Prosecutors drop charges against 2 people arrested in Arroyo Terminals case

McALLEN, Texas (ValleyCentral) — A judge on Tuesday dismissed the indictment against two people charged in the Arroyo Terminals case.

The U.S. Attorney’s Office for the Southern District of Texas filed motions to dismiss the indictment against Kelly Anne Jensen and Zachary Golden Jensen “in the interest of justice.”

Prosecutors didn’t provide any details about why the government decided to dismiss the indictment.

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

Barges transported the crude oil from the Arroyo Terminals facility in Rio Hondo to buyers in other parts of Texas.

Federal agents raided Arroyo Terminals on April 23.

Prosecutors, meanwhile, unsealed an indictment against James Lael Jensen and his son, Maxwell Sterling Jensen, who co-owned the company.

The indictment charged them with fraudulently importing nearly 2,900 shipments of crude oil from May 2022 to April 2025.

“They were entering into agreements with conspirators — unindicted conspirators — to bring mislabeled crude oil from Mexico into the United States,” Assistant U.S. Attorney Michael Hess said during a hearing on April 24 in Utah.

Customs paperwork described the shipments as “waste oil,” Hess said, not crude oil.

“This is significant mainly because the government of Mexico, through its oil company, PEMEX, will not allow for crude oil to enter into the United States, except through very limited agreements with oil and gas companies,” Hess said.

The crude oil had been stolen from PEMEX, mislabeled and shipped across the border, Hess said, adding that members of the Jensen family made a “significant profit” selling the stolen oil.

It wasn’t the first time James Jensen had been accused of buying stolen petroleum products.

PEMEX filed a lawsuit against James in 2011, claiming he purchased stolen natural gas condensate.

James denied any wrongdoing and PEMEX dismissed the case in 2013.

Maxwell Jensen, who co-owned Arroyo Terminals, played a key role in the family business, Assistant U.S. Attorney Laura Garcia said during a hearing on April 29 in Brownsville.

“We do believe that Mr. Maxwell Jensen — him, working on behalf of the Jensen family — had significant ties to Mexico,” Garcia said.

Prosecutors also charged James Jensen’s wife, Kelly, and his son, Zachary, with participating in a conspiracy to launder money.

All four members of the Jensen family pleaded not guilty.

Prosecutors returned to the grand jury in May with a revised indictment.

The new indictment charged James and Maxwell with providing material support to a foreign terrorist organization — the Jalisco New Generation Cartel — in April 2025.

Members of the Jalisco cartel transport stolen crude oil through Tamaulipas, according to information published by the U.S. Treasury Department, which slapped the cartel with sanctions in 2024 and 2025.

“Stolen crude oil is smuggled into the United States through complicit Mexican brokers and often mislabeled as ‘waste oil’ or other hazardous material to avoid scrutiny and evade taxes and regulations,” according to a news release the Treasury Department published on May 1. “The stolen crude oil is then delivered to complicit U.S. importers in the oil and natural gas industry operating near the U.S. southwest border, who sell it at a steep discount on the U.S. and global energy markets before repatriating the significant illicit profits back to the cartels in Mexico.”

If convicted on the terrorism charge, James and Maxwell could be sentenced to 20 years in federal prison.

Prosecutors, however, also decided to drop the case against Kelly and Zachary “in the interest of justice.”

The government informed attorneys for Kelly and Zachary about the decision on May 22 and filed motions to dismiss the indictment on May 27.

What prompted the decision remains unclear. Asked why the government filed motions to dismiss the indictment, a spokeswoman for the U.S. Attorney’s Office said that she had no additional details to share.

Attorneys for Kelly and Zachary couldn’t immediately be reached for comment Tuesday.