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Case 2:16-cr-00802 Document 54 Filed in TXSD on 01/25/17 Page 1 of 79

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS CORPUS CHRISTI DIVISION

UNITED STATES OF AMERICA,

) ) Plaintiff, ) ) vs. ) ) LUIS CARLOS CASTILLO-CERVANTES, ) ) ) Defendant.

CASE NO:

2:16-CR-00802

CRIMINAL Corpus Christi, Texas Tuesday, January 3, 2017 (2:56 p.m. to 3:48 p.m.) (3:54 p.m. to 4:50 p.m.)

REARRAIGNMENT

BEFORE THE HONORABLE B. JANICE ELLINGTON, UNITED STATES MAGISTRATE JUDGE

Appearances:

See Next Page

Clerk:

Letty Garza

Court Recorder:

Genay Rogan

Interpreter:

Lorena Parada-Valdes / Beatriz Wright Mariana Rios

Deputy U.S. Marshal:

Hannah Word

Court Security Officer:

Raul Barrera

Transcribed by:

Exceptional Reporting Services, Inc. P.O. Box 18668 Corpus Christi, TX 78480-8668 361 949-2988

Proceedings recorded by electronic sound recording; transcript produced by transcription service. EXCEPTIONAL REPORTING SERVICES, INC

Case 2:16-cr-00802 Document 54 Filed in TXSD on 01/25/17 Page 2 of 79 2 APPEARANCES FOR:

Plaintiff:

JULIE K. HAMPTON, ESQ. JON MUSCHENHEIM, ESQ. Assistant United States Attorney 800 N. Shoreline, Suite 500 Corpus Christi, TX 78401

Defendant:

RICARDO L. SALINAS, ESQ. Attorney at Law 2011 N. Conway Street Mission, TX 78572 SCOTT M. ELLISON, ESQ. Attorney at Law 410 Peoples Street Corpus Christi, TX 78401

U.S. Probation Office:

Michelle Huerta 1133 N. Shoreline Room 124 Corpus Christi, TX 78401

EXCEPTIONAL REPORTING SERVICES, INC

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Corpus Christi, Texas; Tuesday, January 3, 2017; 2:56 p.m.

(Interpreter Utilized for Translation)

(Call to Order)

THE COURT:

All right.

I’m going to call Case Number

C-16-cr-00802, Luis Carlos Castillo-Cervantes.

appearances please?

7 8 9

MS. HAMPTON:

May I have

Julie Hampton and Jon Muschenheim on

behalf of the United States. MR. SALINAS:

Your Honor, Rick Salinas along with Mr.

Scott Ellison on behalf of Mr. Luis Carlos Castillo-Cervantes.

Your Honor, he will need the assistance of an interpreter.

believe one will be provided him.

13 14

THE COURT:

MS. HAMPTON:

THE COURT:

MS. HAMPTON:

THE COURT:

MS. HAMPTON:

issue that prevents --

Yes, Your Honor. And the -- there was some issue you said

you wanted to bring up, Ms. Hampton?

Are you -- are we ready to go

forward on the pleas?

All right.

THE COURT:

Is that --

Yes, Your Honor. -- no longer an issue? No.

It is -- we don’t believe it’s an

Mr. Castillo-Cervantes, can you hear and

understand the interpreter, sir?

THE DEFENDANT:

THE COURT:

Yes.

Yes, ma’am.

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Go ahead, Ms. Hampton.

MS. HAMPTON:

We -- the Government does not believe

it’s an issue that prevents the case from going forward, but we

want to call it to the Court’s attention so the Court can make

further inquiry, if it’s necessary.

During a search warrant of Mr. Castillo’s residence

in October of this year, agents found some documentation

showing a business connection between Mr. Castillo and Norberto

Salinas, who is the mayor of Mission and the father of

Rick Salinas, attorney -- counsel for Mr. Castillo.

THE COURT:

Okay.

Cervantes.

Okay.

Wait.

Slow down, just a minute.

And you -- there was a search warrant for Mr. Castillo-

MS. HAMPTON:

THE COURT:

MS. HAMPTON:

THE COURT:

MS. HAMPTON:

Yes, Your Honor. And it was in October. Yes, Your Honor. And then what was found? There was some documentation that we

verified through sources that Mr. Castillo has a business

relationship with Mr. Salinas’ father, who is the current mayor

of Mission, Texas.

to the charges in this case or criminal conduct, but we wanted

to call it to the Court’s attention in any event.

24 25

We do not believe that it’s at all related

THE COURT:

Okay.

So, Mr. Salinas, your father is

Norberto Salinas and -EXCEPTIONAL REPORTING SERVICES, INC

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MR. SALINAS:

THE COURT:

MR. SALINAS:

THE COURT:

Yes, Your Honor. -- he’s the mayor of Mission? Yes. Okay.

And have you had a chance to --

and you were made aware of this, Mr. Salinas, is that right?

MR. SALINAS:

THE COURT:

Yes, Your Honor. And do you believe there to be -- now,

Ms. Hampton, you said you’re comfortable that there is no

business -- no problem or conflict with regard to Mr. Salinas’

or Mr. Ellison’s representation of the Defendant.

representation?

MS. HAMPTON:

THE COURT:

14 15

Is that your

Yes, Your Honor. Mr. Salinas, how do you feel about this

and have you talked to your client about it? MR. SALINAS:

Your Honor, I've talked to Mr. Castillo

about this several times.

I’ve known Mr. Castillo for a little

over 20 years, I think, and -- or maybe more than that.

he’s been a close, personal friend of our family.

am the Godfather to one of his kids, Rodrigo, which is his

youngest boy.

they’ve developed some property -- my father and Mr. Castillo.

I think that because the substance or the bulk of these

allegations in -- in the Government’s complaint against

Mr. Castillo deals with financial institutions, real estate,

it’s -- it’s, for lack of a better word, a white collar offense

And

In fact, I

I’m not completely familiar -- I know that

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strike.

And whether or not my father would be a witness to any

of this, which I seriously doubt after discussing this with

Mr. Castillo, seems to be somewhat remote.

one of the -- one of the times I got together with

Mr. Muschenheim, and there was a photograph that was taken from

inside the home of Mr. Castillo which my father was -- was

photographed with him along with some other people.

aware to Mr. Muschenheim and he was kind enough to make it

aware to me that maybe somewhere down the road -- I think the

In fact, I think at

I made it

biggest concern here that I’ve discussed with Mr. Castillo here

is if there is anything in there that he has an issue with,

this is the time to bring it up.

or may not know about this particular witness, my father, that

would help him in the course of this case, well then this is

the time for him to bring it up irrespective of -- of I guess,

for lack of a better word, if these are things that would help.

If these are things that -- for instance, my example to him was

if my father is the head of the Mexican cartel, that would be

something that the Government would be very interested in and,

you know, obviously, I have no business in representing him if

-- if he possesses information like that, whether it be a lot

or a little bit.

continue to represent him.

24 25

If there’s things that he may

And he’s informed me that he wants for me to

I will tell the Court that back in 2012, he had a very brief discussion with me concerning the fact that he was EXCEPTIONAL REPORTING SERVICES, INC

Case 2:16-cr-00802 Document 54 Filed in TXSD on 01/25/17 Page 7 of 79 7 1

being interviewed by the FBI.

I think that part of that may have been out of maybe

embarrassment.

He never came to see me again.

I don’t know.

In 2014, he did retain a lawyer, which Mr. Thomas who

has now asked the Court to allow him to withdraw and I believe

that order's been signed.

been completely voluntarily on his own.

or recommended --

9 10 11

THE COURT:

So his wanting me to help him has Nobody’s asked him to

What do you mean Mr. Thomas?

Who are you

talking about? MS. HAMPTON:

There was another lawyer, Ray Thomas,

who represented Mr. Castillo before he was charged and briefly

after he was charged.

to withdraw from this case and Judge Jack granted that motion.

THE COURT:

MR. SALINAS:

I think two weeks ago he filed a motion

Go ahead, Mr. Salinas.

Continue.

So I’m just -- I think I’m laying out

everything that could possibly come up.

And unlike in so many

cases, Judge, where sometimes a family friend or an uncle or

someone who may or may not be involved in the same criminal

episode that the Defendant may be involved in, that’s not the

situation here.

than Mr. Castillo, himself.

him that this is the time to bring it up and if it's an issue,

then I’ll probably be stepping away.

he wants me to continue to represent him.

Nobody else has asked me to represent, other I’ve made it abundantly clear to

He’s indicated to me that

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I know that he talks to my dad on a frequent basis.

They’re good friends.

that he feels that would impede my ability to represent him.

I’ve had a long discussion with him.

THE COURT:

the case, Mr. Salinas?

MR. SALINAS:

There doesn’t seem anything in his mind

Have you examined all of the discovery in

Judge, no.

There’s thousands of

documents, but I have had discussions with Ms. Hampton and Mr.

Muschenheim.

They’ve been real clear to me that they don’t

think -- I think the biggest problem here is that, we’re just

trying to make sure he doesn’t complain about it later, that

somehow or the other he didn’t disclose something because of me

representing him.

him.

with regarding my representation in the form of a conflict or

something that you really can’t tell the Government or can’t

talk about in any proceeding because of my representation of

you as a lawyer?

that no, there isn’t anything.

And those are the comments that I’ve made to

Listen, is there anything that you don’t feel comfortable

And he’s indicated to me time and time again

MR. ELLISON:

May I just say, Your Honor, when it was

just brought to my attention before we came in the courtroom

and Mr. Salinas and I were meeting with Mr. Castillo, I just

asked him simply is there any involvement with Rick Salinas’

father with any of the transactions or business dealings that

are within the scope of your criminal charges and he said no. EXCEPTIONAL REPORTING SERVICES, INC

Case 2:16-cr-00802 Document 54 Filed in TXSD on 01/25/17 Page 9 of 79 9 1

Any relationship he has had with Mr. Salinas’ father is

completely independent of this criminal case.

that Mr. Salinas’ father would ever be a witness in this case,

according to Mr. Castillo.

any conflict, but it was something that the Government was

concerned that if Mr. -- if something materialized later that

it would be a ground for Mr. Castillo to complain that he had a

counsel with a conflict.

we came in here to do the plea and he said no, there wouldn’t

So I don’t see

So I don’t see that there would be

So I asked him those questions before

be any problem.

THE COURT:

Okay.

And, Mr. Salinas, just said on the

record that he had not looked at all of the discovery in the

case.

have your client enter a guilty plea when you admitted on the

record that you had not examined all of the discovery.

That’s a problem.

I don’t understand how you intend to

What are we going to do about that?

MR. SALINAS:

Your Honor, I -- there’s no other

Defendants in here.

portion of the hearing.

THE COURT:

I’d ask the Court to, I guess, seal this We’ve had --

Wait, wait, wait, wait, wait.

I would be

happy to seal this and I thought about that at the beginning,

but nobody asked for it so I didn’t seal it.

MR. MUSCHENHEIM:

Your Honor, can I answer that

question?

I think we can do it in an open courtroom.

had an opportunity to present to Mr. Luis Carlos Castillo, EXCEPTIONAL REPORTING SERVICES, INC

We’ve

Case 2:16-cr-00802 Document 54 Filed in TXSD on 01/25/17 Page 10 of 79 10 1

along with Mr. Salinas, hundreds of documents to present our

version of the facts to him, all the salient documents.

so, I think there’s literally 30,000 documents in this case.

This is a case with voluminous discovery in the form of bank

records.

and so, in terms of the material facts that underlie the plea,

it has been presented.

the IRS, who’s present in the Courtroom, we've presented

document after document for them to review.

And

We created summaries of these account informations

With the help of Mr. Luis Reyna from

So we have spent

hours, literally hours, explaining this complex case to Defense

Counsel and his client.

THE COURT:

And are you comfortable, Mr. Muschenheim

and Ms. Hampton, with the Defendant proceeding today to a

guilty plea?

MS. HAMPTON:

I am, Your Honor.

MR. MUSCHENHEIM:

THE COURT:

MR. SALINAS:

Yes, Your Honor.

How about you, Mr. Salinas? Your Honor, I’m comfortable.

We’ve had

numerous get-togethers.

Again, I’m preaching to the choir, I’m

sure the Court know what that’s all about but I came in late in

2016, right after he was arrested.

think that I’ve been involved for the last two to three years,

but -- and I was able to get some information from Mr. Ray

Thomas, his previous counsel.

him for years, and he’s shared -- again, I’ve known

I don’t want the Court to

And Mr. Muschenheim, I’ve known

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Ms. Hampton, as well, but I go back a little further with

Mr. Muschenheim and I’ve had sit-down discussions with him.

And I’ve never had any reason to believe that he would tell me

something that isn’t the way it is.

able to confirm a lot of that information with Mr. Castillo,

himself, and I think there’s good grounds and a good basis for

a plea today.

THE COURT:

MR. SALINAS:

THE COURT:

MR. ELLISON:

Not only that, I’ve been

Mr. -I’ve no doubt. -- Mr. Ellison, do you agree? I do, Your Honor.

I’ve just come on

board as local counsel, but I have spoken to Mr. Castillo as

well and made sure that he understood that issues that may

arise during this plea colloquy, which I understand may take 30

minutes to an hour for the Government to go through, are issues

that may or may not become contested matters at sentencing

later, but that the gist of everything that Mr. Salinas and I

have just been going over it with him in the factual recitation

is true and correct, and he concedes that with some

qualifications here and there.

21 22 23

One of the informants had said there was shoty workmanship -THE COURT:

Okay.

Is it necessary -- do you want me

to close the courtroom for this?

MR. SALINAS:

Your Honor, I would probably agree the

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plea colloquy --

2 3

THE COURT:

Well, no, I -- the plea’s going to be in

open Court.

MR. SALINAS:

THE COURT:

about a conflict.

do this under seal?

Right. I’m just talking about this discussion

Do you -- do -- is anybody requesting that I

MS. HAMPTON:

MR. MUSCHENHEIM:

THE COURT:

MR. SALINAS:

THE COURT:

MR. ELLISON:

No, Your Honor. No, Your Honor.

Mr. Salinas? No.

No, Your Honor.

Mr. Ellison, go ahead. No, Your Honor.

And I was just saying

that based on my conversations with Mr. Castillo, as well as

Mr. Muschenheim and Ms. Hampton, there certainly is a factual

basis for the plea.

Government is going to dismiss the other Count, which I believe

that this plea is well informed and rounded and is voluntary

today.

We’re going to plead to one Count and the

We’re ready to proceed with the plea, your Honor. THE COURT:

And has the Government turned over to

Mr. Castillo-Cervantes and his counsel any Brady or other

exculpatory materials?

MS. HAMPTON:

THE COURT:

Yes, Your Honor. Okay.

And you’re confident that you have

all of the exculpatory information that may apply to this case. EXCEPTIONAL REPORTING SERVICES, INC

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Is that right?

MR. SALINAS:

Yes, Your Honor.

MR. ELLISON:

Yes, Your Honor.

THE COURT:

Do you want me to inquire of your

client?

6 7

Okay.

MR. SALINAS:

I would ask the Court to do that in

light of the fact that -- the focus of the conflict --

THE COURT:

MR. SALINAS:

THE COURT:

Mr. --- involving my representation. -- Castillo-Cervantes, have you -- it’s

been brought to my attention, as you’ve been standing here with

a headset on, have you heard everything that has been discussed

about a possible conflict of interest, sir?

THE DEFENDANT:

THE COURT:

Yes, Your Honor.

And are you confident based upon what you

know about this case that your relationship with Mr. Salinas’

father is not going to present any kind of a problem in this

case, either today or later?

19 20

THE DEFENDANT:

THE COURT:

And are you friends with Mr. Salinas’

father?

THE DEFENDANT:

THE COURT:

There will be no -- it will not

present.

21 22

No.

Yes.

And are any of the transactions that have

happened in this case, do they have anything to do with EXCEPTIONAL REPORTING SERVICES, INC

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Mr. Salinas’ father?

THE DEFENDANT:

THE COURT:

No.

No, ma’am.

And if something is discovered later on

in the process of getting ready for sentencing that, perhaps,

Mr. Salinas’ father had some involvement, whether it be direct

or indirect in this case or if his name comes up, do you

understand that it’s going to be too late at this point for you

to complain about any kind of a conflict of interest.

understand that?

THE DEFENDANT:

THE COURT:

Do you

Yes, I do understand it.

Do you understand that you have the right

to conflict-free counsel in this case and that if you think

that there is any problem involving Mr. Salinas’ father or

Mr. Salinas that would interfere with their ability to provide

a competent representation of you that you can request -- you

could have time to find another lawyer or you can request a

court-appointed lawyer if you can’t afford a lawyer.

understand that, sir?

THE DEFENDANT:

THE COURT:

Do you

Yes, I do understand it.

And do you understand that by going

forward with this guilty plea, you’re going to have to waive

any possible conflict of interest that may surface, that may be

in effect now or may surface in the future.

that, sir?

THE DEFENDANT:

Do you understand

Yes, I do understand it.

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THE COURT:

THE DEFENDANT:

THE COURT:

THE DEFENDANT:

THE COURT:

Is that what you want to do?

Are you doing that voluntarily, sir? Yes.

Has anyone tried to bully you or convince

you that you should waive any conflict of interest --

THE DEFENDANT:

THE COURT:

Yes.

No.

Are there any other questions that you

would like for me to ask the Defendant, Ms. Hampton?

MS. HAMPTON:

Not that I can think of, Your Honor.

THE COURT:

MR. MUSCHENHEIM:

THE COURT:

How about you, Mr. Muschenheim?

Okay.

No.

Thank you for the inquiry.

I have a question.

I was going to

-- I havenâ&#x20AC;&#x2122;t done a money laundering plea in a while and I was

looking at the Indictment.

the predicate offenses are in this case or are we talking about

three pages worth, or two pages worth of predicate offenses?

And is there going to be disagreement that if -- is there any

disagreement that all of the predicate offenses that are listed

there in Count One are applicable to this case?

21 22

MS. HAMPTON:

Is there some agreement about what

We believe all of them are applicable,

Your Honor, and we have evidence as to --

THE COURT:

MR. SALINAS:

THE COURT:

And do you agree, Mr. Salinas? I do agree. And, Mr. Ellison?

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MR. ELLISON:

THE COURT:

MR. SALINAS:

Yes, Your Honor. And your client is willing to admit that? Yes, Your Honor.

I think that all the

fundamental basic elements of the offense are going to be met

with the plea and the plea colloquy, Judge, the substantial

facts that will justify the plea here today.

THE COURT:

And, Mr. Castillo-Cervantes, is there

anything thatâ&#x20AC;&#x2122;s happened so far in this hearing that makes you

feel like you need to ask for more time before going forward

with your guilty plea this afternoon, sir?

THE DEFENDANT:

THE COURT:

Do you want to go forward with your

guilty plea this afternoon?

THE DEFENDANT:

THE COURT:

No, Your Honor.

Yes.

Would you raise your right hand to be

sworn, sir?

(Defendant Sworn)

THE COURT:

Mr. Castillo-Cervantes, thank you, sir.

You may lower your hand.

understand, sir, that you are now under oath and if you give

false answers to any questions that I ask you, those answers

could later be used against you in another prosecution for

perjury or for making a false statement?

sir?

THE DEFENDANT:

Mr. Castillo-Cervantes, do you

Do you understand,

Yes, Your Honor.

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THE COURT:

And do you affirm under oath that all of

the answers that you gave to me earlier to the questions that I

asked you, do you affirm or reaffirm that all of your answers

are true?

THE DEFENDANT:

THE COURT:

Yes.

Okay.

Yes, Your Honor.

Mr. Cervantes -- Mr. Castillo-

Cervantes, it’s also important that you understand and hear

everything that’s translated through your headset.

stops working because it will sometimes, or in these long pleas

you may run out of battery space, be sure and let me know so we

can get you a headset that does work.

too fast for you, I want you to not be shy about asking me to

slow down or repeat a question or if you need a minute to visit

with your lawyers, just ask me for the time, sir, and I’ll be

happy to give it you.

THE DEFENDANT:

THE COURT:

Yes.

All right.

Yes, Your Honor. And what is your full name,

sir?

THE DEFENDANT:

THE COURT:

THE DEFENDANT:

THE COURT:

THE DEFENDANT:

THE COURT:

Also, if I start going

Do you understand?

So if it

Luis Carlos Castillo-Cervantes.

How old are you? Fifty-six years old.

How many years did you go to school? College.

Here in the United States or in another

country? EXCEPTIONAL REPORTING SERVICES, INC

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THE DEFENDANT:

THE COURT:

THE DEFENDANT:

THE COURT:

Yes.

Spanish?

THE COURT:

Mexico.

Do you read, write, speak, and understand

THE DEFENDANT:

In Mexico.

And is Spanish your first language?

No.

Yes.

Do you understand and speak any English

at all or read and write English? THE DEFENDANT: THE COURT:

A bit.

And has all of the information in this

case, the documents and the evidence, has it been translated by

your attorneys or someone else whoâ&#x20AC;&#x2122;s fluent in Spanish?

all that been translated for you, sir?

THE DEFENDANT:

THE COURT:

Yes, Your Honor.

And have you had any trouble

communicating with your attorneys, sir?

THE DEFENDANT:

THE COURT:

Yes.

Has

No, Your Honor.

Have you -- what kind of work do you do

for a living, Mr. Castillo-Cervantes?

THE DEFENDANT:

THE COURT:

Construction businesses.

And have you ever been addicted to drugs

or alcohol, or suffered from any mental illness, or gone to a

hospital or a treatment center for any of these things, sir?

THE DEFENDANT:

THE COURT:

No, Your Honor.

Have you had in the last 24 hours any

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drugs, medicines, pills, narcotic drugs, or alcoholic

beverages?

THE DEFENDANT:

THE COURT:

No, Your Honor.

Mr. Salinas, is Mr. Castillo-Cervantes

competent?

MR. SALINAS:

THE COURT:

In my opinion, he is. And without divulging your confidential

communications, has he been able to discuss with you the nature

and consequences of the charges against him and been able to

assist you in possible defenses?

MR. SALINAS:

THE COURT:

Yes, Your Honor. And, Mr. Castillo, let me ask you this

question, sir.

competent to enter a guilty plea, sir?

15 16 17

In your opinion, do you believe that you are

THE DEFENDANT:

Yes, Your Honor.

(Court confers with Clerk) THE COURT:

Mr. Castillo-Cervantes, it looks like you

signed this consent form along with your lawyer.

this form, sir?

THE DEFENDANT:

THE COURT:

Yes, Your Honor.

Before you signed this form, did your

attorney read it to you in Spanish and explain it to you?

THE DEFENDANT:

THE COURT:

Did you sign

Yes, Your Honor.

And do you -- I want to make sure that

you understand that you have a constitutional right to have EXCEPTIONAL REPORTING SERVICES, INC

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your guilty plea proceeding conducted by a United States

District Judge.

Jack.

waive that right and refusing to consent to allow me to conduct

this guilty plea hearing.

Judge.

authority to hear your plea of guilty unless you do consent.

Do you understand, sir?

In your case, that would be Judge Janis Graham

And you cannot be punished in any way by refusing to

I’m a United States Magistrate

I am not a District Judge and I don’t have the

THE DEFENDANT:

THE COURT:

Yes, Your Honor.

And you can’t be punished by refusing to

consent.

In fact, if you want to plead guilty, Judge Jack will

be in at 9:00 in the morning tomorrow and you could do your

plea in front of her.

Do you understand?

THE DEFENDANT:

THE COURT:

Yes, Your Honor.

And do you want me to hear your plea of

guilty this afternoon or do you want to wait until Judge Jack

can do it in the morning?

18 19 20 21

THE DEFENDANT:

THE COURT:

All right.

Have you received a copy of

the Indictment in your case, sir? THE DEFENDANT:

THE COURT:

I would like you to

take it.

Yes, Your Honor.

Yes.

Yes, Your Honor.

Has your attorney read the Indictment to

you in Spanish and fully discussed your case with you? THE DEFENDANT:

Yes, Your Honor.

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THE COURT:

Is your attorney appointed by the Court

or hired by you?

THE DEFENDANT:

THE COURT:

I hired him.

Do you understand that if at any time

this case is pending you canâ&#x20AC;&#x2122;t afford to pay your attorney or

your attorneys, that you can come back to me or to Judge Jack

and you can request a Court-appointed lawyer.

understand, sir?

9 10

THE DEFENDANT: THE COURT:

Do you

Yes, Your Honor.

Are you fully satisfied with the services

that Mr. Salinas and Mr. Ellison have provided to you up to

this point?

THE DEFENDANT:

THE COURT:

THE DEFENDANT:

THE COURT:

Yes, Your Honor.

Have they answered all of your questions? Yes, Your Honor.

Under the Constitution and laws of the

United States, you are entitled to enter a plea of not guilty

to the charge that has been brought against you and you are

entitled to require that the United States prove your guilt of

this charge to a jury of American citizens in this community.

At your jury trial, you would be presumed innocent.

have to prove that you are innocent.

You do not

Instead, it is the job of the Government to prove to

the jury by presenting evidence that you are guilty beyond a

reasonable doubt.

All 12 jurors must agree unanimously that

EXCEPTIONAL REPORTING SERVICES, INC

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the Government has proved the charge against you beyond a

reasonable doubt before you can be convicted.

3 4

At your jury trial, your attorney would be present with you to furnish all required legal services.

Do you understand, sir?

THE DEFENDANT:

THE COURT:

Yes, Your Honor.

To prove that you are guilty, the

Government would be required to bring its witnesses in to open

Court before you, and your lawyer, and the District Judge, and

the jury.

You would have the right to see the witnesses and to

hear their testimony, and the right to question and cross-

examine those witnesses, and the right to object to any

evidence that the witnesses bring into Court.

like the Government, you would have the right to present your

own witnesses and evidence before the jury and you would have

the right to issue subpoenas to compel witnesses to testify in

your favor.

and testify before the jury and to tell the jury all those

matters that are important about your case.

forced to testify before the jury or to present any evidence at

all, because you have the right to remain silent.

Government that has to prove the charge against you beyond a

reasonable doubt.

would be told that your failure to testify cannot be used to

suggest or infer that you are guilty.

And then, just

You would also have the right to take the stand

But you cannot be

Itâ&#x20AC;&#x2122;s the

And if you choose not to testify, the jury

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Do you understand, sir?

THE DEFENDANT:

THE COURT:

Yes, Your Honor.

Now the reason why I went to all that

trouble to tell you about your rights is because if you plead

guilty to Count One, as you've said you want to do today,

you’re going to be waiving, that is giving up, your right to a

jury trial.

talked about that are associated with your right to a jury

trial.

You’re going to give up all the rights we just

You’ll even be giving up your right of silence because

you are going to have to admit to committing this crime and

also answer questions I may ask you about it.

Do you understand?

THE DEFENDANT:

THE COURT:

you want to plead guilty, sir?

Yes, Your Honor.

Do you want to have a trial by jury or do

THE DEFENDANT:

THE COURT:

Plead guilty.

You’ve been accused in this Indictment,

Mr. Castillo-Cervantes, with violating Title 18, United States

Code, Section 1956(h), that is the conspiracy section of the

money laundering statute.

makes it unlawful for any person to conspire with another to

conduct or attempt to conduct financial transactions involving

interstate and foreign commerce knowing that the financial

transactions involve the proceeds of some form of unlawful

activity and knowing that the transactions were designed in

So you’re accused of -- that statute

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whole or in part to conceal and disguise the nature, location,

source, ownership, and control of the proceeds of the specified

unlawful activity.

Do you understand the charge, sir?

THE DEFENDANT:

THE COURT:

Yes, Your Honor.

As far as the elements are concerned in

this case, Mr. Castillo-Cervantes, before you can be convicted,

the Government would have to prove the following things beyond

a reasonable doubt.

First, that two or more persons, directly or

indirectly, reached an agreement to conduct or attempt to

conduct financial transactions involving interstate or foreign

commerce and involving the proceeds of specified unlawful

activity.

enumerate that specified unlawful activity.

And in a minute, Iâ&#x20AC;&#x2122;m going to ask Ms. Hampton to

But, number 2, that you knew the unlawful purpose of

the agreement that you entered into and, number 3, that you

voluntarily joined in that agreement with the intent to further

its unlawful purpose.

20 21

Ms. Hampton, would you enumerate, please, for me the -- first of all, is that correct, Ms. Hampton?

MS. HAMPTON:

THE COURT:

24 25

Yes, Your Honor. And would you then set forth for me the

specified unlawful activity. MS. HAMPTON:

There are three, Your Honor.

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Under Title 18, Section 1344, bank fraud is alleged;

possession of stolen funds in an amount more than $5,000, which

is Title 18, 2314; and finally, offenses against a foreign

nation involving bribery of a public official and

misappropriation, theft, and embezzlement of public funds by or

for the benefit of a public official.

18:1956(c)(7)(b)(iv).

8 9 10

THE COURT: again.

MS. HAMPTON:

THE COURT:

And offenses against a foreign nation

Okay.

That’s two.

And what’s the third

one?

MS. HAMPTON:

THE COURT:

MS. HAMPTON:

The first one is bank fraud. Uh-huh. The second one is possession of stolen

funds --

THE COURT:

MS. HAMPTON:

THE COURT:

Okay.

involving bribery of a public official, et cetera.

Possession of stolen funds in an amount

more than $5,000. THE COURT:

Help me out one more time

the bank fraud and --

Wait.

I -- you said there were three and I only caught two,

11 12

Okay.

And that is cited in

Oh.

Oh, okay.

-- in the amount more than $5,000. Okay.

And the third one is offenses

against a foreign nation involving bribery of a public official EXCEPTIONAL REPORTING SERVICES, INC

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and misappropriation, theft, and embezzlement of public funds

by or for the benefit of a public official.

MS. HAMPTON:

THE COURT:

Yes, Your Honor.

Is that right?

Thatâ&#x20AC;&#x2122;s correct.

And do you understand all of the

predicate offenses, these three specified unlawful activities

that the Government says are involved in this conspiracy,

Mr. Castillo-Cervantes?

going to have to prove all those things, all those elements,

beyond a reasonable doubt before you can be convicted, sir?

THE DEFENDANT:

THE COURT:

Do you understand the Government is

Yes, Your Honor.

Now the maximum possible punishment in

your case, Mr. Castillo-Cervantes, is up to 20 years in federal

prison.

could be fined up to a maximum of $500,000 or alternatively,

twice the value of the property thatâ&#x20AC;&#x2122;s involved in the

commission of the offense.

In addition to the prison term of up to 20 years, you

Do you understand so far, sir?

THE DEFENDANT:

THE COURT:

Yes, Your Honor.

In addition, if you do go to prison, then

when you get out of prison, you would be facing a supervised

release term of up to three years.

period of supervision of your behavior after you are released

from prison.

regulations as set forth by our Courts and by Judge Jack.

you violate any term or condition of your supervised release,

Supervised release is a

You will have to follow certain rules and

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you could go back to prison for up to a maximum of two more

years.

if you were to receive the maximum of two years for violating

supervised release if there’s time left on your term, you can

actually be put back out on supervised release.

again, you can get up to the maximum again for violating

supervised release, and this can continue to happen over and

over until you have finished serving your term of supervised

release.

10 11

It’s also very important that you understand that even

Do you understand the supervised release term and the consequences of violating supervised release, sir?

THE DEFENDANT:

THE COURT:

Yes, Your Honor.

Also, if you are convicted, you will have

to pay a mandatory $100 special assessment.

sir?

Do you understand,

That’s mandatory.

THE DEFENDANT:

THE COURT:

If you violate

Yes, Your Honor.

And, Mr. Castillo-Cervantes, are you a

United States citizen, sir?

THE DEFENDANT:

THE COURT:

Yes, Your Honor.

It’s required even though you have told

me on the record that you’re a United States citizen, it still

my job to tell you under Rule 11 that if you are not a United

States citizen, if you are convicted, you may be removed from

the United States, denied citizenship, and denied admission to

the United States in the future. EXCEPTIONAL REPORTING SERVICES, INC

Case 2:16-cr-00802 Document 54 Filed in TXSD on 01/25/17 Page 28 of 79 28 1

Do you understand?

THE DEFENDANT:

THE COURT:

Yes, Your Honor.

Also, because you are a citizen, if

you’re convicted of this offense, then you’re facing a loss of

certain rights you have as a citizen, such as the right to

vote, the right to hold public office, the right to serve on a

jury, and the right to possess any kind of a firearm.

8 9

Do you understand and have you discussed this with your attorney, sir?

THE DEFENDANT:

THE COURT:

Yes, Your Honor.

All right.

Is everybody satisfied that

I’ve covered the offense and the penalties correctly?

Ms. Hampton?

MS. HAMPTON:

THE COURT:

MR. SALINAS:

THE COURT:

Yes, Your Honor. And Mr. Salinas? Yes, Your Honor. All right.

Mr. Salinas, have you been

given a copy of Judge Jack’s Court's Exhibit 1?

MR. SALINAS:

THE COURT:

I have, Your Honor. I’m going to direct you prior to

sentencing to go over the conditions of supervised release with

your client.

MR. SALINAS:

THE COURT:

Very well. I want to tell you about the sentencing

procedure that Judge Jack will follow in your case, EXCEPTIONAL REPORTING SERVICES, INC

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Mr. Castillo-Cervantes.

presentence report will be prepared.

prepare the report after interviewing you.

lawyer present for this interview.

After a draft of the report is prepared, your lawyer will let

you read it or will read it to you if you cannot read English.

If you notice mistakes in the report, no matter how small, itâ&#x20AC;&#x2122;s

very important that you point them out to your lawyer, who will

help you decide whether you should file formal written

objections.

time of your sentencing.

Before you are sentenced, a A Probation Officer will You may have your

In fact, I recommend it.

Judge Jack will rule on all the objections at the

Do you understand, sir?

THE DEFENDANT:

THE COURT:

Yes, Your Honor.

Also at the time of your sentencing,

Judge Jack will calculate, determine, and consider the advisory

guidelines of the United States Sentencing Commission, together

with any departures or variances from those guidelines, as well

as all other sentencing factors that the Court is required by

law to consider.

give the District Judge advice and guidelines on what would be

an appropriate sentence in your case.

guideline range is going to be based upon the offense you have

committed, your criminal history, whether you were on

supervision when this offense was committed, and various other

aggravating and mitigating factors that the Court finds apply

The sentencing guidelines are advisory.

They

Your sentencing

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to you.

It’s mandatory that Judge Jack calculate your

guideline range and once your guidelines are calculated, she

must consider imposing a guideline sentence but in the end, she

doesn’t have to impose a guideline sentence.

sentence more severe or less severe than the sentencing

guidelines.

very important part in your sentencing.

8 9 10

She can impose a

You can see though that the guidelines will play a

Have you and your attorney discussed how the guidelines might be calculated in your case and applied to you, sir?

THE DEFENDANT:

THE COURT:

Yes, Your Honor.

Do you understand that your attorney’s

estimate is not going to be binding on Judge Jack?

find your range to be higher or lower than your attorney’s

estimate.

Do you understand, sir?

THE DEFENDANT:

THE COURT:

Yes, Your Honor.

All right.

We need to talk about the

guidelines now.

19 20

She could

Ms. Hampton, what are the possible enhancements that would apply in this case?

MS. HAMPTON:

Your Honor, I believe under 2S1.1, he

will start off with a base offense level of eight.

I believe

there will be an enhancement under 2B1.1 of plus 22, possibly,

which is involving more than $25 million dollars in the

conduct.

I do believe there will be a two-point enhancement EXCEPTIONAL REPORTING SERVICES, INC

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for sophisticated money laundering, two levels for the

conviction under 19 --

3 4

THE COURT:

Wait -- wait.

Slow down.

for sophisticated money laundering.

All right.

MS. HAMPTON:

THE COURT:

MS. HAMPTON:

Okay.

The two

Two levels for a 1956 conviction. You mean a prior 1950 -No.

I believe in the guidelines, it

says if he was convicted under 1956, there’s an additional two

levels under 2S1.1.

THE COURT:

MS. HAMPTON:

12 13 14 15

Okay.

Go ahead.

And I think it’s possible, maybe not

likely, that he might receive leadership points. THE COURT:

And how many levels is that?

It’s either

two or four, or? MS. HAMPTON:

I don’t know, Your Honor.

I -- I would

-- it’s hard -- it’s a -- I think it would be a hard argument

for us to make, but I think it’s possible for the Court to find

him either two, three, or four level leadership based on some

of his conduct with the bank.

20 21

THE COURT:

Okay.

And who’s here from Probation,

Ms. Huerta?

PROBATION OFFICER HUERTA:

THE COURT:

24 25

Yes, Your Honor.

Is -- do you agree with all of the

enhancements that Ms. Hampton has mentioned? PROBATION OFFICER HUERTA:

Yes, Your Honor.

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THE COURT:

All right.

And, Mr. Salinas, Iâ&#x20AC;&#x2122;m not

asking your client to agree that any of these enhancements

apply, but have you fully discussed with your client the fact

that all of these enhancements may possibly apply?

MR. SALINAS:

THE COURT:

Yes, Your Honor. Mr. Castillo-Cervantes, have you -- Iâ&#x20AC;&#x2122;m

not asking you to admit to anything today, but I want to make

sure you understand that you might be looking at a 22 level

offense increase because if the -- it turns out that this

offense involved more than $25 million dollars.

11 12

Do you understand that that kind of an enhancement is possibly applicable to your case, sir?

THE DEFENDANT:

THE COURT:

Yes, Your Honor.

And do you understand that also, another

two-level offense could be applied to this case because this is

a -- because of sophistication in terms of the type of money

laundering that was involved?

THE DEFENDANT:

THE COURT:

Do you understand, sir?

Yes, Your Honor.

Do you understand that another two levels

might apply because this is a conviction for -- this involves

money laundering under Title 18, United States Code, Section

1956.

your case?

Do you understand that that enhancement may apply in

THE DEFENDANT:

THE COURT:

Yes, Your Honor.

And do you understand that you may be

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given a leadership role and depending on your role in the

offense, it could either be an increase of two levels or three

levels or four levels for your involvement as a leader in, or

organizer or manager in this offense?

THE DEFENDANT:

THE COURT:

Do you understand, sir?

Yes, Your Honor.

Any other possible enhancements apply to

this case, Ms. Hampton?

MS. HAMPTON:

THE COURT:

No, Your Honor. No obstruction of justice?

And Ms. Huerta, do you agree?

PROBATION OFFICER HUERTA:

THE COURT:

MR. SALINAS:

THE COURT:

And, Mr. Salinas, do you

We don’t agree with -- we agree that -You agree that we’ve talked about all the

possible enhancements --

17 18

Yes, Your Honor.

agree?

All right.

Okay.

MR. SALINAS:

-- we’ve talked about -- yes, Your

Honor.

THE COURT:

-- right.

Okay.

All right.

And, Mr. Castillo-Cervantes, has anyone threatened

you or forced you to plead guilty or promised you leniency if

you would plead guilty, sir?

THE DEFENDANT:

THE COURT:

No, Your Honor.

Are you voluntarily pleading guilty of

this offense because you believe that you are guilty, sir? EXCEPTIONAL REPORTING SERVICES, INC

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THE DEFENDANT:

THE COURT:

Yes, Your Honor.

And is there a written plea agreement?

Ms. Hampton?

MS. HAMPTON:

Yes, there is, Your Honor.

THE COURT:

Mr. Castillo-Cervantes, I believe, that you have in

Okay.

front of you a written plea agreement.

“A Memorandum of a Plea Agreement.”

gone over each and every paragraph of this plea agreement

It’s a document titled

Have you and your attorney

together in Spanish, sir?

THE DEFENDANT:

THE COURT:

THE DEFENDANT:

THE COURT:

THE DEFENDANT:

THE COURT:

Ms. Hampton, would you summarize the plea agreement

18 19

Yes, Your Honor.

Do you understand the agreement, sir? Yes, Your Honor.

And did you sign the agreement? Yes, Your Honor.

May I see the agreement, please?

for me please? MS. HAMPTON:

Yes, Your Honor.

Your Honor, in

consideration for the Defendant’s plea of guilty, his truthful

testimony to the Court today and at sentencing, and his

truthful rendition of facts to U.S. Probation in preparation of

the presentence investigation report, the Government agrees to

recommend that he be given maximum credit for acceptance of

responsibility and a sentence of imprisonment at the lowest end EXCEPTIONAL REPORTING SERVICES, INC

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of the applicable guideline range.

and the Government agrees to dismiss Count Two at the time of

sentencing.

This is a plea to Count One

There’s a provision in the Defendant’s plea agreement

that should he provide substantial assistance to the

Government, the Government will move for a downward departure

on his behalf.

motion rests within the Government’s discretion and whether to

grant that motion rests within the Court’s sole discretion.

He’s admonished that whether to file that

Neither the Government nor any law enforcement

officer can or does make any promise or representation as to

what sentence will be imposed by the Court.

acknowledges that the guidelines are advisory and the Court may

sentence him anywhere up to and including the statutory

maximum.

Defendant commits or attempts to commit additional crimes from

today’s date to the date of sentencing, the Government will be

released of its obligations under this plea agreement.

Defendant will not be released of his obligations, nor of his

plea of guilty.

The Defendant

Should it be judged by the Government that the

The

The Defendant also agrees to several forfeiture

items, which are listed in Paragraph 9, some of which are

administrative forfeitures, some of which are criminal

forfeiture.

sign a preliminary order after today’s plea.

We are asking the Court, the District Court, to Those are the

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items listed in “A” and “B,” a 2008 Learjet 45XR aircraft, and

a personal money judgment in the amount of $5 million dollars.

The Defendant further consents to that final forfeiture

judgment and agrees to take all steps necessary to pass clear

title to forfeitable assets to the United States.

waives any challenge to the forfeiture of this property listed.

THE COURT:

Okay.

He also

Not just the ones that you’re

asking for a signature on today, but to forfeit any interest in

any of the items that are here in paragraph 9?

MS. HAMPTON:

Yes, Your Honor.

“A” and “B” are

subject to criminal forfeiture.

are subject to administrative forfeiture, currently in seizure

status.

THE COURT:

“C” -- Items “C” through “L”

But Mr. Castillo-Cervantes’ requirement

in terms of this plea agreement is not to contest any of these

forfeitures?

MS. HAMPTON:

THE COURT:

Yes, Your Honor. And to do whatever’s necessary to assist

that these forfeitures occur?

MS. HAMPTON:

THE COURT:

Mr. Salinas, is that an accurate summary of your

Yes, Your Honor. Is that right?

client’s plea agreement with the Government?

MS. SALINAS:

THE COURT:

Yes, Judge, it is. Mr. Castillo-Cervantes, is that your

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understanding of the plea agreement that you have with the

Government?

THE DEFENDANT:

THE COURT:

Yes, Your Honor.

And I want to make sure you understand,

in Paragraph 3, that if you -- you’re not required to debrief

with the Government, but if you decide that you want to, then

it’s going to be up to the Government’s lawyer to evaluate what

you have to say and decide whether or not it amounts to

substantial assistance and then, if the Government does make a

motion for a downward departure for substantial assistance,

then it’s going to be up to Judge Jack to decide whether to

grant the motion and how much of a departure to give you.

Do you understand, sir?

THE DEFENDANT:

THE COURT:

Yes, Your Honor.

And do you understand that you’re also

agreeing to assist the Government in any way in its forfeiture

proceedings, either administratively or criminally, to forfeit

all of the property that’s listed in Paragraph 9?

understand and do you agree, sir?

THE DEFENDANT:

THE COURT:

Yes, Your Honor.

And did you enter into this plea

agreement voluntarily, Mr. Castillo-Cervantes?

THE DEFENDANT:

THE COURT:

Do you

Yes, Your Honor.

Do you have any questions about the plea

agreement, sir? EXCEPTIONAL REPORTING SERVICES, INC

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THE DEFENDANT:

THE COURT:

No, Your Honor.

I want to make sure that you understand,

Mr. Castillo-Cervantes, that you have no plea agreement with

Judge Jack.

This plea agreement is with the lawyers for the

Government.

It means that they have to make a certain

recommendation to Judge Jack at the time of your sentencing.

It’s not a promise from Judge Jack that you will receive the

recommended sentence.

sentence will be imposed in your case and you have no plea

You have no promises from her about what

agreement with Judge Jack.

Judge Jack is going to be free to

impose a sentence all the way up to the statutory maximum

sentence of 20 years; and if she chooses to do that, you cannot

take back your plea of guilty.

sentence you had hoped for or were expecting, you cannot take

back your plea of guilty.

Or if you do not receive the

Do you understand, sir?

THE DEFENDANT:

THE COURT:

Yes, Your Honor.

Has anybody promised you exactly what

sentence you would receive in this case, Mr. Castillo-

Cervantes?

THE DEFENDANT:

THE COURT:

THE DEFENDANT:

THE COURT:

No, Your Honor.

Do you have any questions? No, Your Honor.

It’s not too late to change your mind.

Do you still want to plead guilty, sir? EXCEPTIONAL REPORTING SERVICES, INC

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THE DEFENDANT:

THE COURT:

Ms. Hampton, would you read the charge to

Yes, Your Honor.

All right.

Mr. Castillo-Cervantes and take his plea please?

MS. HAMPTON:

Yes, Your Honor.

"The United States of America versus Luis Carlos

Castillo-Cervantes, Criminal Number C-16-00802,

Indictment.

â&#x20AC;&#x153;The Grand Jury charges that, Count One, between on

or about 2006 and up to and including November 10th,

2014, in the Southern District of Texas and elsewhere

within the jurisdiction of the Court, the Defendant,

Luis Carlos Castillo-Cervantes, did knowingly and

intentionally conspire and agree with other persons

known and unknown to the Grand Jury to commit

offenses against the United States in violation of

Title 18, United States Code, Section 1956; to wit,

(a) to transport, transmit, and transfer, and attempt

to transport, transmit, and transfer monetary

instruments and funds involved in the proceeds of

specified unlawful activity; to wit,

possession of stolen funds in an amount more than

$5,000, and offenses against a foreign nation

involving bribery of a public official and

misappropriation, theft, and embezzlement of public EXCEPTIONAL REPORTING SERVICES, INC

bank fraud,

Case 2:16-cr-00802 Document 54 Filed in TXSD on 01/25/17 Page 40 of 79 40 1

funds by or for the benefit of a public official to a

place in the United States from or through a place

outside the United States, knowing that the monetary

instruments and funds involved in the transportation,

transmission, and transfer represented the proceeds

of some form of unlawful activity; to wit,

fraud, possession of stolen funds in an amount more

than $5,000, and offenses against a foreign nation

involving bribery of a public official and

bank

misappropriation, theft, and embezzlement of public

funds by or for the benefit of a public official and

knowing that such transportation, transmission, and

transfer was designed in whole, or in part, to

conceal and disguise the nature, location, source,

ownership, and control of the proceeds of specified

unlawful activity, in violation of Title 18, United

States Code, Section 1956(a)(2)(b)(i); and (b)to

conduct and attempt to conduct financial transactions

which, in fact, involved the proceeds of specified

unlawful activity; to wit,

stolen funds in an amount more than $5,000, and

offenses against a foreign nation involving bribery

of a public official and misappropriation, theft, and

embezzlement of public funds by or for the benefit of

a public official, knowing that the property involved

bank fraud, possession of

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in the transactions represents the proceeds of some

form of activity; to wit,

stolen funds in an amount more than $5,000, and

offenses against a foreign nation involving bribery

of a public official and misappropriation, theft, and

embezzlement of public funds, by or for the benefit

of a public official and knowing that the transaction

was designed in whole or in part to conceal and

disguise the nature, location, source, ownership, and

bank fraud, possession of

control of the proceeds of specified unlawful

activity, in violation of Title 18, United States

Code, Section 1956(a)(1)(b)(i) all in violation of

Title 18, United States Code, Section 1956(h)."

Mr. Luis Carlos Castillo-Cervantes, how do you plead

to Count One of the Indictment, guilty or not guilty?

THE DEFENDANT:

THE COURT:

18 19 20 21

Let me just take a quick

(Court attends another matter from 3:48 to 3:54 p.m.) THE COURT:

All right, are you ready to continue,

Mr. Salinas? MR. SALINAS:

THE COURT:

All right.

break right here.

Guilty.

Yes, Your Honor. Okay, Mr. Castillo, would you come

forward, sir. Mr. Castillo-Cervantes, can you hear and understand EXCEPTIONAL REPORTING SERVICES, INC

Case 2:16-cr-00802 Document 54 Filed in TXSD on 01/25/17 Page 42 of 79 42 1

the interpreter?

DEFENDANT CASTILLO-CERVANTES:

THE COURT:

Yes.

Mr. Castillo, you are still under oath.

I placed you under oath earlier.

if you give false answers to any questions that I ask you,

those answers could later be used against you in another

prosecution for perjury or for making a false statement.

8 9

You are still under oath, and

What I'm going to do at this point is I am going to ask Ms. Hampton, the Government's lawyer, to summarize the

evidence against you.

want you to listen to what she says carefully; and then if you

disagree or want to add anything to what Ms. Hampton has said,

I'll give you an opportunity to do that.

14 15 16 17

She tends to talk kind of fast, and so I

Now, are we going to do this in segments, or are we going to have Ms. Hampton talking for half an hour? MR. SALINAS:

Your Honor, may I address the Court

real quick?

THE COURT:

MR. SALINAS:

Yes. With the Court's permission, I had

proposed to Ms. Hampton, because it's a relatively lengthy plea

colloquy, that we stop after every page.

to let us look at it right now.

because of the holiday, we weren't able to do it; but if the

Court would allow us to use counsel table to sit down and make

a few notes and have Mr. Cervantes join us, and after every

She was kind enough

We had a chance last week, but

EXCEPTIONAL REPORTING SERVICES, INC

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page, I don't think there's going to be much to talk about it,

but in any event, it's part of the Information.

THE COURT:

doing it.

Ms. Hampton?

That would probably be a good way of

Do you have any objection to doing it that way,

MS. HAMPTON:

THE COURT:

No, Your Honor. Okay, you may be seated at counsel table.

And Ms. Hampton, at an appropriate place, if you're in the

middle of a sentence, keep going, but otherwise we'll stop at

every page.

And Mr. Castillo-Cervantes, I want you to listen

carefully, because I will be asking you if the facts stated by

Ms. Hampton are true.

Go ahead, Ms. Hampton.

MS. HAMPTON:

Thank you, Your Honor.

At trial in

this case, the Government would prove, through legal and

competent evidence, that during the course of investigating

several different elected government of Mexico officials, the

United States Government discovered that Luis Carlos Castillo

had made payments from his U.S. business named Rodmax,

R-o-d-m-a-x, to these officials in the United States.

financial transactions that formed the basis of the indictment

occurred between 2006 and November 10, 2014.

The

The payments were frequently made through

International Bank in McAllen, Texas.

JP Morgan Chase Bank was

also used to move money through two offshore accounts in EXCEPTIONAL REPORTING SERVICES, INC

Case 2:16-cr-00802 Document 54 Filed in TXSD on 01/25/17 Page 44 of 79 44 1

Bermuda.

Both of these banks are FDIC insured.

scheme that the Government uncovered in its evidence is that

Mr. Castillo received inflated payments for road contract work

for his Mexican asphalt company in Mexico from the various

Mexican state governments.

United States to his accounts for his U.S. company, Rodmax.

Mr. Castillo would then pay bribes in the U.S. to the

government of Mexico officials.

for these bribes to occur.

The basic

Then he moved those funds to the

It is also illegal in Mexico

Mr. Castillo incorporated Rodmax in the state of

Texas in 2000.

United States, Mr. Castillo was reported to be involved in the

importation and exportation of heavy machinery from the U.S. to

Mexico.

Prior to the development of Rodmax in the

After the development of a paving machine, in which

he had exclusive right to sell, Mr. Castillo started to

negotiate lucrative paving contracts with the state governments

in Mexico.

International Bank in McAllen, Texas, and has been reported by

cooperators on numerous occasion to call that bank his own,

claiming some type of ownership of International Bank.

Mr. Castillo was also a shareholder of

Mr. Castillo brought numerous politically-exposed

individuals onto the IMB, or International Bank, platform.

Through the manipulation of the banking system, individuals

were allowed to launder tens of millions of dollars of money EXCEPTIONAL REPORTING SERVICES, INC

Case 2:16-cr-00802 Document 54 Filed in TXSD on 01/25/17 Page 45 of 79 45 1

laundering proceeds into and out of International Bank.

The

United States' evidence includes bank documents underlying the

transactions, cooperator testimony, business documents, and

search warrant evidence recovered from Mr. Castillo's

residence.

$5 million in U.S. financial transactions, which is the basis

of the $5 million money judgment in the preliminary order of

forfeiture the Government will submit.

Those individuals bribed will include over

Those individuals include Jorge Juan Torres Lopez,

who is the former interim governor of the state of Coahuila,

2011, and before that the treasurer for the state of Coahuila;

Reynoso Femat, the former Mexican governor of the state of

Aguascalientes from 2003 to 2009; Eugenio Hernandez Flores, the

former Mexican governor of Tamaulipas from 2004 to 2010; Oscar

Gomez Guerra, the brother-in-law to Eugenio Hernandez Flores;

and Humberto Moreira, former governor of Coahuila from 2005 to

2011.

18 19 20

MR. SALINAS:

Your Honor, do you want to go ahead and

address him and then I'll go ahead and -THE COURT:

Yes.

Mr. Castillo-Cervantes, is there

anything that the Government's lawyer has said so far that you

disagree with, sir?

23 24 25

(Mr. Salinas conferring with defendant) MR. SALINAS:

Your Honor, he's indicated -- I think I

can get this, if I can -- because we did have the -- we were EXCEPTIONAL REPORTING SERVICES, INC

Case 2:16-cr-00802 Document 54 Filed in TXSD on 01/25/17 Page 46 of 79 46 1

privileged to get a copy.

them were inflated and some of the payments he didn't receive.

And the second issue is when he said that the bank was his,

that's his bank, where I bank, not that he owned the bank.

Those were the only two issues on page one of their description

of the facts.

7 8

THE COURT:

The inflated payments, not all of

Okay.

And so he agreed that he -- he

agrees he's a shareholder in the bank?

(Mr. Salinas conferring with defendant)

MR. SALINAS:

Right, Judge.

And we don't agree that

he ever -- I don't know if that was read by Ms. Hampton, but we

don't agree he ever held a position at the bank.

MS. HAMPTON:

He was a shareholder --

MR. SALINAS:

Right.

MS. HAMPTON:

-- I think is what I said, Your Honor,

and some of the cooperators have stated that he claimed it was

his bank, that he was part owner of the bank.

18 19

THE COURT:

That he made a statement like he was an

owner?

MS. HAMPTON:

Yes.

MR. SALINAS:

And I think -- I'm fluent in Spanish as

well and I think what -- the way he described it to me and Mr.

Ellison was that that was his bank, in the sense that it's my

bank.

it may have been taken some other way.

In Spanish it's mi banco, that's where I bank at. He never held a

EXCEPTIONAL REPORTING SERVICES, INC

That

Case 2:16-cr-00802 Document 54 Filed in TXSD on 01/25/17 Page 47 of 79 47 1

position.

but he was a substantial, I guess, shareholder.

seven percent of the total stock, about seven percent of the

total stock.

He was never a CEO, in an administrative position,

THE COURT:

All right.

He owned about

And are all those facts that

your lawyer has just pointed out and corrections to what

Ms. Hampton said, are all those true, Mr. Castillo-Cervantes?

DEFENDANT CASTILLO-CERVANTES:

THE COURT:

Yes, Your Honor.

Even though you may disagree about the

type of bribes or the amount of money and bribes that were

paid, do you agree that you, in fact, were involved in the

payment of bribes to Mexican government officials?

DEFENDANT CASTILLO-CERVANTES:

THE COURT:

Yes, Your Honor.

All right, thank you.

You may proceed.

You may sit down.

MS. HAMPTON:

Your Honor, from this point it's more

of a general overview of evidence relating to each of the

Mexican politicians that Mr. Castillo dealt with.

I will talk about Jorge Juan Torres Lopez and the evidence

relating to his money laundering schemes with Mr. Castillo.

So at first,

Again, Mr. Torres Lopez was the former governor of

Coahuila.

In 2011, he was appointed interim governor and

before that he was the secretary of finance for that state.

The evidence relating to Mr. Torres Lopez involves the inflated

contracts for paving projects with Mr. Castillo to the amount EXCEPTIONAL REPORTING SERVICES, INC

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of about $6.8 million in U.S. bribes that were paid. Mr. Castillo also helped Mr. Torres Lopez to open an

International Bank account for Mr. Torres, and Mr. Castillo

himself provided over $730,000 in U.S. dollars in deposits.

Mr. Torres Lopez used that money in financial transactions for

the purchase of real property in Montgomery, Texas, and also

layered the purchase of that property by creating shell

corporations and placing the property in that name.

Mr. Torres Lopez also received bribe money in -- in

Mexico, given to him directly from Mr. Castillo in several

duffel bags on several transactions.

for the benefit -- part of the money was ultimately for the

benefit of then Governor Humberto Moreira.

delivered by Mr. Torres Lopez and Mr. Villarreal Hernandez, who

was also the secretary of finance of the state of Coahuila

after Mr. Torres Lopez.

Mr. Torres Lopez and Mr. Villarreal, which was bribe money paid

by Mr. Castillo to Humberto Moreira, and transferred that money

through several financial transactions from Mexican bank

accounts into the U.S., specifically to International Bank,

then to JP Morgan Chase Bank.

accounts created in Bermuda, one at Sun Secured in Bermuda and

one at Old Mutual of Bermuda.

$2.3 million.

The money was ultimately

That money was

They received a portion of that money,

And ultimately there were two

Mr. Villarreal's account was

Mr. Torres Lopez' account was $2.7 million.

In considering the evidence about Mr. Castillo EXCEPTIONAL REPORTING SERVICES, INC

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relating to Mr. Torres Lopez and Mr. Hector Javier Villarreal,

we do have the testimony of Hector Javier Villarreal Hernandez

and Guillermo Flores Cordero to corroborate bank documentation,

both of which are charged here in the Southern District in the

Corpus Christi division, both have been convicted and are

awaiting sentencing.

I said before Mr. Villarreal Hernandez was the

secretary of finance under Jorge Juan Torres Lopez in the state

of Coahuila.

Guillermo Flores Cordero was a wealthy,

successful businessman in the hotel business, who also dealt

with several of these politicians, but also Mr. Castillo.

Mr. Torres' account was open -- at International Bank

was opened in 2008 with a check that was deposited directly

from Rodmax Incorporated, which is

Mr. Castillo's business.

Mr. Castillo's business was located inside the International

Bank building.

of Mr. Castillo.

reflects that they are -- that Mr. Torres' accounts are held on

the sixth floor of the bank, which is the address of

Mr. Castillo and Rodmax.

those mailings could not go into Mexico because they needed to

keep it a secret as far as how much money they had in the U.S.

because they had not reported it.

state of Coahuila, and they did not want people in Mexico to

It was for $10,000.

At that time,

The check also reflects the endorsed signature The International Bank account statement

Mr. Villarreal will testify that

It was stolen money from the

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know about it so they kept it at Mr. Castillo's address.

After that opening of the Torres account at IMB,

there was a Texas Money Exchange check, which is a business

that's also linked to Mr. Castillo, through analysis of the

International Bank Rodmax checking account.

it said "Pay to the order of Rodmax," and it was deposited into

Mr. Torres' IMB account as a third-party draft in the amount of

$286,000 plus.

And in that check,

The next month another check was drawn from --

THE INTERPRETER:

the final amount you said?

MS. HAMPTON:

THE INTERPRETER:

MS. HAMPTON:

Ms. Hampton, I apologize.

What was

It was over $286,000. Thank you.

You're welcome, thank you.

The next

month another check was drawn from Rodmax Incorporated to

Mr. Torres for $184,000.

signed by Mr. Castillo, it's stated in Spanish “comision

Coahuila.”

kickback or a bribe from Mr. Castillo to be involved in the

highway infrastructure projects in Mexico, which is in

violation of federal Mexican law.

In the memo line of that check,

The statement indicates that Mr. Torres received a

In June of 2008, a fourth check from Mr. Castillo or

Rodmax was deposited in the amount of $250,000 into Mr. Torres'

International Bank account.

"comision Coahuila."

Again, the memo line stated

In less than six months, Mr. Castillo and

EXCEPTIONAL REPORTING SERVICES, INC

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his business of Rodmax were responsible for bribe payments to

Mr. Torres of over $730,000, which is seven times Mr. Torres'

legitimate government income in one year at that time.

Open records and public records checks show that

the -- there was unindicted co-conspirator money launderer, and

Mr. Castillo, from 2007 to 2011, received contracts for public

works projects from the state of Coahuila in the form of

aircraft service, road pavement and construction.

amount of public corruption funds laundered by the unindicted

The total

co-conspirator money launderer and Mr. Castillo and moved into

the account of Mr. Torres Lopez was 1.18 -- excuse me,

$1,184,915.

DEA has seized a portion of that, which is $330,000

from the International Bank account of Mr. Torres, which was

leaving a little over $850,000 that was spent on luxury items

out of the account.

laundering and bank fraud here in the Corpus Christi division.

He remains a fugitive to this day.

Mr. Torres is currently indicted for money

The total amount laundered through the International

Bank account of Mr. Torres Lopez from October of '07 to August

of 2012 due to Mr. Castillo's facilitation efforts was over $2

million.

One thing I did leave out, and it's a common scheme

in these bank accounts and the evidence in this case, that

there are lies being told to the bank which constitute bank EXCEPTIONAL REPORTING SERVICES, INC

Case 2:16-cr-00802 Document 54 Filed in TXSD on 01/25/17 Page 52 of 79 52 1

fraud when a bank account is being opened as far as where the

money is from and what the person does for a living.

case, Mr. Torres Lopez told the bank that he owns a business

called LAE and that he's a business administrator.

he was a politically-exposed person, a public official of

Mexico.

At the time

(Mr. Salinas conferring with defendant)

8 9

In this

MR. SALINAS:

Your Honor, his only objection to --

issue with page two of the recitation is he doesn't remember,

and this has been, I guess, (indiscernible) doesn't remember

all the exact amounts.

through these accounts, except he doesn't recall the exact

amounts.

THE COURT:

He's not denying that money did go

Mr. Castillo-Cervantes, is that correct,

you agree generally with what Ms. Hampton has said, but you

just don't remember the specific amounts over time, but you do

generally agree that these bribes were paid and these accounts

were opened and money went into them?

sir?

Do you agree to that,

DEFENDANT CASTILLO-CERVANTES:

THE COURT:

Yes, Your Honor.

And do you agree that there was bank

fraud involved in the representation by officials for the

opening -- the representations made to open the bank accounts

of where the money came from?

representation, sir?

Do you agree with that

EXCEPTIONAL REPORTING SERVICES, INC

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DEFENDANT CASTILLO-CERVANTES:

THE COURT:

Yes, Your Honor.

Is there anything else that you disagree

with, sir, so far?

DEFENDANT CASTILLO-CERVANTES:

THE COURT:

MS. HAMPTON:

All right.

No, Your Honor.

Go ahead, please.

Regarding Luis Armando Reynoso Femat,

who is the former governor of Aguascalientes, the Government's

evidence shows that Mr. Castillo, through bank documentation,

referred Mr. Reynoso to International Bank to open an account

that would be used to move stolen money from the state of

Aguascalientes into the U.S. in excess of $3 million.

Mr. Reynoso used Mr. Castillo's business address in Reynosa as

an address on the International Bank account, which is

consistent with what other bank accounts have shown when

Mr. Castillo aids these people in opening the accounts.

The total amount of U.S. dollars laundered through

this International Bank account of Mr. Reynoso from March, 2008

to July of 2012, with the help of Mr. Castillo, was over

$3.3 million.

notice was sent to the address of Mr. Castillo in Reynosa

Tamaulipas, Mexico, which is his business address.

The account was closed on July 9, 2012, and the

In banking documents, Mr. Reynoso also told the bank

that he is self-employed as an attorney at law, when he was, in

fact, a politician in Mexico at the time.

MR. SALINAS:

I'm sorry, Your Honor, I didn't get

EXCEPTIONAL REPORTING SERVICES, INC

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that last part.

MS. HAMPTON:

Mr. Reynoso stated to the bank

officials at IMB that he's self-employed as an attorney at law,

when he was a politically-exposed person.

And I would put on the record that there's a higher

level of scrutiny if someone is deemed to be a

politically-exposed person in the banking regulations when they

open an account.

conduct going on for them not to disclose to the bank that

So there's an incentive if there's illegal

they're a politically-exposed person.

MR. SALINAS:

He didn't in this case.

He doesn't deny that account was

opened, Judge.

documents, I don't know if he has first-hand knowledge of that.

I think we've seen some of these documents, Number 1.

2, the only objection is the exact amount.

were transferred at that particular period in time.

he can't tell the Court under oath that, yes, this was the

amount.

there were moneys that were transferred, that were exchanged.

20 21

The information that was actually in the

He doesn't recall right now.

THE COURT:

He knows moneys It just --

But he doesn't deny that

Is that correct, Mr. Castillo-Cervantes,

what your lawyer said?

DEFENDANT CASTILLO-CERVANTES:

THE COURT:

MS. HAMPTON:

Number

Okay.

Yes, Your Honor.

All right, go ahead.

Next is the account information

involving Eugenio Hernandez Flores and Oscar Gomez Guerra. EXCEPTIONAL REPORTING SERVICES, INC

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They're significantly tied together.

Mr. Gomez is Mr. Hernandez Flores' brother-in-law and was used

many times as a straw purchaser or straw owner of various bank

accounts or properties that Mr. Eugenio Hernandez Flores was

involved with.

As I said before,

Overview is that Mr. Gomez operated as a straw

accountholder for the benefit of Mr. Hernandez, which were, in

part, funded by Mr. Castillo.

for paving projects where overbilled amounts were split between

There were inflated contracts

Mr. Castillo and Mr. Hernandez while Mr. Hernandez was the

governor of Tamaulipas.

straw accounts in the U.S. by referring shell company holders

to International Bank and also allowed Mr. Hernandez to

launder -- this allowed Mr. Hernandez to launder over

$30 million in the U.S. through International Bank accounts

using various fraudulent schemes.

Mr. Castillo also helped to set up

Specifically, from at least February of 2009 to 2013,

Guillermo Flores Cordero used three Mexican shell companies to

launder stolen money from Tamaulipas into the U.S.

accounts for the Mexican shell companies, along with the

personal accounts of Mr. Flores and his wife and others at

International Bank and Wells Fargo Bank, confirmed in and out

transactions of over $31 million through the U.S. banking

system.

has already been forfeited to the United States.

Bank

Many of that has already been -- much of that money

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The money moving through the accounts has been

identified as laundered proceeds that were used to buy

high-dollar homes and also secreted into certificates of

deposits in order to hide the true identities of owners, such

as Elsa Hernandez, the sister of Eugenio Hernandez.

In August of 2013, Guillermo Flores Cordero was

arrested for money laundering and operating an unlicensed money

transmitting business.

in this division.

10 11

He's currently pending sentencing here

He is --

THE INTERPRETER:

Sorry, could you go back and repeat

that sentence.

MS. HAMPTON:

Yes.

THE INTERPRETER:

MS. HAMPTON:

Thank you.

In August of 2013, Mr. Flores Cordero

was arrested for money laundering and operating an unlicensed

money transmitting business.

in this division and has agreed to cooperate and testify

against Mr. Castillo.

bank accounts from July of 2008 to August of 2012 that

laundered money involved in public corruption, bribery and

suspected drug trafficking.

the three shell corporations were set up exclusively for money

laundering at International Bank, and Mr. Flores was referred

to the bank by Mr. Castillo and Oscar Gomez Guerra.

He's pending sentencing currently

Essentially, Mr. Flores set up shell

The International Bank accounts of

Mr. Flores would testify about three specific EXCEPTIONAL REPORTING SERVICES, INC

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schemes.

detail, but the three schemes were to steal money from the

government of Tamaulipas and to bring it into the U.S. for the

benefit of Eugenio Hernandez.

million pesos, which is approximately $13.6 million; the second

scheme involved 180 million pesos, which is approximately 16.5

million U.S. dollars; and the final scheme and final money

movement that did occur involved about $2.3 million.

They're very detailed and I will not go into all the

The first scheme involved 150

The Government has identified several accounts that

were used by Eugenio Hernandez in the U.S. at International

Bank.

was the former director of COMAPA, C-O-M-A-P-A, which is,

basically, the water in Reynosa Tamaulipas.

as a straw accountholder for Eugenio Hernandez in a specific

IMB account under the name of his grandmother, Celia Palomares.

That account has also been forfeited to the U.S.

One was under the name of Alvaro Garcia Gonzalez, who

He was being used

From September of '08 to October of 2010, that

account held in a CD was fed money sent from Guillermo Flores'

shell companies totaling over 4 million U.S. dollars.

Mr. Oscar Gomez also set up a bank account at International

Bank.

information about his income but also stated that he was

referred to the bank by Luis Carlos Castillo.

'08 to August of '08, over $3.4 million came into Mr. Gomez'

IMB account through international wires and international

From his Mexican visa, he provided the bank with false

From March of

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transfers from the accounts of the three Mexican shell

corporations created by Guillermo Flores.

In August of 2009, Mr. Castillo received into his

personal account $1 million exactly out of the international

bank account of one of the shell corporations.

Mr. Castillo removed $1 million to the Mexican bank account

held by Grupo Soluciones.

investment with Oscar Gomez and Eugenio Hernandez, and it

appears that it was a bribe for Eugenio Hernandez.

10 11 12

That same day,

That money was used in support of an

The money

was layered through the accounts of International Bank. (Mr. Salinas conferring with defendant) MR. SALINAS:

Your Honor, he doesn't deny any of the

referrals that were made to this bank.

Well, not -- let me

change that.

were made to the bank.

issue with any involvement with Alvaro --

He doesn't deny that there were referrals that He -- the defense -- Mr. Castillo takes

MS. HAMPTON:

Garcia Gonzalez.

MR. SALINAS:

Garcia Gonzalez and â&#x20AC;&#x201C;-

(Defendant conferring)

MR. SALINAS:

Right.

He's not -- he's not -- he

doesn't agree with the -- I guess he does agree with their

factual recitation, doesn't claim that it didn't happen;

however, his position is that he's never been involved with Mr.

Alvaro Garcia Gonzalez and the same with

Mr. Guillermo â&#x20AC;&#x201C;EXCEPTIONAL REPORTING SERVICES, INC

Case 2:16-cr-00802 Document 54 Filed in TXSD on 01/25/17 Page 59 of 79 59 1

(Defendant conferring)

MR. SALINAS:

With the exception of one deposit that

Oscar Gomez had asked in reference to Mr. Guillermo.

is more of an issue of relevant conduct, Judge, I think, that

weâ&#x20AC;&#x2122;d like to reserve the right to probably further discuss that

if and when it becomes an issue at the time of sentencing.

7 8 9 10

THE COURT:

You're talking about Mr. Flores Cordero,

is the one? MR. SALINAS:

The whole issue involving the possible

use of that account to transfer, roughly, $30 million.

THE COURT:

in the transfer of $30 million?

And this

MR. SALINAS:

So he's disputing any of that involvement

Right.

And I think the Government

would agree that the reason this may be an issue that needs to

be taken up later is that initially he was the one that had

made efforts to open up that account for the other activity

that was going on regarding these contracts out of Mexico.

stop me if I'm wrong at some point.

that, after he was done with that, I think that the account may

have been used differently, much to the exclusion -- or

possibly our contention is much to the exclusion of Mr. Luis

Carlos Castillo.

THE COURT:

And

However, subsequent to

So he agrees that he helped to get the

account open to use to further his -- the bribery and the

asphalt contracts? EXCEPTIONAL REPORTING SERVICES, INC

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MR. SALINAS:

It was a deposit, that deposit that was

MS. HAMPTON:

There's a $1 million transfer between

made.

the shell corporation to Mr. Castillo, and then he sent it back

into Mexico, is what he's, I think, agreeing to.

MR. SALINAS:

And I think what he's claiming is that

he made the recommendation to the bank to open up the account

because someone --

9 10

(Defendant conferring) MR. SALINAS:

Oscar Gomez had indicated to him that

he was an empresario, is the word he's using, from Mexico to

open up an account.

involvement with any of the money that -- any of the $30

million that went to the account.

15 16

However, he denies that he had any

THE COURT:

Is that your position,

Mr. Castillo-Cervantes?

DEFENDANT CASTILLO-CERVANTES:

THE COURT:

All right.

Yes, Your Honor.

And Ms. Hampton, do you agree

that's a sentencing issue and a relevant conduct issue?

MS. HAMPTON:

THE COURT:

MS. HAMPTON:

Yes, Your Honor. All right, go ahead. Next, I'd just kind of like to

highlight the testimony of Hector Javier Villarreal Hernandez

and Guillermo Flores Cordero relating to Mr. Castillo.

THE COURT:

Okay.

EXCEPTIONAL REPORTING SERVICES, INC

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MS. HAMPTON:

Mr. Hector Javier Villarreal Hernandez

held multiple positions of authority in the state government in

Mexico and interacted with Mr. Castillo in furtherance of

corruption schemes.

division and also the Western District of Texas, San Antonio

Division for money laundering charges.

Mr. Castillo held the rights to pave roads all over Mexico from

2006 to 2007, and he charged 162 Mexican pesos per square

meter, when the average market price was 80 to 90 Mexican

He is pending sentencing both in this

He will testify that

pesos.

Mr. Castillo was charging double the rate for paving services

on an 18-month contract.

Due to his position, Mr. Hernandez was aware that

In 2008, according to Mr. Hernandez, Mr. Castillo

provided an $80 million Mexican peso, which is approximately

$6.8 million U.S. dollars, based on the exchange rate, bribe to

Mr. Torres, who was the then secretary of finance in Coahuila.

Mr. Villarreal and Mr. Torres delivered this money in cash to

the then governor of Coahuila, Humberto Moreira's, house in

Saltillo, Coahuila.

money was Moreira's cut of the bribe or kickback from Mr.

Castillo for the inflated contracts.

Mr. Torres told Mr. Villarreal that this

Between December of '07 and '08, Mr. Castillo

delivered the 80 million Mexican pesos to Mr. Torres at a

particular hangar, aircraft hangar, in Coahuila.

Mr. Villarreal was present for two of the deliveries and knows EXCEPTIONAL REPORTING SERVICES, INC

Case 2:16-cr-00802 Document 54 Filed in TXSD on 01/25/17 Page 62 of 79 62 1

of a third as well.

amount of money, Mr. Villarreal and Mr. Torres drove duffel

bags of cash to Mr. Torres' private residence, carried the

duffel bags to a bedroom, and Mr. Torres opened the duffel bags

and added stacks of cash to the bag until it contained

approximately 40 million Mexican pesos.

After Mr. Castillo delivered the last

That same evening, Mr. Villarreal and Mr. Torres

delivered the money to Mr. Moreira's residence in Saltillo.

Mr. Torres told Mr. Villarreal that this money was

Mr. Moreira's cut of the kickback or bribes for the inflated

contracts that Mr. Castillo was awarded.

that he and Mr. Torres invested the money from this bribery

scheme in two offshore Bermuda accounts.

was sent to Old Mutual Bermuda in 2008 and also to Sun Trust in

Bermuda from JP Morgan Chase as well.

Mr. Villarreal knows

JP Morgan Chase money

Mr. Villarreal lied to the bank and told the bank

that his mistress was, in fact, his wife, put her on the

account, and was able to successfully move in three wire

transfers over $2.3 million to Bermuda from JP Morgan Chase.

Between August of '09 and April of '11, there were six wire

transfers, including three deposits from a Brownsville, Texas,

JP Morgan Chase account.

three deposits totaling $3.9 million in Mr. Torres' account and

withdrawals totaling 1.9 U.S. dollars.

During that time, there were also

When questioned by the bank, Mr. Villarreal told the EXCEPTIONAL REPORTING SERVICES, INC

Case 2:16-cr-00802 Document 54 Filed in TXSD on 01/25/17 Page 63 of 79 63 1

bank that the money was from airplane sales with Imperial Air.

Imperial Air is also Mr. Castillo's company and the owner of

the Learjet in the indictment.

JP Morgan Chase asked for documentation about these wire

transfers to explain the large quantity of money.

Mr. Villarreal provided false documentation to JP Morgan Chase,

which were signed by Mr. Castillo to the bank as proof.

Mr. Villarreal will testify that Mr. Castillo executed the

false contracts so that they could fool the bank, using his

Bank officials asked for a --

company Imperial Air.

From October of '07 to November of '09, Mr. Castillo

and an unindicted co-conspirator money launderer provided

Mr. Torres a total of $1.1 million, which was deposited in the

form of checks and wires into Mr. Torres' International Bank

account.

According to Mr. Villarreal, Mr. Torres used the

illegal moneys obtained from Mr. Castillo to build a house in

Montgomery, Texas.

documentation and has filed forfeiture proceedings against the

house.

placed in a shell company named by Mr. Torres, and the proceeds

were seized by the federal government.

The Government has verified this through

In December of 2015, that house was sold after it was

MR. SALINAS:

Your Honor, I think the only issues

that we have -- we don't have any dispute about the fact that

Mr. Villarreal will testify that way, but there are particulars EXCEPTIONAL REPORTING SERVICES, INC

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in his proposed testimony had we gone to trial that, obviously,

we’re completely incapable of knowing.

Bermuda stuff and some of these offshore accounts, Mr. Castillo

has no knowledge of that.

the other issue.

signature, obviously, we've already discussed that.

contest that, Judge.

Mr. Villarreal provided, he was not in a position to know what

he may or may not have done with the sale of some of his

For instance, the

The sale of the home, I think, was

The issues regarding the plane and the He doesn't

But some of the other testimony that

property and what he may have done with some of these funds as

far as offshore accounts and stuff like that.

12 13 14

THE COURT:

Mr. Castillo, is that a correct

representation that your lawyer has made on your behalf, sir? MR. SALINAS:

The only addition he asked me to make,

Your Honor, was he doesn't agree with this idea that some of

these contracts were completely inflated.

there was a commission kickback process; however,

Mr. Villarreal is claiming that these contracts were -- the

amounts that he’s claiming that these contracts were inflated

by, he doesn't agree with that.

THE COURT:

He doesn't deny that

So your client, Mr. Castillo, disagrees

about the level of inflation, but he doesn't disagree that he

received a commission --

MR. SALINAS:

THE COURT:

Right. -- back or any kind of a –- that, in

EXCEPTIONAL REPORTING SERVICES, INC

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effect, was a bribe?

MR. SALINAS:

Right, if they were inflated at all.

And the reason for that is that there's so many dates in this,

Your Honor, and going through all the documents, obviously, his

memory has been better served by looking at these documents,

but the amount of money, the -- that was being paid for the

contract, that's difficult for him to tell the Court today

without -- again, he doesn't deny that the bribes were paid;

however, when you're talking about specific amounts, it's

somewhat difficult.

Again, the issues concerning the airplane and the

signature on some of the stuff with Imperial Air, thatâ&#x20AC;&#x2122;s --

we've discussed that.

the other items, the items that Mr. Villarreal gave, whatever

he may have done with the money and the specific numbers, and

he objects to any -- either objects or he doesn't recall

whether or not any of these contracts were inflated.

THE COURT:

He doesn't deny that.

However, some of

Mr. Castillo-Cervantes, are all the

representations that your lawyer has made, are all of those

true, sir?

DEFENDANT CASTILLO-CERVANTES:

THE COURT:

Yes, Your Honor.

Now, there was a -- Ms. Hampton mentioned

that false contracts were provided to JP Morgan Chase involving

some kind of an airplane sale or airplane business, and you

agree that, in fact, you were involved; you did sign those EXCEPTIONAL REPORTING SERVICES, INC

Case 2:16-cr-00802 Document 54 Filed in TXSD on 01/25/17 Page 66 of 79 66 1

contracts and you were involved in that fraudulent

representation to JP Morgan Chase Bank, sir?

(Mr. Salinas conferring with defendant)

MR. SALINAS:

He agrees that -- he doesn't know

whether or not -- he doesn't know -- he did not know that they

were going to actually be presented to JP Morgan, but he did

sign the document and it was to justify the moneys that they

were going to receive.

9 10

THE COURT: false; is that right?

MR. SALINAS:

THE COURT:

And he knew that the documents were

Yes. And is that correct, Mr. Castillo, you

knew those documents were false?

DEFENDANT CASTILLO-CERVANTES:

THE COURT:

MS. HAMPTON:

Yes, Your Honor.

Go ahead. Okay, Your Honor.

Mr. Villarreal would

also talk about a connection between Mr. Castillo and Humberto

Moreira, the former governor of Coahuila.

some others have identified a particular residence in San

Antonio, Texas, as a residence belonging to Humberto Moreira.

IRS agents have obtained records from Chicago Title Company,

and they show that on May 14, 2009, Martinez de la Fuerte was a

named buyer of this property that we're talking about in San

Antonio, Texas, in the Greystone Country Estates, which is a

subdivision there.

Mr. Villarreal and

The sales price of the residence was

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$605,000, the earnest money deposit was $5500, and the prorated

resulting -- resulted in an amount due at closing of

$597,265.71.

On May 14, 2009, a wire transfer of $597,266 --

sorry, $597,266, so a few cents over the amount due at closing,

was sent from Rodmax Incorporated to the -- from Rodmax

Incorporated's IMB account to the account of Chicago Title

Company.

purchase price which completed the purchase of this property

This single payment by Mr. Castillo was the full

owned by Humberto Moreira.

proceedings pending regarding that property in San Antonio,

Texas, in the Western Direct.

There are currently forfeiture

Now I'll jump to Mr. Guillermo Flores Cordero's

testimony which is not as long.

THE COURT:

Mr. --

Wait, maybe we could take care of this

one first.

MS. HAMPTON:

Sure.

MR. SALINAS:

Your Honor, his contention is that that

was part of the payment that he owed to Rayette (phonetic), I

think that's the way you say it.

know if he completely understood that it was for the purchase

of a home.

It is a payment that was due to Rayette.

(Defendant conferring)

MR. SALINAS:

Other than that -- I don't

Okay.

This individual, Moreira,

apparently said that there were moneys that were due to EXCEPTIONAL REPORTING SERVICES, INC

Case 2:16-cr-00802 Document 54 Filed in TXSD on 01/25/17 Page 68 of 79 68 1

Moreira, and instead of paying them directly to Moreira --

(Defendant conferring)

MR. SALINAS:

He says send it to Rayette, where there

was moneys that were owed to Rayette.

that's --

(Defendant conferring)

MR. SALINAS:

8 9

And I think that

Your Honor, can he say that in Spanish

and can we get a translation, please? THE COURT:

Yes.

THE INTERPRETER:

May I get close to him, Your Honor?

DEFENDANT CASTILLO-CERVANTES:

I owed money to

Rayette Aero Services in Saldillo (phonetic).

me send what you owe me to this company, and I was never made

aware that it was for the payment of a house, nor that it was

(indiscernible) either.

THE COURT:

MS. HAMPTON:

And Rayette told

That's all.

All right, go ahead, Ms. Hampton. Mr. Flores Cordero would testify that

Mr. Castillo was good friends with Eugenio Hernandez, Humberto

Moreira, and the Mexican president Enrique Pena Nieto, going

back to the time when Mr. Pena Nieto was a governor of the

state of Mexico.

that Mr. Castillo's construction company was involved in road

construction and they were stealing government money by cutting

costs and making more profits from the project.

According to Mr. Flores, he would testify

Mr. Flores said he was aware of a $3 billion -EXCEPTIONAL REPORTING SERVICES, INC

Case 2:16-cr-00802 Document 54 Filed in TXSD on 01/25/17 Page 69 of 79 69 1

sorry, 3 billion peso highway project that was awarded to

Mr. Castillo during Eugenio Hernandez' governorship.

Mr. Flores will testify that Mr. Hernandez received a 10

percent kickback or bribe for awarding the contract to

Mr. Castillo.

was over-estimated or over-inflated and that Mr. Castillo also

profited by reducing the quality of the road construction.

8 9

Mr. Flores would testify that the project cost

On August of 2009, Mr. Castillo received into his personal account $1 million out of the International Bank

account from a shell company that Mr. Flores created.

Mr. Flores will testify that this was a bribe for Eugenio

Hernandez, and the money was layered through the accounts of

International Bank to attempt to show some sort of legitimacy.

Mr. Flores would testify in late 2008 he arrived in

McAllen, Texas, at an airport in a chartered aircraft and that

Mr. Castillo, Oscar Gomez, and some bank employees from

International Bank picked them up at the airport.

International Bank in McAllen, Texas, together.

would testify that Mr. Castillo presented himself as a chief of

the bank and that Mr. Flores said that they entered

International Bank with Mr. Castillo to open the accounts, and

Mr. Castillo facilitated that, which allowed Mr. Flores Cordero

to move $30 million into the U.S. of stolen money.

24 25

MR. SALINAS: translator?

They went to

Mr. Flores

Your Honor, can we do this with a

I think it would be easier to do it that way EXCEPTIONAL REPORTING SERVICES, INC

Case 2:16-cr-00802 Document 54 Filed in TXSD on 01/25/17 Page 70 of 79 70 1

instead of --

THE COURT:

Yes.

DEFENDANT CASTILLO-CERVANTES:

Mr. Flores, I -- well,

I don't remember if Mr. Gomez also assisted him to open the

account at International Bank.

Mr. Guillermo Flores by Mr. Gomez.

Never in my life would I be able to have a relationship or a

friendship with him because I really only saw him about four

times, so I really couldn't have had a friendship with him or

I was introduced to He is a businessperson.

(indiscernible) or any other person.

And he did the accounts,

regarding the $1 million that they deposited with me, Oscar

Gomez told me that I was being sent that money as an investment

for a company in Mexico, but I never knew that that money had

to do with issues of corruption, or what that money was to go

into.

That's all.

THE COURT:

MS. HAMPTON:

All right, Ms. Hampton. Your Honor, at the search warrant of

Mr. Castillo's house this past October, pertinent documents

uncovered and seized by the Government consist of ledgers with

bribe payments to politically-exposed people who were listed,

including Eugenio Hernandez and others.

International Bank records, which include Rodmax, wire payments

and check bribe payments to politically-exposed people, and

pictures of Mr. Castillo with politically-exposed persons.

Mr. Castillo's

Agents discovered a document laying out, commissions EXCEPTIONAL REPORTING SERVICES, INC

Case 2:16-cr-00802 Document 54 Filed in TXSD on 01/25/17 Page 71 of 79 71 1

or bribes to be paid with handwritten notations from

Mr. Castillo as to the nominee individual to pay on their

behalf.

that the money was going to and the person that was the nominee

person that Mr. Castillo was to pay the bribes to.

also payments to these nominee individuals that are documented

as well with specific amounts.

for moneys to be collected, as well in 2006, which may -- and

also some of the commission payments began in 2004, according

10 11

So there were numbers and there were the actual person

There were

There was a breakdown by state

to Mr. Castillo's handwritten notes. Finally, talk about the Learjet for a minute as the

basis for forfeiture, Your Honor.

Bombardier Learjet, an aircraft purchase agreement, dated

January of 2007, showed this Learjet agreed to â&#x20AC;&#x201C;- that the

Learjet agreed to sell Learjet 45 to Imperial Air LP.

Bombardier Learjet aircraft sales invoice, dated January 2008,

shows that the Imperial Air company of Mr. Castillo purchased

it, with a tail number N135CG, and the balance due at delivery

of $8,700,000.

According to records from

A United States of America U.S. Department of

Transportation FAA aircraft bill of sale, dated January of '08,

shows that Imperial Air purchased that particular aircraft.

The Imperial Air International Bank account funded the down

payment for the purchase of the aircraft.

delivery was 8.7 and was sent by a wire transfer from U.S.

The amount due at

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Aircraft Titles, Incorporated to -- I'm sorry, from IMB to U.S.

Aircraft Titles, Incorporated.

funded in part by a loan from International Bank to Imperial

Air, LP.

The amount due at delivery was

From 2009 through January of '06, loan payments from

Imperial Air International Bank to Imperial -- excuse me, to

International Bank, the loan amount amounted to at least $3.3

million.

to pay bribe payments to several corrupt Mexican state

The Rodmax International Bank account that was used

government officials also funded the Imperial Air International

bank accounts.

down payments and loan payments as well.

These Imperial Air accounts were used to make

Both Hector Javier Villarreal Hernandez and

Mr. Flores Cordero have identified a picture of Mr. Castillo's

Learjet as belonging to Mr. Castillo.

records from U.S. Customs and Border Protection Air and Marine

Operations Center show that several Mexican state government

officials traveled on Mr. Castillo's Learjet on several

occasions, and the Government's evidence is that Mr. Castillo

provided these trips as bribes to the state government

officials.

22 23 24 25

Passenger manifest

Those are the facts in this case, Your Honor. (Mr. Salinas conferring with defendant) MR. SALINAS:

Your Honor, the only issue is that the

way that the plane was used was -- I don't know if it was an EXCEPTIONAL REPORTING SERVICES, INC

Case 2:16-cr-00802 Document 54 Filed in TXSD on 01/25/17 Page 73 of 79 73 1

added bribe, but he doesn't deny that the plane was used.

Whether or not it was specifically for that purpose, I mean,

that's an issue that may not be relevant at the time of

sentencing.

the plane was bought with funds during that relevant period of

time, and there's no question to that.

He's consented to the forfeiture and the fact that

THE COURT:

Mr. Castillo-Cervantes, is that correct,

was the plane purchased with the proceeds of some of this

unlawful activity?

(Mr. Salinas conferring with defendant)

MR. SALINAS:

He's indicated to me that it was part

of the -- it wasn't -- I guess his misunderstanding is that

they weren't the bribe moneys, they were moneys derived from

the contract subsequent to or before, but those

contracts -- those contract moneys were used to purchase the

plane.

THE COURT:

DEFENDANT CASTILLO-CERVANTES:

THE COURT:

Is that correct, Mr. Castillo? Yes, Your Honor.

All right, is that it on the factual

basis, Ms. Hampton?

MS. HAMPTON:

Yes, Your Honor.

THE COURT:

Mr. Castillo, do you agree -- while you might not

Would the parties come forward, please?

agree with every single fact that was recited by Ms. Hampton,

do you agree that you entered into a conspiracy and an EXCEPTIONAL REPORTING SERVICES, INC

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agreement with others to violate the money laundering statute,

sir?

DEFENDANT CASTILLO-CERVANTES:

THE COURT:

Yes, Your Honor.

And do you agree that within the time

period specified in the indictment there, 2006 to November

2014, that one of the objects of this money laundering

conspiracy was to transport, transmit, and transfer and attempt

to transport, transmit and transfer monetary instruments and

funds involving the proceeds of bank fraud?

DEFENDANT CASTILLO-CERVANTES:

THE COURT:

Yes, Your Honor.

And involving the proceeds of stolen

funds in an amount more than $5,000?

DEFENDANT CASTILLO-CERVANTES:

THE COURT:

Yes, Your Honor.

And offenses against a foreign nation

involving bribery of a public official and misappropriation,

theft and embezzlement of public funds by or for the benefit of

a public official?

Do you agree?

DEFENDANT CASTILLO-CERVANTES:

THE COURT:

Yes, Your Honor.

And these financial transactions were

made from a place inside the United States or through a place

outside the United States to a place inside the United States,

knowing that these moneys and funds involved the proceeds of

this specified unlawful activity.

Do you agree, sir?

DEFENDANT CASTILLO-CERVANTES:

THE COURT:

Yes, Your Honor.

And do you agree that these offenses

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were -- these transactions, financial transactions, were

designed in whole or in part to conceal and disguise the

nature, location, ownership, source and control of the proceeds

of the offenses mentioned earlier?

DEFENDANT CASTILLO-CERVANTES:

THE COURT:

Yes, Your Honor.

And do you agree that this money

laundering conspiracy included conducting and attempting to

conduct financial transactions which involve the proceeds of

these three offenses:

bank fraud, possession of stolen funds,

and offenses against a foreign nation involving bribery of

public officials and misappropriation, theft, and embezzlement

of public funds by or for the benefit of a public official?

you agree with that, sir?

DEFENDANT CASTILLO-CERVANTES:

THE COURT:

Yes, Your Honor.

And do you agree and did you know that

the property involved in all of these transactions represented

the proceeds of some form of unlawful activity?

DEFENDANT CASTILLO-CERVANTES:

THE COURT:

Yes, Your Honor.

And did you know that these transactions

were designed in whole or in part to conceal and disguise the

nature, location, source, ownership and control of the proceeds

of the specified unlawful activity, sir?

DEFENDANT CASTILLO-CERVANTES:

THE COURT:

Yes, Your Honor.

And Ms. Hampton, are you satisfied that

the defendant has admitted to the factual basis as far as the EXCEPTIONAL REPORTING SERVICES, INC

Case 2:16-cr-00802 Document 54 Filed in TXSD on 01/25/17 Page 76 of 79 76 1

elements of the offenses that he's -- of the offense listed in

Count One?

MS. HAMPTON:

THE COURT:

MR. SALINAS:

THE COURT:

Yes, Your Honor. Do you agree, Mr. Salinas? I do, Your Honor. Do you believe that all the requirements

of Rule 11 have been met as to your client, Mr. Salinas?

MR. SALINAS:

THE COURT:

MS. HAMPTON:

THE COURT:

I do, Your Honor. And Ms. Hampton, as to the defendant? Yes, Your Honor. It's the finding of the Court in this

case that Mr. Castillo-Cervantes is fully competent and capable

of entering an informed plea; that he's aware of the nature of

the charge, the consequences of the plea, and the plea of

guilty is a knowing and voluntary plea supported by an

independent basis in fact containing each of the essential

elements of the offense.

adopt my findings and accept this guilty plea and I will file

written findings.

objections.

I will recommend that Judge Jack

Counsel will have 14 days to file

I'm going to order a PSI.

The PSI is due to the

parties, first draft, February 7th.

February the 22nd, final PSI to the parties March 4th, and

sentencing is scheduled for March the 20th at 1:15 in the

afternoon.

Objections are due

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I'm going to hand down this sentencing order and ask for signatures on it, and then when we need to talk about --

MS. HAMPTON:

Your Honor, I'd also submit for the

District Court's consideration the preliminary order of

forfeiture.

6 7

THE COURT:

Am I able to sign this, or would it be

better to hold on to it and give it to Judge Jack tomorrow?

THE CLERK:

I think she has to sign it, Your Honor.

THE COURT:

I think she has to too.

MS. HAMPTON:

THE COURT:

MS. HAMPTON:

THE COURT:

Do you object to having her file that

ECF?

MR. SALINAS:

THE COURT:

I could file it ECF if you'd rather.

Whatever's easier.

15 16

No, you just give it to Linda to present

to Judge Jack tomorrow.

13 14

Do I give it back to --

No, Your Honor Okay, all right.

And all right, now, has

the sentencing order been signed by everybody?

MS. HAMPTON:

THE COURT:

Yes, Your Honor. Okay.

Now, Pretrial Services has

indicated that the defendant is compliant with the conditions

of his bond since November 21st, and the recommendation is that

he be remanded pursuant to 3143(a)(2), unless there are

exceptional circumstances.

What's the position of the

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Government on Mr. Castillo-Cervantes' staying out on bond

pending sentencing?

3 4 5

MS. HAMPTON:

We're unopposed and we'd ask the Court

to allow him to stay out on bond pending sentencing. THE COURT:

Mr. Castillo-Cervantes, you're going to

be allowed to stay out on bond pending sentencing, and you're

going to have to continue to comply with all of the conditions

of your bond.

9 10

Do you understand, sir?

DEFENDANT CASTILLO-CERVANTES: THE COURT:

Yes, Your Honor.

And do you understand that if you fail to

appear for your sentencing or any other hearing that's

scheduled in this case, that a warrant could issue for your

arrest, your bond could be revoked, and you could be charged

with committing another crime of failure to appear.

understand, sir?

DEFENDANT CASTILLO-CERVANTES:

THE COURT:

Mr. Salinas? MR. SALINAS:

THE COURT:

MS. HAMPTON:

THE COURT:

MR. MUSCHENHEIM:

Yes, Your Honor.

All right, is there anything further,

Do you

No, Your Honor. And Ms. Hampton? No, Your Honor. Mr. Muschenheim? No, Your Honor.

Thank you for your

time today. THE COURT:

Mr. Ellison?

EXCEPTIONAL REPORTING SERVICES, INC

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MR. ELLISON:

No, Your Honor.

MR. SALINAS:

Thank you for taking us, Judge.

(Hearing adjourned at 4:50 p.m.)

CERTIFICATION

I certify that the foregoing is a correct transcript from the electronic sound recording of the proceedings in the aboveentitled matter.

January 24, 2017_

TONI HUDSON, TRANSCRIBER

EXCEPTIONAL REPORTING SERVICES, INC