfeiture complaint filed by the U.S. Attorney’s Office. In exchange, Vela paid Zarzar thousands of dollars.

Vela also “likely paid” kickbacks to Zarzar during a scheme that involved COVID-19 tests, according to the civil forfeiture complaint. Vela allegedly listed Zarzar as the pharmacy’s lab director and paid him $5 per COVID-19 test.

“We hope to get this resolved in court,” said attorney Rick Salinas of Mission, who represents Vela. “Clearly they’re just allegations. And I firmly believe he hasn’t done anything wrong at all. Zero.”

The U.S. Attorney’s Office filed the 49-page civil forfeiture complaint on Thursday.

While the complaint accuses Vela and Zarzar of breaking the law, the case is civil — not criminal. Vela and Zarzar aren’t charged with any crime or named as defendants in the civil case.

Attorney Crispin “C.J.” Quintanilla of McAllen, who represents Zarzar, said his client hadn’t been served with the civil forfeiture complaint and couldn’t comment on the allegations.

Exactly how much Vela paid Zarzar during the kickback scheme is unclear.

Zarzar received nearly $175,000 in checks from Vela and businesses Vela controlled between January 2018 and September 2024, according to the civil forfeiture complaint. Zarzar also deposited more than $1.7 million in cash during that roughly six-year period.

The FBI, which investigated Vela and Zarzar, couldn’t identify a legitimate source for the cash.

The Prescription Scheme

Zarzar, a local pediatrician, operated a clinic on Griffin Parkway in Mission.

Whenever he prescribed medication, Zarzar pushed his patients to use TLC Pharmacy and Medical Equipment #2, according to the civil forfeiture complaint. Vela owns TLC #2, which is less than 3 miles away from Zarzar’s clinic.

“If patients expressed a desire to use a different pharmacy, Zarzar relied on a series of tactics to try to convince patients to use TLC #2,” according to the civil forfeiture complaint, “at different times saying that TLC #2 offered free delivery services and covered prescriptions that other pharmacies would not.”

According to a clinic employee, Zarzar also provided TLC #2 business cards to patients.

“The employee never saw Zarzar provide business cards for any other pharmacies or recommend any other pharmacies to patients,” according to the civil forfeiture complaint. “Clinic staff were often responsible for handing out the business cards to patients. There were no other business cards for any other pharmacy available.”

Investigators reviewed Medicaid claims data, which showed TLC #2 handled a huge number of prescriptions for Zarzar’s patients.

In 2018 and 2019, just one pharmacy filled more of Zarzar’s prescriptions than TLC #2, according to the civil forfeiture complaint. TLC #2 became his top pharmacy in 2020.

Thanks to Zarzar’s prescriptions, TLC #2 billed Medicaid for more than $1.5 million.

“Investigators also totaled the top 10 pharmacies which filled prescriptions written by Zarzar for the stated time period,” according to the civil forfeiture complaint, “finding that claims submitted by TLC #2 to Medicaid ($1,525,412.15) surpassed the total claims submitted by the other nine pharmacies combined ($869,390.18) during the same period.”

The FBI obtained a search warrant for Vela’s phone.

Agents discovered text messages that appeared to show Zarzar prescribed medication “based on the best interest of TLC #2” rather than his patients, according to the civil forfeiture complaint.

On Sept. 6, 2020, the doctor asked Vela to send him a photo “with the preferred drugs” because “someone misplaced my copy.”

Vela responded with a list of medications.

“Just a few minutes later, Zarzar sent Vela photographs of two prescriptions to be filled at TLC #2 which included four of the drugs from Vela’s list: Triamcinolone cream, Desonide ointment, Nasonex, and Accuneb.”

In a message dated May 31, 2021, they discussed another prescription.

“Vela requested that Zarzar ‘add something to this one,’ referring to a prescription Zarzar had written for Motrin earlier in the day,” according to the civil forfeiture complaint. “Vela sent Zarzar a photograph of the prescription label showing that TLC #2 would only be reimbursed $0.39 for the prescription and told Zarzar ‘39 cents doesn’t even cover the tabs.’”

Zarzar prescribed additional items, which boosted the payout to $25.03.

The COVID-19 Scheme

Vela also “likely paid” kickbacks to Zarzar during a COVID-19 testing scheme, according to the civil forfeiture complaint.

In 2020, when TLC #2 wanted to perform COVID-19 tests, the pharmacy needed a lab director. Federal regulations stipulated the lab director had to be a medical doctor, not a pharmacist.

“Investigators identified a text message conversation between Zarzar and Vela on October 12, 2020, discussing how Vela will compensate Zarzar in exchange for serving as lab director to oversee TLC #2’s testing program related to COVID-19,” according to the civil forfeiture complaint. “Vela offered to pay Zarzar either a flat fee or on a per-test basis.”

Zarzar agreed to become the lab director, but it’s unclear whether he ever actually supervised the lab.

Vela attempted to end the arrangement in November 2020, according to the civil forfeiture complaint, but Zarzar asked him to extend it.

“I will still do the 5 if u (sic) but u start sending me bills for no reason when u were making easy 5k dollars and then u wanted more and was acting up,” Vela wrote to Zarzar in a text message, according to the civil forfeiture complaint.

The FBI determined that “the 5” referred to Vela paying $5 to Zarzar for every COVID-19 test.

“In a separate text message conversation between Vela and Zarzar in October 2020, Vela sent Zarzar a photograph of a sticky note with a series of numbers written next to the days of the week,” according to the civil forfeiture complaint, which showed that 256 tests had been conducted that week. “A few days later, Vela issued Zarzar a check for $1,280. This amount is equivalent to 256 tests performed multiplied by $5 for each test.”

The FBI determined the “easy 5k dollars” referred to Vela paying $5,000 per month for Zarzar to serve as lab director.

“Thus, Vela likely paid Zarzar kickbacks while Zarzar served as the laboratory director for TLC #2’s testing,” according to the civil forfeiture complaint, “but performed none of the duties he was obligated to perform” under federal regulations.

Cash and Checks

From 2018 to 2024, when the kickback schemes allegedly happened, Zarzar received nearly $175,000 in checks from Vela and businesses Vela controlled.

Zarzar also deposited more than $1.7 million in cash.

The FBI could not find a legitimate source for the cash deposits. Records from his clinic showed Zarzar received very few cash payments.

“In all of 2023, the clinic took in approximately $3,410 in cash per records reviewed by investigators,” according to the civil forfeiture complaint.

Vela also handled large amounts of cash.

“For instance, investigator review found that on June 6, 2023, a TLC #2 employee sent Vela a photograph via text message of an envelope bearing the Lone Star National Bank logo with the words ‘Boss 2000’ handwritten on the envelope,” according to the civil forfeiture complaint. “In another instance, Vela issued at least four checks to a TLC #2 employee all dated July 16, 2023, totaling more than $10,000 and drawn on two different pharmacy bank accounts.”

Documents reviewed by the FBI suggested the TLC #2 employee had cashed the checks.

“In text messages on July 16, 2023, the TLC #2 employee told Vela that $4,500 was left for Vela,” according to the civil forfeiture complaint.

Call logs also suggested Zarzar made at least one significant cash deposit after communicating with Vela.

After reviewing bank documents, business records and call logs, the FBI concluded “Vela likely attempted to disguise significant cash withdrawals, Zarzar received cash from Vela, and Zarzar likely failed to report his cash proceeds, all while the kickback scheme was ongoing,” according to the civil forfeiture complaint.

The FBI raided Zarzar’s clinic in June.

During the raid, agents seized gold coins, Pokemon cards and World War II memorabilia, among other items.

“The United States seeks a final judgment forfeiting the Defendant Properties to the United States,” according to the civil forfeiture complaint, “and any other relief to which the United States may be entitled.”

An initial hearing in the case is scheduled for March.