Suspect in IES fraud case scheduled for re-arraignment

The former finance director for International Educational Services, or IES, is scheduled for a re-arraignment hearing on Tuesday morning in Brownsville federal court.

U.S. District Judge Fernando Rodriguez Jr. scheduled the hearing for Juan Jose Gonzalez on Friday, court records indicate.

Gonzalez is charged along with Ruben Gallegos Sr. and his son Ruben Gallegos Jr. with conspiracy and theft concerning programs receiving federal funds.

They are accused of misapplying hundreds of thousands of dollars in federal grant funds meant to be used for temporarily housing migrant children at IES, a nonprofit.

Ruben Gallegos Sr. was the president and Ruben Gallegos Jr. was its chief executive officer.

IES had operated for years before it abruptly shuttered its doors and fired all of its employees on March 31, 2018.

At the time, neither the federal government or IES explained why the nonprofit suddenly closed.

It wasn’t until The Brownsville Herald filed a successful Freedom of Information Act request with the Office of Refugee Resettlement’s Administration for Children & Families for communication between those agencies and IES following the closure. The Herald also reviewed years of IES tax documents.

That information revealed how the organization used millions of dollars in federal grant monies, including that IES employees profited from leased properties owned by its executives and that those executives paid themselves salaries that were more than federal grant rules allowed.

On Aug. 30, 2022 the men were arrested on the federal indictment, which matched The Herald’s reporting and expanded on more allegations, including how federal grant funds were used to lease vacant lots and residential properties from Ruben Gallegos Sr. and Ruben Gallegos Jr.

“Ruben Gallegos Sr. and Juan Jose Gonzalez approved less-than-arms-length transactions in which IES used federal grant funds to pay for multiple leases on the same properties that were owned by Ruben Gallegos Sr., or related entities, in order to inflate rental income paid with federal grant funds to Ruben Gallegos Sr.,” the indictment stated.

The 13-page indictment also alleges they purchased a $1 million San Benito property they falsely claimed was operational and would serve more than 1,000 children in Fiscal Year 2015.

“The IES San Benito Shelter was not operational during FY-2015,” the indictment stated.

The last court hearing in the case was on March 26. Court records indicate the parties are still in the process of discovery.

Jury selection is currently scheduled for Sept. 3.

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