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CAUSE NO. C703 737177E 1 IN D E XHIDALGO COUNTY DRAINAGE § IN THE DISTRICT COURT OF 2

PAGFDISTRICT N0. 1, § 3

‘

§ 4 APPEARANCES ................................ 2

Plaintiff, § HIDALGO COUNTY‘ TEXAS 5 GODFREY GARZA’ JR-

»6 EXAMINATION

9 By Mr. Cowen.VS‘ §

7‘ By Mr‘ Newmn

§By Mr. Cowen.

El

INTEG CORPORATION, ET § 275TH JUDICIAL DISTRICT 9

AL, § 1 o

61 1 E X H I B l T s

‘

12 N0. DESCRIPTION PAGEDefendanls' § Exhibit 1 lnteg Corporate Documents 18

1 3 Exhibit 5 2/6/07 Imeg — HCDD1Agreement 50

1 4 Exhibit 6 2/6/07 Transcribed Minu‘es 43Exhibit 7 4/14/08 Intcg Invoice 62

ORAL AND VIDEOTAPED DEPOSITION OF GODFREY GARZA, JR, l 5 Exhibit 21 Agenda Items 140

JANUARY 24, 201 8 Exhibit 29 GG Final Memorandum rc

l 6 Shredded Docs 108VOLUME 1 0F 1Exhibit 3o GG Memo to Claudette 109

1 7 Exhibit 39 ‘Federal Financial

ORAL AND VIDEOTAPED DEPOSITION 0F GODFREY GARZA,_ ‘

ASSISPEICC Award 121”

JR, produced as a witness at the instance of the1 8

E313: 2;(6’3 E1223 13g

Plaintiff and duly swom, was taken in the above styled 1 9 Exhibit 44 2013 Related Party 126

and numbered cause on Wednesday, January 24, 2018, from Exmbi‘ 45 2012 Related Pan)’ 125

10:] | a.m. Io 3:26 p.m., before Tamara Chapman, CSR, RPR,2 O Emb“

43ues2t$r183As99 Fraudl

,6CCR (LA) in and for the Slate of Texas, reported by 2 1 Exhibit 47 2012 SAS 99 Fraud

computerized stenotype machine, at the offices 0f ShawI ‘

QUES‘im‘S 126

Cowan, LLP, 160‘) Shoal Creek Boulevard, Austin, Texas,2 2 Embu

45%;?5355AS99 Pravdl

76pursuant lo the Texas Rules of Civil Procedure and the 2 3 Exhibit 49 2007 SAS 99 Fraud

—

provisions slated 0n the record herein. Questions 1262 4 Exhibit 50 2007 SAS 99 Fraud

J b N 35973Questions 126

o o, 2 5

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1 A P P E A R A N C E s 1 THE VIDEOGRAPHER: It is January 24th, 2018,2

REPRESENTING PLAINTIFF: 2 10:11 a.m., and we are on the record.

3michae:

i:

Blanchard 3 (Discussion off the written record)IC 36 [Owen _

4 COWHN MASK BLANCHARD 4 MR. SHAW: Let me say one thmg before we6243 1H 10 West, Suite 801 5 get started, Godfrey Garza, Jr, had a subdural hematoma

5 San Antonio, Texas 7820] . . .

2109414301 6 back 1n 2015. He’s fine. He oertamly can testlfy. We6 fikaéfiigbfiigl-gim 7 will probably need to take a break about every hour or so

lC ac Cm H‘la .COm . .

7”

8 Just to make sure. There ls a tendency —- he does have a

8 REEEIESENENG DEFENDANT: 9 tendency, as the day may wears on and he gets tired, it

an . 8W _ _ . .

9 SHAW COWART) LLP l O may start affectmg hls speech 1n some partlcular way. l

l O1:09. Shgal Crgegléaomevard’ Sui‘e 100 l l just wanted to alert you to that. We don’t anticipate it

ustm, exas . . . .

8773039333 l 2 happemng, but l wanted to say, Just 1n case 1t does.

1 1 elshaw@shawcowan.com 1 3 Okay?1 2

REPRESENTING DEFENDANT; l 4 MR. COWEN: Any time you need a break, just

l 3 John W. Newton, III l 5 take a break.ROACH & NEWTON, L.L.P.

.

l 4 One Westchase Center l 6 MR. SHAW: Yeah. We'll do 1t about every

10777 Westheimer Road, Suite 2] 2 l 7 hour 0r so1 5 Houston, Texas 77042

r

713_652_2031 l 8 GODFREY GARZA, JR.,

i:Jnew‘0"@r030h“ew‘°"-°°m l 9 having been first duly sworn, testified as follows:

ALSO FRESENT: 2 0 EXAMINATIONl 8 Jeremy Garrett, Vidcographcr 2 1 BY MR COWEN~1 9

' ‘

2 0 2 2 Q. What is your name?

é:2 3 A, Godfrey Garza, Jr.

2 3 2 4 Q. Mr. Garza, how are you currently employed?

:22 5 A. I work for Integ.

1 (Pflfifiiflitw 4)‘

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1 Q. Since you have parted ways with the Hidalgo 1 Q. And then as a designer what did you do?

2 County Drainage District, have you been employed with 2 A, Basically design the projects.

3 anyone other than Integ? 3 Q. And what does that entail?

4 A. GG Consulting. 4 A, Providing cross sections, drawing the plans,

5 Q. Does lnteg currently have any customers? 5 doing quantity takeoffs, designing the storm sewer lines,

6 A. No, sir. 6 placing the -- the lines, assisting in preparation 0f

7 Q. So what are you doing being employed for Integ 7 specs.

8 right now? 8 Q, And then when did you become a project manager at

9 A. Keeping up with pending litigations going on. 9 Melden & Hunt?

l O Q. Anything else? l O A, About two years after working there.

l 1 A. Keeping track of income that comes in from rental l l Q. So around 1981'?

l 2 propem'es. l 2 A, More or less.

l 3 Q. Okay. Does Integ own rental properties? l 3 Q. Did you stay a project manager until you lefi in

l 4 A. Yes, sir. l 4 1985?

l 5 Q. Give me your educational background. l 5 A. Yes, sir.

1 6 A. I graduated from high school, McAllen High, got l 6 Q, What were yourjob duties as a project manager at

l 7 my applied science degree while l was in the military, l 7 Melden & Hunt?

1 8 went to college for about a year. l 8 A, Besides designing, I would coordinate with the

l 9 Q. What was your applied science degree in? l 9 actual construction of the proj ects. I would meet with

2 O A. It was just applied science in -- applied 2 0 clients, try to generate work, Coordinate the survey

2 1 science. 2 l crews, make sure work was being done appropriately, make

22 Q. Was that an associate's 0r a bachelor's? 2 2 sure work was scheduled properly.

2 3 A. It was just called applied science. 2 3 Q. What do you mean by "coordinated with actual

2 4 Q. Okay. So it's not a bachelor's degree? 2 4 construction"?

2 5 A. No, sir. 2 5 A. Assisted in receiving the bids, preparing the

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l Q. Where did you go to college? 1 plans and specs, went out with a field crew to make sure

2 A. Pan American University. 2 the construction was done properly, make sure it was being

3 Q. Did you graduate? 3 complied with the plans that were being designed, they

4 A. N0, sir. 4 were meeting the guidelines that were laid out.

5 Q. What did you study there? 5 Q. And what did you have t0 d0 Io coordinate with

6 A. Basics. 6 survey crews?

7 Q. What was Lhe first job you had after you stopped 7 A. Basically schedule the survey crews, make sure

8 going to Pan Am? 8 the crews went out to the proper site, research, got the

9 A. [worked for Melden & Hunt Engineering, 9 proper documentation t0 give t0 the crews Io g0 out,

1 O Q. And from what years t0 What years did you work l O receive the information the crews brought back in, make

1 l for Melden & Hunt? 1 1 sure all the information was properly laid out in the

1 2 A. l would say ‘79 to '85, best recollection. 1 2 books, the field books, so they could be handed down to

1 3 Q. What did you d0 for Melden & Hunt? 1 3 the draftsman, so the drafismen could draw out the

1 4 A. Started off as a drafisman, then worked my way up l 4 information that was brought in by the field crew.

1 5 as a designer, project manager. l 5 Q. And what did you d0 Io make sure that work was

1 6 Q. What did you do as a draftsman there? 1 6 scheduled properly?

1 7 A. Basically designed the projects based 011 the 1 7 A. Make sure that the crews got out on time, make

l 8 direction from the engineer, guidance from the engineer. l 8 sure the crews have the information they needed, answered

1 9 Q. What types of projects? 1 9 any particular question they might have, coordinate that

2 O A. Subdivisions, water lines, place water plants, 2 0 with the —— the surveyor that we had in—house. If they

2 l water plants, storm sewers, drainage, 2 1 had any specific questions they might have regarding

2 2 Q. Can you name any drainage projects you worked on? 2 2 information they found out in the field‘

2 3 A. The major project was Hidalgo County drainage 2 3 Q. What are some projects that you served as project

2 4 proj ects. North Main drains, South Main drains, master 2 4 manager on for Melden & Hum?2 5 drain system. 2 5 A. Numerous subdivisions, Again, a lot of the

2 (Pflfifiib'it Yb 8)

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1 drainage projects, ifnot all ofthe drainage projects l Q. Is that a "yes"?

2 they were doing for the District, the Drainage District. 2 A. Yes, Sir,

3 Projects over in the city of Santa Rosa, projects in 3 Q. How long were you at Phase V Engineering?

4 Edinburg, projects in Pharr, 4 A. About ten years,

5 Q. What are some of the drainage projects you worked 5 Q. Who else was involved with Phase V Engineering as

6 on? 6 owners or partners?

7 A. Main floodwater channel, west main drain, 7 A. Mr. Samuel H. Fads.

8 Pharr/San Juan/Alamo drain, master drainage —- excuse me, 8 Q. And who was he?

9 main floodwater channel Phase 1, Phase 2, Phase 3, 9 A. He was a —— the engineer and the surveyor for the

1 O Phase 4, north main drain, south main drain, Mission l O firm.

l l lateral. l l And the other partner was Jesus Garza.

l 2 Q. Would the main floodwater channel, what was your l 2 Q‘ And who is Jesus Garza?

l 3 involvement while you were with Melden & Hunt? What did 1 3 A- Jesus Garza W35 a surveyor-

l 4 you do? l 4 Q. Any relation between you --

l 5 A. Basically, the project manager. 1 5 A. N0, Sir.

l 6 Q. And what did you do as project manager for the l 6 Q. -- and Jesus Garza?

l 7 main floodwater channel? l 7 And do you have a brother that worked at Phase V1 8 A. Basically. coordinated with the area work, the 1 8 Engineering at any point?

l 9 surveyors, the draftsmen, the engineer, the contractor, 1 9 A. Uh-huh.

2 O the —— the Drainage Distn'ct itself. 2 O MRr SHAW: IS that a "yes"?

2 1 Q. How often did you have to go out to thejobsite? 2 1 A- Yes-

22 A. Probably at least once or twice a week. 2 2 Q~ (BY NLR- COWEN) Who was lhal?

2 3 Q. On all these projects, did you have t0 g0 out at 2 3 A- Jaime Garza-

2 4 least once 0r twice a week When you were project manager? 2 4 Q‘ What did Jaime Garza d0 there?

2 5 A, When they were under construction, 2 5 A. He basically worked out in the field as a crew

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l Q. Was Melden & Hunt an engineering firm? 1 chief.

2 A. Yes. 2 Q. Doing what?

3 Q. Were there licensed engineers there? 3 A. Managing a crew.

4 A. Yes. 4 Q. What kind of crew?

5 Q. After you lefi Melden & Hunt, what was your next 5 A. Survey crew.

6 employment? 6 Q. Is Mr. Jaime Garza a licensed surveyor?

7 A. Phase V Engineering. 7 A, N0, sir.

8 Q. What was Phase V Engineering? 8 Q. Why did you cease t0 work with Phase V9 A. Civil engineering firm. 9 Engineering?

l O Q. What did you d0 there? l O A, The Drainage District hired me to g0 work.

l 1 A. I became a partner with the firm and basically 1 l Q, And what was your initial —— when did you go work

12 did similar work that I was doing at Melden & Hunt. 12 for the Drainage District?

l 3 Q. What do you mean by "similar work”? 1 3 A. Sometime in ‘95, '96.

l4 A. Project manager, design work, coordinating survey 1 4 Q, What was your initial position?

l 5 crews, coordinating with the engineer, going out in the 1 5 A, District manager.

l 6 field, managing projects. 1 6 Q. During the times that you considered yourself an

l 7 Q. And how often would you actually, during the 1 7 employee, were you always a district manager?

l 8 construction phase ofthe project, have to go out in the 1 8 A, Yes, sir.

l 9 field and observe the construction in order to properly 1 9 Q, And what were your job duties when you were

2 O management it? 2 O employed as district manager?

2 l A. It depends on how much work was being done. 2 l A. Manage the employees ofthe District, make sure

2 2 Usually twice a week, I would go out. 2 2 that the District was operating and functioning properly,

2 3 Q. And you were a partner in an engineering firm 2 3 make sure that the system was operating properly,

2 4 without being an engineer? 2 4 Q, And were you paid a salary at that time?

25 A. Uh—huh. 2 5 A. Yes, sir.

3 <Pa£§hmitq 12)

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1 Q. And What was your initial salary? 1 A. He was never —— yes, sir. I‘m sorry. Yes, sir.

2 A. I don‘t recall, 2 Q. You wcrc about to say hc was ncvcr a what?

3 Q. How long did you remain in a position where you 3 A. I was about to say he was never a shareholder in

4 considered yourself an cmploycc of the District? 4 Intcg, but, ycs, hc was a shareholder in Intcg.

5 A. Until sometime in 2000. 5 Q. And then at some point, you acquired his shares?

6 Q. What happened in 2000? 6 A. ch, sir.

7 A. I went under contract with Integ as a district 7 Q. How did that happen?

8 manager duu'cs. 8 A. Just bought his shares out.

9 Q. Didn't your duties change at all when you went 9 Q. When did you buy his shares out?

l 0 from being someone paid as an employee to someone paid l O A. I don’t recall the date.

1 1 through Integ? l 1 Q. How much did you pay for them?

l2 A. Some of lhc duties changed. Not much. Most of 12 A. I don’t recall the amount.

1 3 the change was regarding the amount oftime that I needed l 3 Q. Do you have an approximation?

14 lo spend thcrc, l 4 A. No, sir.

1 5 Q. And What —— tell me about that. l 5 Q. Was it more than a million dollars?

1 6 A. I was no longer basically required to bc 1hcrc 40 1 6 A. I don’t recall thc amount, sir.

1 7 hours. l 7 Q. Okay. Well, did you have a million dollars back

1 8 Q. Why not? l 8 then to pay him?

1 9 A. Iwas only required Io spend as much time as was l 9 A. No.

2 O nccdcd to fulfill thc requirements ofmy coniract. 2 O Q. Okay. Did you havc a hundred thousand dollars to

2 1 Q. I want to take a step back and ask you some 2 1 pay him?

22 questions about Intcg. Is that okay? 22 A. No, sir.

2 3 A. Yes. 2 3 Q. So it would have been less than a hundIed

2 4 Q. D0 you remember whcn Intcg was formed? 2 4 thousand. Did you havc tcn thousand dollars t0 pay him?

2 5 A. No, sir, not exactly. 2 5 A. No, sir.

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1 Q. Okay. If the Texas Secretary of State records l Q. So 1‘1 was not a large amount of money you paid?

2 show that it was fonncd around June 20th of 1991, would 2 A, No, sir‘

3 you disagree with that? 3 Q, You —— did you pay him something?

4 A. Iflhat’s what the records indicate, sir. 4 A, I don't recall, sir,

5 Q. When Integ was originally formed, who were the 5 Q. You do not recall whether you paid him any money

6 shareholders? 6 or not?

7 A. Myself, Godfrey Garza, Jr., and Jesus Garza. 7 A, No, sir, I don‘t.

8 Q. Is that thc same Jesus Garza that you worked with 8 Q. Do you have any records that would show that?

9 at Phase V Engineering? 9 A. Only what is shown in the corporate books.

l O A. Yes, sir. l O Q. And do you know approximately when Mr. Jesus

l 1 Q. Were there any other shareholders when it was l l Garza was no longer a shareholder in Intcg?

l 2 originally fonncd? l 2 A. It would have to show in the corporate books. I

l 3 A. No, sir. l 3 don‘t recall.

l 4 Q. Any other officers or directors thn it was l 4 Q, Was it before or afier you went to work for the

1 5 originally formed? l 5 Drainage District?

l 6 A. Not that I recall. l 6 A. Repeat the question, please,

1 7 Q. What did Integ do when it was originally formed? l 7 Q. Was it before or after you went to work for the

l 8 A. Intcg was being -- was formed to provide l 8 Drainage District?

l 9 construction management services and also to be a real l 9 A, What was the question?

2 0 estate management company. 2 O Q, Okay. Did Mr‘ Jesus Garza cease to be a

2 1 Q. How long was MI. Jesus Garza a shareholder in 2 l shareholder in Integ either before or after you went to

2 2 Intcg? 2 2 work for the Drainage District?

2 3 A. I think —— I don't recall exactly. 2 3 A, Before.

2 4 Q. At some point in time, Mr. Jcsus Garza ceased to 2 4 Q, What construction management projects did Integ

2 5 be a shareholder in Integ. Is that correct? 2 5 do prior to the year 2000?

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l A. They built some apartments, plus they did some 1 MR. SHAW: 1647?

2 management work in Mexico. 2 MR. COWEN: Uh-huh.

3 Q. What apartments did it build? 3 MR. SHAW: Okay.

4 A. It built a fourplcx in Mission and a fourplcx in 4 Look at the entire document --

5 Edinburg. 5 THE WITNESS: Okay.

6 Q. Who -- Who owned those fourplcxcs? 6 MR. SHAW: -- Exhibit 1‘ And then he wants

7 A. Integ. 7 you t0 focus on 1647.

8 Q. S0 both thc fourplcxcs that it built, it built 8 THE WITNESS: Okay‘

9 for itself? 9 Q. QY MR, COWEN) And if you need any time t0 read

l O A. Uh-huh. l 0 over it before I ask any questions, you're welcome t0 take

l l Q. Is that a “yes”? l l all the time you need.

12 A. ch, sir. l2 MR. SHAW: Just let him know what it is.

l 3 Q. And What was the management work that Integ did l 3 A. fl’ause.)

l 4 in Mexico prior to 2000? l4 Okay‘ On 47. Yes, sir.

l 5 A. Basically, they did some management work for l 5 Q. QY MR, COWEN) Is that the minutes of a special

l 6 Emerson Electric on a warehouse. l 6 meeting 0f Integ Corporation held 0n June lst, 1992?

l 7 Q. What did —— what did Integ d0 for Emerson l 7 A. Yes, sir.

l 8 Electric on [11c warehouse? l 8 Q And is that the meeting Where MIC JESUS Garza

l 9 A. They provided the management, the construction l 9 advised that he 110 longer wanted to be a shareholder in

2 O management and the construction component. 2 0 the company?

2 l Q. Was that in Reynosa 0r Where in Mexico? 2 l A. Yes, sir.

2 2 A. Reynosa. 2 2 (Discussion off the written record.)

2 3 Q. And What did —— did Integ have any employees, 2 3 A. Yes, sir.

2 4 other than you, at thc time it did that management work 2 4 Q‘ (BY MR, COWEN) And it says that Mr. Jesus Garza

2 5 for Emerson Electric? 2 5 sold the shares back to the corporation for $10?

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l A. Just Jesus Garza and myself, l A. Yes, sir.

2 Q. Okay. So Jesus Garza was still there when that 2 Q. Is that accurate?

3 happened? 3 A, If that‘s what the meeting notes say, sir.

4 A. Yes, sir‘ 4 Q. And was the management work done for Emerson

5 Q. And what —— what work did you and Mr, Jesus Garza 5 Electric prior to this June lst, 1992, meeting?

6 do with respect t0 the Emerson Electric project? 6 A. I don't know the exact date when the Emerson work

7 A. Project management, 7 was done, sir,

8 Q. And what did that entail? 8 Q. Did Mr. Jesus Garza continue to do any work with

9 A. Supervising the construction of the project, 9 Integ after he gave up his shares?

l O making sure it was being built properly, making sure that l O A, No, sir‘

l l the people did the project regarding the construction 0f l l Q, From 1992 to the present, have there been any

1 2 the cement, the installation ofthe cement, the walls went l 2 other shareholders in Integ?

l 3 up properly, Construction management. l 3 A. No, sir.

l 4 Q. How often would you have to go over there during l 4 Q, Are you married?

l 5 construction? l 5 A, Yes, sir,

l 6 A. Maybe three times a week. l 6 Q, To whom are you married?

l 7 Q. And Mr. Jesus Garza, how often would he have to l 7 A. To Annie Garza.

1 8 go? l 8 Q. How long have you been married to Annie Garza?

l 9 A. We would alternate. Either him 0r myself would l 9 A, 44 years.

2 O go over there. 2 O Q. And never divorced?

2 l Q. So between the two 0f you, was it three times a 2 l A. No, sir.

2 2 week or three times a week each? 2 2 Q, So you were married to Annie Garza at the time

2 3 A. I couldn‘t recall. 23 you formed Inleg. Correct?

2 4 Q. Could you look at Exhibit 1 in that notebook. 2 4 A, Yes, sir.

2 5 And there‘s a page that has the Bates number HCDD—1647. 2 5 Q. You were married Io Amfie Garza at the time that

5 (PageExfiibitW 20)

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1 your sons transferred their shares in Valley Data l checking accounts?

2 Collections to your wife? 2 A‘ No,

3 A. Yes, sir. 3 Q. And from all times from 2000 to the present, you

4 Q. D0 you havc any kind of written agreement with 4 and your wife had ajoint checking account?

5 your wife setting out your shares in Integ as separate 5 A. Yes.

6 property? 6 Q‘ And at all times from 2000 t0 present, you and

7 A. We‘ve had understanding that whatever companies 7 your wife did not have separate personal checking

8 shc's had, I‘vc had no interest in, and whatever companies 8 accounts?

9 I‘ve had, she's had no interest in. 9 A. I do not know if my Wife had a different checking

l O Q. Anything in writing that rcflccts that l O account 0n her own.

l 1 understanding? 1 l Q. You did not have a personal checking account that

l 2 A. Wc'vc had some documents drawn up in the past 1 2 your wife was not a signatory on at any time from the year

l 3 when she‘s had her company where I had no interest in her 1 3 2000 to the present ——

l 4 companies. 1 4 A‘ No,

l 5 Q. Okay. What documents were drawn up that says 1 5 Q. —— isn't that true?

l 6 that you havc no interest in Valley Data? 1 6 A‘ N0,

l 7 A. None that I recall. 1 7 Q. Okay, Let m ——

l 8 Q. Okay. And is thcrc any written document showing 1 8 MR. SHAW: Is what he‘s saying correct?

l 9 that she has no community property interest in your shares 1 9 THE WITNESS: Yes,

2 O in Inlcg? 2 O MR. COWEN: Let me re-ask the question.

2 1 A. None that I recall. 2 l Q. QY MR, COWEN) Did you have a separate personal

2 2 Q. Now, you said you and your wife had an 2 2 checking account 0n which your wife could not sign at any

2 3 understanding that you each had no interest in the other‘s 2 3 time from the year 2000 to the present?

2 4 companies? 2 4 A‘ No,

2 5 A. Uh—huh. 2 5 MR. SHAW: You need to add something,

Page 2 2 Page 2 4

1 MR. SHAW: Is that ”yes"? l Godfrey?

2 Q. (BY MR. COWEN) Is that a "yes"? 2 THE WITNESS: Yes, 1 do.

3 A. Yes. 3 A. I -— I don't recall if-— I'd -— I'd -- I'd have

4 Q. Tell me about how you reached that understanding? 4 t0 ask Annie on one account.

5 A. Basically, she would operate her company and I 5 MR. SHAW: Okay,

6 would operate my company. 6 Q. (BY MR. COWEN) D0 you want to take a break and

7 Q. And when did you discuss that understanding? 7 ask her?

8 A. Since back in the -- l guess in 20005 when she 8 A. Yes, sir.

9 opened up her company on an adult daycare center that she 9 MR. COWEN: Okay. We‘ll take a break.

l O was operating a corporation, Heavenly Days Corporation, 1 0 THE VIDEOGRAPHER: It is 10:40, and we're

l 1 that she formed and licensed and operated, that I had n0 1 l off the record.

l 2 interest in and she had n0 interest in any of my 12 (Break)

l 3 companies, and I sold and did What I needed to do and she 1 3 THE VIDEOGRAPHER: It is 10:52. We're back

l 4 never got involved in it, 1 4 0n the record.

l 5 Q. Did you ever have any agreements that if you 1 5 MR. SHAW: You want to —- you want to

l 6 divorced, that any interest in your companies would not 1 6 clarify something?

l 7 count as communin property for division of the marital 1 7 THE WITNESS: Yes, sir.

l 8 estate? 1 8 A. l want t0 clan'fy two items. One of the items is

l 9 A. No, sir. We did not, but we had an understanding 1 9 that basically when we were doing work -— or when Integ

2 0 that as far as the corporations were, in doing everyday 2 0 was doing —— 0r when Phase V was doing work in Mexico, it

2 1 business, n0. 2 l was under -- Phase V was not under Integ, so the work

2 2 Q. For personal banking, did you have a joint 22 being done 011 the Macillas was under Phase V, not under

2 3 checking account? 2 3 Integ.

2 4 A. Yes. 2 4 And, secondly, that l never had any accounts,

2 5 Q. Did you have —— maintain separate personal 2 5 bank accounts on my own. As far as Annie, you'll have to

6 (PageExfiibitW 24>

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Page 25 Page 2 7

1 ask Annie as far as any personal checking accounts. l Q. I want t0 g0 back to Integ and What it did prior

2 Q, (BY MR. COWEN) Did you ever receive any money 2 to entering into a contract with the District. So prior

3 from Integ while you worked for Integ? 3 to entering into a contract the District, Integ built two

4 A,\%s. 4 flunpkxcx Conecfl5 Q, What would you do —- would you receive it in the 5 A. Yes, sir.

6 form of checks or cash or both? 6 Q. And then it managed and collected rent for those

7 A. Both. 7 two fourplexes?

8 Q, When you got checks from Integ, what would you d0 8 A. Yes, Sir.

9 with them? 9 Q. Did it do anything else, other than those two

l O A, [would deposit them in my personal account, l O fourplexes, before entering into a contract with the

l l Q. And is that a personal account 0n Which your wife 1 l District?

l 2 Annie is also an account owner -- l 2 A. Basically they were the -- did some remodeling

l3 A. Yes. l3 work on the building and that was it.

l4 Q, -- holder? l 4 Q. What building?

l 5 And did you do anything to segregate the money 1 5 A. A building that Integ purchased to tum into an

l 6 you received from Integ t0 make sure your wife didn't have 1 6 office building.

l7 access to it or spend it? l7 Q. Where was that office building?

l 8 A, No. 1 8 A. In Mission.

l 9 Q. And did your wife ever receive any money from l 9 Q. What was the address?

2 O Valley Data? 2 0 A. 2014.

2 l A. I would say —- [would have t0 speculate that she 2 l Q. 2014 what?

22 would receive her payroll checks‘ 22 A. Highway 83, Mission,

2 3 Q. Any distn'butions 01‘ dividends from Valley Data? 2 3 Q. And does Integ still own that building?

2 4 A. You would have t0 ask her. 2 4 A. No, it was sold.

2 5 Q. And d0 you know Where she would deposit her 2 5 Q. When was it sold?

Page 26 Page 28

1 payroll checks from Valley Data? l A, Eight years ago, ten years ago.

2 A. I would speculate into our joint checking 2 Q. How did the District go from paying you as an

3 account, 3 employee to entering into a contract with Integ?

4 Q. Was any ofthe money you received from Integ used 4 A. Through action of the Board of Directors.

5 to pay household bills for you and your wife? 5 Q, Whose idea was it?

6 A. l would speculate, yes‘ 6 A. 1t was an idea from the Board ofDirectors.

7 Q. Why are you saying you‘re speculating? 7 Q. So the Board of Directors brought you in and

8 A. Because I don't usually follow where a1] the 8 said, We want you t0 —— to not be an employee anymore. We9 payments are made. My wife usually makes the payments. 9 want to hire a corporation you own?

l 0 Q. Now, your wife testified in her prior deposition 1 O A. Basically it was that orl was leaving.

l 1 that she was a signatory on Inleg‘s bank account. Is that 1 l Q, Okay. So let‘s back up a little bit. How did

l 2 true? 1 2 the Board 0f Directors know you were leaving? Did they

l 3 A. Yes, sir. 1 3 tell you that they were going t0 fire you unless you

l 4 Q. And your wife actually -- at cenain periods of 1 4 switched t0 being a contractor?

l 5 time actually prepared the Checks for signature fiom Integ 1 5 A, No. Basically I told the Board of Directors that

l 6 t0 pay things. Correct? 1 6 [wanted t0 g0 back into the private sector.

l 7 A. Yes, sir. 1 7 Q, Okay. And when was that?

1 8 Q. And she was also an employee of Integ? 1 8 A. Sometime in 2000.

l 9 A. Yes, sir, 1 9 Q, Why did you want t0 go back into the private

2 0 Q. Were you ever a signatory on any account for 2 O sector?

2 1 Valley Data? 2 l A. The economy was picking up, and I felt I could

2 2 A. No, sir. 2 2 make more money 0n the private sector.

2 3 Q. Did you ever have any personal involvement with 2 3 Q, And so who did you tell that you wanted to go

2 4 the business of Valley Dam? 2 4 into the pn'vate sector?

25 A. No, sir. 2 5 A, My district liaison Board member.

7 (Pageanfloiw 28)

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P a g e 2 9 P a g e 3 l

1 Q. Who was that? 1 A. Yes, sir.

2 A. Commissioner Oscar Garza, Jr. 2 Q. What in the world did you do that was worth

3 Q. What do you mean he was your liaison Board 3 millions of dollars?

4 member? 4 MR, SHAW: Objection; form,

5 A. Basically every department at the County has a 5 A. I managed the project as per my contract

6 liaison, one of the commissioners on the court. That is 6 requirements,

7 who you talk to of any issues you might have, and it’s his 7 Q. (BY MR. COWEN) What do you mean by that?

8 responsibility to go and discuss it with the rest of the 8 A. My contract stipulated the job performance lhatI

9 commissioners. 9 needed Io do in order for Integ to get paid the fees that

l 0 Q. Okay. And you ended up, then, entering into a l 0 were associated with it.

l 1 contract between Integ and the District in 2000‘? l l Q. And what is your interpretation of what that job

l 2 A. Integ entered into a contract with the District l 2 performance was required?

l 3 sometime in 2000. l 3 A. Basically to provide the construction management

l 4 Q. Okay. Who signed that contract on behalf of l 4 of the services related lo the implementation of the

l 5 Integ? l 5 Hidalgo County Drainage District Master Drainage System

1 6 A. I did. l 6 Phase II,

l 7 Q. And at that time What employees did Integ have? l 7 Q. But what did you actually do? What work did you

l 8 A. Myself. l 8 d0? You got paid millions of dollars. What work did you

l 9 Q. Who was the shareholder of Integ at that time? l 9 do?

2 O A. Godfrey Garza, Jr. 2 O A. I basically prepared the District and its

2 1 Q. You were the only shareholder? 2 l personnel to gets its system organized to manage the

22 A. Yes, sir. 2 2 construction documentation related for the implemenLation

2 3 Q. The only officer? 2 3 ofthe Hidalgo County Drainage —— Master Drainage

2 4 A. Yes, sir. 2 4 Phase II, I made sure that the employees were hired, they

2 5 Q. The only director? 2 5 were going to be required Io do that in—house.

Page 3 O Page 3 2

l A. Yes, sir. l I made sure that they knew what they needed to

2 Q. From 2000 to the present has lnteg had any other 2 do. l also made sure that the engineers did the job that

3 employees? 3 they were required to do. I made sure that the

4 A. Just my wife, and sometimes when l would hire 4 contractors were doing the work that they were contracted

5 contract laborers to help out. 5 to do. Iwent out there and provided the inspection, with

6 Q. Okay. So your wife, Annie Garza, was also an 6 the assistance ofthe engineers, t0 make sure that the

7 employee? 7 project was being done on time. I made sure that all the

8 A. Yes, sir, 0f lnteg. 8 compliance was being done according t0 the contracts. l

9 Q. And you said you hired contract laborers? 9 made sure that all the documentation was being forwarded.

1 O A. Uh—huh. 1f I needed some help to go and work at l O I made sure that the Commissioner‘s Court was aware that

1 l the ranch or if I needed some help doing odds and ends, 1 l everything was being done in compliance. I made sure that,

1 2 painting 0r whatever. l2 the bills were being sent in properly and being reviewed

1 3 Q. D0 you consider those contract laborers to be 1 3 properly. I made sure that the auditors were doing their

l 4 employees? l 4 job 0f getting things audited, I made sure that the

1 5 A. N0, I just -— laborers. 1 5 reports were being completed on time.

1 6 Q. Did you —— did [meg ever hire any contract l 6 Q, And you think that was worth millions of dollars?

1 7 laborers to perform any construction management work? 1 7 MR. SHAW: Objection; form.

l 8 A. No, sir. l 8 A. I made sure that I complied with the work that

1 9 Q. Did Integ ever hire any contract laborers t0 1 9 was done on the proj ect, and I made sure that I got paid

2 O perform any work that was being done by lnteg on behalf of 2 O what was in the contract.

2 l the Drainage District? 2 l Q, (BY MR, COWEN) Do you believe that you provided

2 2 A. No. 22 millions of dollars ofvalue t0 the District?

2 3 Q. So during the time that Integ was paid millions 2 3 A, Yes, sir.

2 4 of dollars by the District, you and your wife were the 2 4 Q, You do?

2 5 only employees? 2 5 A, Yes, sir.

8 <Page§xfii€biw 32)

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Page 33 Page 35

l Q. How many hours a week were you working during the l since Integ has no longer been contracting with the

2 period of time in which Integ was being paid millions of 2 District, have you had anyone else offer you a million

3 dollars to do construction management? 3 dollars or more a year m do any work, you personally?

4 A. I couldn‘t tell you the amount 0f hours because 4 A. Not with all this pending litigation accusations

5 some ofthe work was being done 24/7. 5 I've had.

6 Q. By you? 6 Q. Has anyone told you if this litigation wasn't

7 A. The contractors were out there 24/7, so it was 7 there they'd pay you more than a million dollars a year to

8 not that I was going out there 40 hours a week, 0r that I 8 do work for them?

9 was going out at 8:00 in the morning, or I was going out 9 A. I would hate to g0 and ask somebody.

1 O at 10:00, 0r if I was going out 0n Saturdays 0r Sundays. l O Q. Okay. But no one’s said "Godfrey Garza, you're

l l The project was being done at an accelerated time. This l 1 such a great, knowledgeable person in construction

12 project did not just consist 0f going out there, l 2 management, just get this litigation behind you and we'll

l 3 construction, but during a period of almost five years l 3 pay you more than a million dollars. You can start as

1 4 closeout time. l 4 soon as this is over." Did anyone ever tell you that?

l 5 Q. What I'm asking you, though, is the work that you l 5 M R. SHAW: Besides Hidalgo County?

1 6 did personally, how many hours a week did you personally l 6 MR. COWEN: I said anyone.

l 7 spend working during this period of time? l 7 A. I would hate to say ”yes," for the simple reason

1 8 A. I couldn‘t tell you. l 8 that everybody is so scared of saying anything right nowl 9 Q, Can you give an estimate? l 9 because 0f Hidalgo County.

2 O A. No. 2 O Q. (BY MR. COWEN) Okay. You're not a licensed

2 1 Q. Do you have any idea? 2 1 professional engineer?

22 A.NQ 22 A.Nmsfi2 3 Q. You don't know —— what time would you normally 2 3 Q. You're not a licensed surveyor?

2 4 get up in the morning? 2 4 A. No, sir.

2 5 A. 7 o'clock. 2 5 MR. SHAW: Let him finish his question,

Page 34 Page 36

1 Q, Okay. What time would you usually get home at l Godfrey, so you don't talk over him, please.

2 night? 2 THE WITNESS: Yes, sir.

3 A, Probably about 9 o‘clock. 3 Q, (BY MR, COWEN) Did you do anything to document

4 Q. Okay. Every day? 4 the construction management work that Integ did 0n behalf

5 A, Most 0fthe days. 5 ofthe District?

6 Q. Okay. And you‘d be working that whole time? 6 A. Yes, sir,

7 A, Yes, sir. 7 Q, What did you do to document the work?

8 Q. Had you ever had a job that paid a million 8 A. There should be files inside the District's

9 dollars a year before? 9 computer system where meetings took place, where reviews

l O A. l had a company that generated a million dollars 1 0 took place, where I attended meetings, where I met with

1 1 a year. l l the contractors, where I met with the engineers, where we

l 2 Q. Okay. How many employees did that company have? 12 received reports, where l attended Board meetings. where I

1 3 A, Five, six, eight employees, l 3 attended meetings with the Department of Homeland

l 4 Q. Okay. How many —— were you the sole shareholder 1 4 Security, where we met With the independent auditors,

1 5 0f that company? l 5 where we went into arbitrations or mediations,

l 6 A. Yes, sir. 1 6 Q. From 2000 up t0 2006. what did [meg d0 for the

1 7 Q, Okay. Which company was that? l 7 District?

l 8 A. Phase V Engineering. 1 8 A, The contract delineated certain management items

l 9 Q, Okay. And was it a million dollars in profit 01' l 9 that Integ was responsible for doing for the District.

2 O a million dollars in gross revenue? 2 0 And basically those were the items that l did,

2 1 A, A million dollars in gross revenue. 2 l Q, What were those items?

22 Q. And what kind 0f profit would you get from a 22 A. I d0 not have the contract specifically in front

2 3 million dollars in gross revenue? 2 3 ofme to list you item by items, but in general, provided

2 4 A. 40 percent, 45 percent. 2 4 them as general management of the Distn'ct, made sure the

2 5 Q, Okay. Have you ever had anyone since you've -- 2 5 District complied with all of the requirements set forth,

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Page 3 7 Page 3 9

l as far as maintenance 0f the District, personnel 0f the l Av Oh, n0.

2 District. Made sure that people were hired properly, made 2 Q. It was just yours and she‘d drive it sometimes?

3 sure the budgets were done, made sure the audit reports 3 A. Yes, sir.

4 were done, made sure the District was maintained properly, 4 Q. It was yours and she'd drive it sometimes?

5 Q, What‘s the difference between those job duties 5 A, Yes, sir.

6 and what you were doing when you were an employee 0f the 6 Q. Now, at some point in time there was a new

7 District? 7 contract entered in 2007 that also provided an agreement

8 A, The duties were basically the same, except for 8 where Integ would perform construction management

9 the time involved on it. 9 services?

l O Q, You just didn't have t0 work as many hours? 10 A, Yes, sir.

l l A. Yes, sir. l l Q. And Integ would then get compensation for

l 2 Q, But you got paid more money? 12 construction management services. Correct?

1 3 A. The difference was that while I was an employee, l 3 A, Yes, sir.

1 4 I was covered by insurance, I was covered by retirement, I l 4 Q, But Integ did not hire any additional employees

1 5 was covered by health, I was provided a vehicle, I was 1 5 once it stmed doing the construction management

l 6 given vacation, Iwas given workmen's comp, Iwas given l 6 services, did it?

1 7 everything, l 7 A, No, sir.

1 8 When Iwent under contract, there was n0 more l 8 Q. And you were the only one at [meg that ever did

l 9 retirement, there was n0 more medical, there was no more l 9 any work that would be considered construction management

2 O vehicle, there was n0 more anything. So there was an 2 O services. Correct?

2 l increase in salary, but I n0 longer had any of the 2 1 A, Yes, sir,

2 2 benefits 0f an employee associated with the District. 22 Q, Whose idea was it to have [meg get paid for

2 3 So there was a jump in salary, but if you look at 2 3 construction management services?

2 4 the cost 0f the salary that Iwould make prior t0 going 2 4 A, I presented the idea t0 the Board 0f Directors.

2 5 under contract, and you add that to all of the benefits 2 5 or to the District liaison officer.

Page 3 8 Page 4 O

l that I lost, you‘ll probably find out it‘s almost an l Q, Okay. So you first presented it to whom --

2 equitable number. 2 which —— who was the —— was that Oscar Garza?

3 Q. And later the District started paying you a 3 A, Oscar Garza, Jr.

4 vehicle allowance t0 compensate you for the use of a 4 THE REPORTER: Make sure, for your purposes

5 vehicle? 5 and mine, so everything's clear --

6 A. Yes, sir. 6 MR. SHAW: Take a half—second step.

7 Q. And then also started paying a cell phone 7 THE WITNESS: Yes, sir.

8 allowance? 8 Q, (BY MR, COWEN) At that time what was anticipated

9 A. Yes, sir. 9 that the Phase II consmlction project was going to

10 Q. Did Integ own any vehicles? 10 entail?

1 l A. Yes, sir. l 1 A, The Phase II Master Drainage System project

1 2 Q. And did you drive a vehicle owned by Integ? 12 entailed numerous drainage improvements throughout the

1 3 A. Yes, sir. l 3 county based on numerous presentations that had been done

1 4 Q. Did you drive it only when you were 0n Integ l 4 to the Board of Directors, entailing about $900 million

1 5 company business or were you also allowed to drive it for l 5 worth of work that needed to be done within the District,

1 6 personal use? l 6 in which the Board made a decision 0f doing about

1 7 A. I was allowed to drive it for personal use. l 7 $ 100 million worth ofwork and equated that split within

1 8 Q Did your wife, Annie Gama, ever drive a vehicle l 8 the precincts, and $100 million was delineated out, Which

1 9 owned by Integ? l 9 included numerous projects throughout the District,

2 O A. Sometimes. 2 0 Q. Was there anywhere where there is a list 0fthose

2 l Q. Which vehicle did she drive that was owned by 2 1 projects?

2 2 Integ? 22 A, Yes, sir,

2 3 A. Probably the pickup. 2 3 Q, Where would I find that list?

2 4 Q. Okay. Is that a pickup that she had for daily 2 4 A. There is a repon in a presentation that was done

2 5 use or was it —— 2 5 to multiple cities and communities, identifying, one, the

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Page 4 l Page 4 3

1 $900 million worth of work, and also the $100 million l contract With you.

2 worth ofdrainage improvements, 2 A. Uh—huh.

3 Q. Now, the 900 million would not be done all in one 3 Q. Was there someone from TEDSI there as well at

4 phase, would i1? 4 that meeting?

5 A. No, sir. 5 A. The audience.

6 Q. The Phase II, a1 that time, was going lo be what 6 Q. Okay. Did he speak at that meeting?

7 was going to be done with the $100 million bond issue? 7 A. I think Commissioner Garza asked him some

8 A. Yes, sir. 8 questions.

9 Q. Back at the time that you presented the idea 0f 9 Q. Why was he there?

l O [meg doing construction management Lo the Board, no one l O A. I don't know why he was there, sir.

1 l knew that the federal government was going to come in and l l Q. He just —— and who was it from TEDSI Who was

l 2 do the levy improvement project, did they? l 2 there?

1 3 A. The levy improvement project was delineated as an l 3 A. Mr. Mark Lupher.

1 4 IBWC project that needed lo be done, and i1 impacted the l 4 Q. And MI. Lupher just happened to say that this was

1 5 Drainage District. l 5 a good deal for the District?

l 6 Q. But it was not originally going Lo be part of the l 6 A. You would have to ask Mr. Lupher that.

1 7 $100 million bond issue? l 7 Q. You didn't talk to Mr. Lupher about being there

l 8 A. Yes, sir, it was, l 8 before he got there?

1 9 Q. $100 million was going to be spent on the levies? l 9 A. No, sir, I did not.

2 O A. No, sir, a portion 0f the $100 million was, 2 O Q, I'd like you to look at Exhibit 6.

2 l Q. Okay. What was going to be done —— what portion 2 l MR. SHAW: You can familiarize yourself With

2 2 was going lo be done with the levies? 2 2 it, and then he’ll ask you questions.

2 3 A. The most critical pan ofthe levy system around 2 3 MR. COWEN: Yeah. Why don't we go offthe

2 4 Mission was scheduled to be improved out ofthe 2 4 record so you can just read through it.

2 5 $100 million. 2 5 THE VIDEOGRAPHER: It is 11:18 and we are

Page 4 2 Page 4 4

1 Q. And how much of the 100 million would be spend on 1 off the record.

2 that? 2 (Break)

3 A. They were estimating $ 10 million, 3 THE VIDEOGRAPHER: It is 11:26, We‘re back

4 Q. Any other levy improvements that were part of the 4 on the record.

5 100 million? 5 Q, (BY MR, COWEN) So at the time that you were

6 A. No, sir. 6 discussing this contract with the commissioners, what was

7 Q. Now, it’s called Phase II. What was Phase I? 7 being discussed was being paid out of a portion 0f the

8 A. Phase l was basically the 1976/78 original 8 money on $100 million bond issue. Correct?

9 master plan that the District did when it was originally 9 MR, SHAW: Objection; form.

l O created. l O A. What was being discussed was getting a contract

l l Q. And were bonds issued for that? l l to include one and a half percentage of the bond issuance

l 2 A. There was deferral series of bonds issues done l 2 of the Phase ll for the construction management of the

l 3 during the period of '76 through the '90s, l 3 project.

l 4 Q. So Phase I, how long did it take to do? How long l 4 Q. (BY MR. COWEN) Well, you said that we'll put out

1 5 were people working on Phase I? l 5 to the public on the bond issue while anticipating about

l 6 A. 20-some—odd years probably. l 6 40 percent ofthe bond issuance of $100 million is going

l 7 Q. And was —- was it the expectation, back in 2007, l 7 to be land acquisition. Did you say that?

l 8 that Phase [I would take 10 to 20 years? l 8 A. Yes, sir.

l 9 A. Probably so. l 9 Q, Okay, And you weren‘t going to be paid any money

2 O Q. And I've been reading through the transcript of 2 O on land acquisition. Correct?

2 l the -— of a meeting back in December of 2014, where you 2 l A, Yes.

2 2 were discussing the possible -— l‘m sorry. That’s the 2 2 Q. So you were talking about one and a halfpercent

2 3 wrong date. 2 3 on about $60 million at that time?

2 4 l was reading the transcript of the meeting where 2 4 A. Yes, sir.

2 5 the Drainage District was talking about doing this 2 5 Q, Now the —- and then you were talking about this

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Page 4 5 Page 4 7

l could take 10 to 20 years? l Q. And did the auditor —- an independent auditor

2 A. Yes, sir. 2 actually audit whether 0r not [meg had done the work t0

3 Q. And so one and a half percent of $60 million, do 3 get paid?

4 you know how much that is? 4 A. I believe the auditor did his auditing as

5 A. Not offhand, sir. 5 required by law.

6 Q. Okay. And just because I didn't sleep enough 6 Q. And what did the auditor audit? What was the

7 last night, I‘m going to do the math instead of doing it 7 scope 0n that audit?

8 my head. 8 A. Whatever they're required to audit.

9 MR. NEWTON: One and a half percent is —— 9 Q. Do you know?

l 0 Q. (BY IVLR. COWEN) That would be about $900,000 1 0 A. Not specifically, sir.

1 l Does that sound right? 1 l Q. Isn't it true that auditors typically don't 100k

1 2 A. Yes, sir‘ 1 2 t0 see whether the money was actually earned? They just

1 3 Q. So for 10 years, that would be about 90,000 a 1 3 100k t0 see if the checks match up with what's in the

1 4 year? 1 4 accounting system?

1 5 A. Okay, sir. 1 5 A. Idon‘t know.

1 6 Q. And over 20 years, that would be about 45,000 a 1 6 MR. SHAW: Objection; form.

1 7 year. Does that sound about right? 1 7 Q, (BY MR. COWEN) And Lora Briones, what was her

1 8 A. Okay, sir, 1 8 position with the District at that time?

1 9 Q. During this meeting when you were discussing 1 9 A. She was a financial officer.

2 0 the —— being —— the contract back in 2007, was there any 2 0 Q. Okay‘ Who did she report t0?

2 l discussion ofyou being paid on a federal project to do 2 l A. She reported to —— to the Drainage District Board

2 2 the border wall? 2 2 0f Directors and she was basically under me at the

2 3 A. No, sir. 2 3 Drainage District.

2 4 Q. And you said that it's just a coincidence that 2 4 Q. Okay. So the person that's supposed t0 be

2 5 your liaison, Mr. —— Commissioner Garza called on the 2 5 providing a check and balance as t0 payments to your

Page 46 Page 48

1 representative of TEDSI who happened to be in the audience l company is someone that is supervised by you. Correct?

2 that day? 2 A. But she also was an employee 0f the District. So

3 MR. SHAW: Objection; form. 3 she had her own fiducialy obligations to the Board of

4 A. Mr. Lupher —— Commissioner Garza is the one that 4 Directors.

5 called on Mr. Mark Lupher. W'hy, I don't know. 5 Q, But she also was supervised by you, Correct?

6 Q. (BY MR. COWEN) That wasn't something that you 6 A. Yes, sir.

7 and Commissioner Garza and Mr. Lupher had arranged before 7 Q, Did Lora Bliones ever question whether or not

8 the meeting? 8 lnteg should be paid the money it was being paid?

9 A. No, sir. 9 A, Not t0 me,

1 O Q. Had you Spoken to Mr, Lupher before the meeting? 1 O Q. Did you ever hear Lora Bnoues questioning the

1 1 A. No, sir. 1 l money that Integ was being paid?

1 2 Q. Now, TEDSI, the company that —— Whose 1 2 A. No, sir.

1 3 representative spoke up on -- in support ofyour deal, 1 3 Q, When you were an employee prior to 2000 0fthe

1 4 they ended up being one of the contractors on these 1 4 District, would you agree that you owe the District a

1 5 projects you managed. Correct? 1 5 fiduciary duty?

1 6 A. Yes, sir, 1 6 MR. SHAW: Objection; form.

1 7 Q. TEDSI also ended up hiring Valley Data as a 1 7 A, I owe the District whatever I'm required to owe

1 8 subcontractor, Correct? 1 8 them as an employee.

1 9 A. Yes, sir. 1 9 Q, (BY MR. COWEN) Okay. Given that you continued

2 O Q. And is it your position that's all just a 2 O being in the same position oftrust and confidence in

2 1 coincidence? 2 l doing the same work as the District manager after Integ

2 2 A. Yes, sir, 2 2 started getting paid by a contract, wouldn't you have the

2 3 Q. You also represented that there would be checks 2 3 same obligations?

2 4 and balances. Correct? 2 4 MR. SHAW: Objection; form.

2 5 A. Yes, sir. 2 5 A, No, sir. Iwas basically working for [meg and

12 (PageExfimitV 48)

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Page 4 9 Page 5 l

l Integ was a corporation that was providing a service based 1 Correct?

2 on a contract. 2 A. It says under ”Agreement and Tenns,” ”in

3 Q. (BY MR. COWEN) Do you think Integ had any duties 3 accordance With the terms and provisions hereof," on the

4 of loyalty to the District? 4 first page under ”Obligations of Integ.”

5 MR. SHAW: Objection; form, 5 Q. Right. But it says that "Integ shall perform the

6 A. I think Integ's responsibilities was laid out in 6 duties of the manager of the District,” Correct?

7 the contract, 7 A. I believe under Item I, "Obligations of Integ,”

8 Q. (BY MR. COWEN) So Integ could -- could lie, 8 ”Intcg agrees to provide the following services to the

9 cheat, and steal all it wanted as long as it could get 9 District during the term of this Agreement in accordance

l O itself paid under the contract, Is that your position? l O with the tenns and provisions hereof."

ll MR. SHAW: Objection; form. ll Q. Right. Then 1.], the heading is "Management."

l 2 A. I think Integ's responsibilities is what was laid l 2 Correct?

1 3 in the contract. l 3 A. Correct.

l 4 Q. (BY MR. COWEN) Okay. So you're denying that you l 4 Q. It says, "Subject to the direction of the Board

l 5 had any fiduciary duty owed being that you were acting as l 5 of Directors of the District, lnteg shall perform the

l 6 the manager ofthe District at all times? l 6 duties 0f the manager of the District.” Correct?

l7 MR. SHAW: Objection; form. l7 A. Yes, sir.

l 8 A. I'm saying that I had the responsibility 0r lnteg l 8 Q. And then it lists a bunch of duties that Integ

l 9 had the responsibility of the items that were delineated l 9 has t0 perform. Correct?

2 O in the contract, 2 0 A. "Including, but not limited to the following."

2 1 Q. (BY MR. COWEN) Which included managing the 2 1 Q. Right. And —— and the District didn‘t hire a new

2 2 District? 2 2 manager or distfict director when it entered into

2 3 A. I‘m responding that whatever was laid out in the 2 3 contracts with Integ, did it?

2 4 contract for the responsibility of Integ, those were the 2 4 A. The District hired Integ and used —— using

2 5 obligations that Integ had. 2 5 Godfrey Garza, Jr. to provide the services as listed under

Pa ge 5 O Page 5 2

l Q. Well, Integ was responsible for general 1 this contract.

2 administration of the District. Correct? 2 Q‘ And you were the person that provided the

3 A. If that's what was delineated in the contract. 3 services, Correct?

4 Q. Is that correct? 4 A‘ Under Integ Corporation

5 A. If that's what was delineated in the contract. 5 Q. But there were n0 other human beings, besides

6 Q. You don't remember? 6 you, that performed the services as manager ofthe

7 A. I'd have to read the contract. 7 District. Correct?

8 Q. Okay. Well, What -— what is your understanding 8 A. That provided these services as listed in the

9 of what Intcg was supposed to d0? 9 contract.

l O A. Basically, whatever was written in the contract. 1 O Q‘ And included "exercising discretion and

l 1 Q. Okay. What was that? 1 1 judgment," Correct, under Subsection A(lO)?

1 2 A. If I have a look at the contract, I can read the 1 2 A. It says under A(lO), "exercise discretion and

l 3 contract verbatim. 1 3 judgment in matters not covered by this Agreement and/or

l 4 Q. It’s in -- it's Exhibit 5. Does that set out 1 4 policies ofthe District."

l 5 what Integ's responsibilities were? 1 5 Q. A(l), "perfotm the overall management and

l 6 MR. SHAW: What's the date? 1 6 compliance of the programs." Correct?

1 7 MR. COWEN: That‘s the February 7th. 1 7 A. Which item, sir?

l 8 MR. SHAW: Okay. 1 8 Q‘ A(I). You were to perform overall management and

l 9 MR. COWEN: I mean February 2007. 1 9 compliance ofthe District‘s programs. Correct?

2 O A. Would you like for Inc to read them? 2 O A. Yes, sir.

2 1 Q. (BY MR. COWEN) Well, I was -- first of all, on 2 1 Q. You were establishing —— under A(4), establishing

2 2 thc second page -- on thc bottom of the first page going 2 2 and maintaining "necessary standards ofperformance" for

2 3 to the second page, it says, "Subject to the direction of 2 3 the District. Correct?

2 4 the Board of Directors of the District, Integ shall 2 4 A. That they "comply with the plans, applicable

2 5 perform the duties of the manager of the District." 2 5 laws, and regulations."

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Page 5 3 Page 5 5

l Q. But you were establishing and maintaining the l A. Yes, sir.

2 necessary standaIds of perfotmance. Conect? 2 Q. Okay. Did you have a District c-mail address?

3 A. As long as they complied With those requirements 3 A. Yes, sir.

4 as laid out there. 4 Q. And did you use that c—mail account?

5 Q. And it was your job t0 ”coordinate the 5 A. Yes sir.

6 responsibilities and assignments" ofthe staff. Conect? 6 Q. And on your signature line for c—mails, did you7 A. Yes, sir. 7 put "Integ' or did you put "Godfrey Gar7a director'

8 Q. ”Recommend policies on organization, finance 8 A. I don't recall.

9 programs, personnel, and all other function." Correct? 9 Q. You don't recall?

l O A. Which item was that? l O A. I recall that it was Drainage District manager.

l l Q. That is 9. l l Q. Okay.

12 A. Yes, sir. 12 A. And I recall the address was HCDD No. l.

l 3 Q. Basically, under the contract, you had to do l3 Q. Did the office supplies there m your office at

l 4 everything you had to do as an employee and more? l 4 the District, were those purchased by the District or byl 5 A. And a lot 0fthese basically were ”recommend," l 5 Integ?

l 6 but they still had to be approved by the Board. l 6 A. By the District.

l 7 Q. But they were the same job duties you had when l 7 Q. The employees that -- that assisted you, were

l 8 you were an employee. Conect? l 8 those District employees?

l 9 A. No, sir. l9 A. Yes, sir.

2 O Q. They were more job duties than you —— than you 2 O Q. Did Intcg have to purchase anything, equipment,

2 l had as an employee. Correct? 2 1 software, supplies in order to do this contract?

22 A. Yes, sir. 22 A. N0.

23 Q. But all the job duties you had as an employee, 23 Q. Did Integ have any other customers from 2007 to

2 4 other than showing up 9:00 to 5:00, 40 hours a week, you 2 4 2014?

2 5 still had through Integ? 2 b A. N0.

Page 5 4 Page 5 6

l A. Yes, sir. l Q. So Integ‘s sole source ofrevenue from 2007 to

2 Q. In fact you would even serve and communicate on 2 20] 4 was the income received under the contract from the

3 the District‘s behalf with the District‘s attorney 3 District?

4 regardinglitigation matters? 4 A, N0,

5 A. I was doing that before. 5 Q. What were the other sources of revenue?

6 Q. And after? 6 A, Rental‘

7 A. Yes, sin 7 Q, And rental income,

8 Q. And regarding contract matters Correct? 8 But lnteg performed no other construction

9 A. Yes, sir. 9 management services?

l O Q. So the District entrusted you t0 have privileged l O A, No,

l 1 communications with its attomey. Correct? l l Q, And what was the rental income being received on?

12 A. Yes. 12 A. The apartments

l 3 MR. SHAW: Objection; form. l 3 Q. The two fourplexes?

l4 Let me make sure I get -- l 4 A, Yes, sir.

l 5 THE WITNESS: Yes, sir, I'm son'y, l 5 Q. Anything else?

l 6 MR. SHAW: -- an objection in. l 6 A, Basically on -- whenever there was income

l 7 I object Io the form of the question. l 7 available from some rental property on an office building.

l 8 A. l would discuss with the attemey based on the l 8 Q. And that was the -- the office building rented to

l 9 direction from the Board 0f Directors regarding what items l 9 Valley Data?

2 O were pertinent to the District, and the attorney would 2 O A. That they were utilizing and they would pay rent

2 1 give us the opinion to comply with whatever the District 2 l whenever they had money available.

2 2 needed to comply with‘ 2 2 Q, Okay.

2 3 Q. (BY MR. COWEN) Did the Distfict provide the 2 3 A, And also that office building that we had in

2 4 computer you used to do the work as the manager or 2 4 Mission‘

2 5 director? 2 5 Q. Okay. And who was renting that?

14 <PageExfimiw 56>

14 of4o

Page 57 Page 59

1 A. That was being renting by Heavenly Days, the l you were signing on behalfof Integ?

2 corporation that my wife had. 2 A, No, sir.

3 Q. Okay. And that was the adult day care? 3 Q. You signed them as the director?

4 A. Uh—huh. 4 A, District manager.

5 Q. ls that a "yes"? 5 Q. District manager.

6 A. Yes, sir. 6 Did Intcg pay a salary to your wife at any time?

7 Q. And would that pay rent every month or just when 7 A. Only When she did work for Integ.

8 it had the money? 8 Q, What periods of lime did your wife do work for

9 A. Every month. 9 Integ?

l O Q. Okay. Was there a written lease agreement l O A, Periodically.

l 1 between Heavenly Days adult daycare and lnteg? l l Q. What years?

l 2 A. Yes. l 2 A, Evcry ycar, periodically,

l 3 Q. Was there a written lease agreement between l 3 Q. Okay. Was it a specific salary or how was she

l 4 Valley Data and Integ? l 4 paid?

l 5 A. No. l 5 A. She would get paid on a weekly basis when she did

l 6 Q. Would Valley Data pay the rent every month? l 6 work.

l 7 A. No. l 7 Q. Okay. Would taxes be Withheld or would she be

l 8 Q. Was the rent the same every month? l 8 paid as a contractor?

19 A.No. 19 A.meswofldbewmmfld2 0 Q. What was the rent? 2 O Q, But Intcg didn't pay any wages Io anyone olhcr

2 l A. There was no rent. 2 l than you or your wife. Correct?

2 2 Q. It’s just whatever they —— they wanted to pay? 2 2 A, Yes, sir,

2 3 A. Whatever they could pay. 2 3 Q. There was a bond issue done for $100 million by

2 4 Q. And Integ had never worked on a multimillion 2 4 lhc District‘ Correct?

2 5 dollar project as construction manager before, had it? 2 5 A. Yes, sir.

Page 58 Page 60

l A. No. l Q, Did that bond issue set out what the Phase II

2 Q. The relationship between -- contractual 2 projects were going to be?

3 relationship between Imeg and the District lasted 14 3 A, The bond issue itself by Bond Counsel did not.

4 years? 4 Q. Okay. By what the public voted on?

5 A. It could have been 15 years. 5 A, That’s correct.

6 Q. Okay‘ The District's letterhead actually listed 6 Q. 1t did or did not?

7 Godfrey Garza, In, as the manager, Correct? 7 A, Did not.

8 A. Yes, sir, 8 Q. lwant to ask you some about some of the Phase ll

9 Q. The District letterhead did not list Imeg as the 9 projects. There's a W-06-OO La Villa project. Did that

l O manager? l 0 project ever get completed?

l l A. No, sir. l 1 A, I don’t recall,

l 2 Q. And so throughout the IS years during which Integ 1 2 Q. Okay. How about the Weslaco drain?

l 3 had contracted with the District Io provide management l 3 A, I don’t recall,

l 4 services, the letterhead always said "Godfiey Garza, Jr., 1 4 Q. How about the Monte Christo, did that ever get

1 5 manager. " Con'ect? l 5 completed?

1 6 A. Yes, sir, l 6 A. The Monte Christo changed by Commissioner Garza.

l 7 Q. And you never directed anyone to change that? l 7 It was scheduled to be constructed a cenain way, and then

1 8 A. l believe the letterhead stayed from the time l 8 Commissioner Garza changed the proj ect and constructed it

l 9 that we were —— I was an employee, that the letterhead l 9 in a different form so the ditch, instead 0f being dug, he

2 O just stayed the same. 2 O reconstructed and dug detention ponds.

2 l Q. And during those 15 years7 you never asked anyone 2 1 Q, Okay, And was that project finished?

2 2 to change the letterhead? 2 2 A. l don’t know if it was finished.

2 3 A. N0, sir. 2 3 Q, Was the McAllen Pharr South drain project

2 4 Q. And when you signed letters that went out on 2 4 finished?

2 5 behalf of the District, you did not sign them noting that 2 5 A, I don’t know if they finished construction on it.

15 (PageExfiibitV 60)

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Page 61 Page 63

l Q. Was the Jackson drain project finished? 1 A. Integ‘s computer.

2 A‘ [believe it was 80 or 90 percent complete. 2 Q. Okay. So that wasn't a District computer?

3 Q. Was the Penitas drain project finished? 3 A. No, sir.

4 A‘ Yes, sir. 4 Q. How was -- how did thc invoice gct fiom Intcg to

5 Q. When was it finished? 5 the District?

6 A‘ I don't recall the date. 6 A. It was cithcr given to mc to take ovcr to thc

7 Q. Was the Raymondville industrial project finished? 7 District.

8 A‘ They started construction on it about two, three 8 Q. Or?

9 months ago. 9 A. Or it was faxed. But more than likely it‘s

l 0 Q‘ Now, the contract, ifyou look at Exhibit A t0 1 O original, so I must have Iakcn it ovcr thcrc to him

l 1 the contract -— 1 l myself.

l2 (Discussion offthe written record‘) 12 Q. And who did you givc it to?

l 3 A. Yes, sir. 1 3 A. I would usually give it either t0 Lora or I would

l 4 Q‘ (BY MR, COWEN) Okay. It talks about paying one 1 4 givc it to Sylvia Sanchez.

l 5 and a half percent of actual construction costs. Correct? 1 5 Q. Who is Sylvia Sanchez?

l 6 A‘ Yes, sir. 1 6 A. Sylvia Sanchez was chief 0f staff 0r

l 7 Q. It doesn't say total construction costs? 1 7 administrative assistant to the District.

l 8 A‘ No, sir. 1 8 Q, Okay. And thcn on thc third page —- I want to

l 9 Q. Does it define the term "actual construction 1 9 ask you a question. Were any of the invoices ever faxed?

2 O costs" in the contract? 2 O A. I don’t recall.

2 l A. No, sir. 2 l Q. Who would know?

2 2 Q. Valley DaLa Collection was not a licensed 2 2 A. I guess the invoice itself would show if it was

2 3 engineering company. True? 2 3 faxed.

2 4 A. No, sir. 2 4 Q. Because it would have the little fax linc on thc

2 5 Q. And it was not a licensed surveying company? 2 5 top?

Page 62 Page 64

l A, No, sir. 1 A, Yeah.

2 Q. It did not employ any licensed engineers? 2 Q. On the third page it says Hidalgo —— Hidalgo

3 A. No, sir. 3 County Drainage District #1, Engineering Cost as of

4 Q. It did not employ any licensed surveyors? 4 December 3lst, 2007. Correct?

5 A. No, sir. 5 A, Yes, sir.

6 Q. I want to go through some of these invoices With 6 Q. Now, this is —— these are costs for which lnteg

7 you, and let's start with Exhibit 7. 7 charged 1,5 percent for construction management. Correct?

8 Okay. Exhibit 7 starts with a check that was 8 A. Yes, sir.

9 paid t0 Intcg for $1 19,861.72. Concct? 9 Q, What was Integ’s overhead, by the way? I mean,

l O A. Yes, sir. 1 O who all did it have to pay and what all did it have to pay

l l Q. And that was for services pcrfonncd by these 1 1 at that time?

l 2 construction management services? 1 2 A. Basically it would be my overhead, my —— myl 3 A. It says "Services performed as pcr mastcr 1 3 salary and whatever I would pay Annie,

l 4 drainage system contract." 1 4 Q. Okay. That was the only overhead, is what you

l 5 Q. And then there is an invoice, which is the second 1 5 paid yourself and your wife?

l 6 page. Correct? 16 A. Yes, sir.

l7 A. Yes, sir. 17 Q, Okay,

l 8 Q. Who prepared that invoice? l 8 A. And whatever gasoline [was paying or my vehicle

l 9 A. Integ did. 1 9 payment or my insurance payment or Whatever medical

2 O Q. Who at Intcg prepared it? 2 0 insurance l paid or whatever my costs were.

2 l A. My wife. 2 1 Q, Okay, But it didn’t have -— it didn‘t lease an

2 2 Q. So your wife actually prepared thc -- that 2 2 office anywhere?

2 3 invoice? 2 3 A, No, sir,

24 A. ch, sir. 24 Q. 1t didn’t advertise?

2 5 Q. And what computer did she use? 2 5 A‘ No, sir‘

16 (PageExfiibitV 64)

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Page 6 5 Page 6 7

l Q. So the first thing there was some work done by l page, Page 5, that they billed for? Was that preliminary

2 S&B Infrastructure, Ltd, for preliminary engineering, 2 engineering work?

3 $159,713.67 worth of work. What did you or Lnteg do to 3 A. TEDSI was doing preliminary engineering work the

4 manage lhal preliminary engineering work? 4 Monte Christa project,

5 A. Reviewed the reports that were being done by S&B, 5 Q. And so none of this was actual construction going

6 reviewed the delineation of what they were doing on those 6 0n, this was all engineering work?

7 repons, reviewed any work that was being done by S&B on 7 A. That is correct, sir.

8 the preparation of those reports regarding either 8 Q‘ And what work did you 0r Integ d0 with regard t0

9 environmental, regarding the schematics, any meetings that 9 this engineering work being done by TEDSI?

l O 100k place, I would have 10 look at [he actual report lo l O A‘ Basically coordinating the route that TEDSI was

l l give you direct input as to what I did on them. l l delineating, meeting with Commissioner Garza on the route

l 2 Q. And for this 58,37903 you spent —— you billed 0n 1 2 where the drainage ditch was going to be going, meeting

l 3 this engineering work, how much time do you think you l 3 with the Irrigation District in which this proj ect was

1 4 spent on it? 1 4 being done, looking at where the minimum amount of impact

l 5 A. I'd have to look at the report itself t0 see how l 5 this proj ect was going t0 go With the land owners, looking

1 6 much lime I spent on it. l 6 at whatever utility adjustments were needing t0 be done

l 7 Q. What qualifies you to tell whether the l 7 and just looking at the route Which was going to be less

l 8 engineering work was being done of—— l0 the proper l 8 expensive t0 build the project on‘

1 9 quality for an engineer? l 9 Q. Then the next page, is that more work for

2 O A. My 30-some—odd years‘ experience of working with 2 O engineering?

2 1 engineers. 2 l A. Yes, sir.

2 2 Q. But you're not an engineer, Correct? 2 2 Q‘ And no actual construction at this point?

23 A. No, sir. 23 A. No, sir.

2 4 Q. There was nothing actually built that was being 2 4 Q‘ Then the next page starts with -- it says

2 5 billed for 011 Page 3. Correct? 2 5 "Penitas Drain Basin." Was this also engineering work?

Page 6 6 Page 6 8

l A. N0, sir. 1 A, Yes, sir.

2 Q. There was not actual construction, this was 2 Q, No actual constmction being billed for here?

3 engineering? 3 A, No, sir.

4 A. Yes, sir. 4 MR. SHAW: Let me object t0 the form 0f the

5 Q. And then Lhe next page are additional engineering 5 question.

6 costs. ls that correct? 6 MR. COWEN: That's fine,

7 A. Yes, sir. 7 MR. SHAW: You can ask me to clarify it.

8 Q. Also by S&B Infrastructure? 8 MR. COWEN: l don't want to ask you to

9 A. Yes, sir. 9 clarify it.

1 O Q. And what did you do to earn your $186 on this l O MR. SHAW: Okay, Then I object to the form

1 1 part? l l ofthe question,

12 A. Basically just go out there and verify that the 12 A, Basically what, again. is basically engineering

1 3 construction was being done properly, they provided 1 3 work that the engineer was engaged in and services that

1 4 inspection, I went out to provide the inspection and l 4 the engineer was doing regarding the work and just making

1 5 reviewed and made sure that the gates were going to be 1 5 sure that everything was being done properly.

1 6 operating properly and that also they were installed l 6 Q, (BY MR, COWEN) Okay, Go t0 the next page. Next

l 7 properly. 1 7 page was additional -— was engineering work being done on

l 8 Q. Did you do that kind of work back when you were l 8 the levy system, Correct?

l 9 an employee at the District, go look at projects that were 1 9 A, Yes, sir.

2 0 being done? 2 0 Q. And that was over $43 million dollars being done

2 1 A. Yes, sir. 2 l on the levy system?

2 2 Q. Okay. And that‘s back when you were just getting 22 A. Yes, sir,

2 3 a salary? 2 3 Q, W'hat were the cultural resources that Dannenbaum

2 4 A. Yes, sir. 2 4 was paid $1 59,01 1.54 for?

2 5 Q. And then TEDSI, what was TEDSI doing on the next 2 5 A, The cultural resources consist of going in there

17 (PageExfimitV 68)

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Page 6 9 Page 7 1

1 and evaluating to make sure that there was not any l Q, The preliminary eng'neering and field survey

2 historical or environmental issues impacted on the levies. 2 billing entn‘es, was that the kind ofwork that Valley

3 You have to make sure that where the footprint of the 3 Data Collection Services did?

4 levies are, that itselfdoes not fit over a historical 4 A. It would be a combination ofwhat the engineer

5 site. 5 would do and Valley Data would do, Valley Data, or any

6 Q. Weren't the levies already there? 6 other surveying company they would hire, would g0 out with

7 A. It doesn't matter if the levies were there. When 7 the engineers and start doing Whatever preliminary work

8 you have a levy system and you're going [0 put dirt 0n top 8 they needed to look. An engineer would -- traditionally

9 of a historical site, it’s not a problem. When you're 9 would go out there and look at the site and then stan

l O going to start digging into the levies and start moving l O collecting whatever data they needed to start developing

l 1 din up from it, then you could have a historical problem l 1 their plans.

l 2 because you‘re going to be moving problem. But ifyou're 12 Q, Do you know if TEDSI used any surveying companies

l 3 putting din on top of it, you don't have an issue on l 3 other than Valley Data?

l 4 historical sites‘ l 4 A. You would have to check with TEDSI on that,

l 5 So you have to make sure that if it is a 1 5 Q, Did TEDSI ever disclose who their subcontractors

l 6 historical site [hat you're going t0 have a plan in place l 6 were?

l 7 to identify that you're putting dirt on top 0f it; but if l 7 A, Basically you would check with TEDSI on that, whol 8 you're digging undemeath it, you have t0 communicate with l 8 their contract __ subcontractors were,

l 9 any historical society and get an update and get a time l 9 Q, Given that there was a contractual obligation for

2 O and get a permit and make sure all Ofthat is in 2 O the contractors t0 disclose their subs, did you ever ask

2 1 compliance. 2 1 TEDSI who their subs were?

22 Q‘ And no one knew where the historical sites were 22 MR. SHAW: Objection; fonm.

2 3 from the original levy construction? 2 3 MR. NEWTON: Yeah, I'm going to object;

2 4 A. No, because the levies were done back in the 2 4 form,

2 5 19305 and the 19505, and the issue on historical and 2 5 A, I‘ve never asked any contract —— sub —— any

Page 7 O Page 7 2

l environmental issues are not something that were being l contractor who their subs were, for the simple reason that

2 considered very highly back in the ‘305 or in the ‘405 the 2 legal counsel had always told us that whoever the subs

3 way we 100k at it today, 3 were was none 0f our concem.

4 Q. So the District paid $159,01 1 .54 so someone could 4 Q, (BY MR‘ COWEN) Page 1 I ofthe invoice, Alamo

5 look at the levies to see if any of them were historical 5 Drain is divided between engineering costs and

6 sites? 6 construction costs. Correct?

7 A, Yeah, it's probably going to be more money than 7 A, Yes, sir,

8 that spent 0n environmental issues t0 make sure that you 8 Q, Did you pay yourself only on the construction

9 meet all the environmental criteria. 9 cost or on both the construction and the engineering?

1 O Q. And then you got —- you got 1.5 percent 0f that l O MR. SHAW: Let me object to the form of the

1 l for managing their seeing if any of the levies were l l question.

1 2 historical sites? l 2 A. The invoice that l have here was basically

1 3 A, Making sure that they comply with all the l 3 prepared by Ms. Lora Briones and the accounting. So I

l 4 requirements. l 4 didn't prepare these invoices. These invoices were

1 5 Q, And Page 9, that was —- I‘m sorry, Page 8, the l 5 prepared by the Distfict financial officer, and these

1 6 work that was done by Dannenbaum and L&G, that was all l 6 invoices were given to me, or to Integ, to attach to our

1 7 work being done on the levy system. Correct? l 7 billing. So she or the District accounting department is

1 8 A. Yes, sir. l 8 the ones that prepared the invoices, So I didn‘t prepare

1 9 Q, Then Page 9 there's additional engineering work l 9 them,

2 O being done 0n the Jackson drain project by L&G and 2 O Q, (BY MR‘ COWEN) So you had the District‘s

2 l Dannenbaum? 2 l employees prepare the invoices for Integ?

2 2 A. Yes, sir. 2 2 A. That's what the contract identified, that they

2 3 Q, Page 10 is engineering work being done by 2 3 were the ones to prepare billing,

2 4 Dannenbaum 011 the Weslaco Outfall‘? l‘m sorry, by TEDSI, 2 4 Q. And those were people you supervised. Correct?

2 5 A, By TEDSI, 2 5 A. That's the way the contract read.

18 (PageExfifloiw 72>

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Page 73 Page 75

l Q. So employees ofthe District, being paid by the l TIE VIDEOGRAPHER: This is the Stan of

2 DmmLmDmmHMQmwmmmwmmmmw 2 mw2lfiflflkmkmeMmed3 invoices for Integ? 3 MR. SHAW: Godfrey, was there something you

4 A. Not in my direction. Thc contract idcnlificd 4 wanted to clan' fy?

5 that the District financial officer would prepare the 5 THE WITNESS: Yes, sir.

6 payments. 6 A, I wanted to -- to clarify the question earlier

7 Q. And this particular one differemiates 7 regarding Integ doing any work for anybody else. AndI

8 construction costs from engineering costs. Correct? 8 wanted to clarify that Integ had done work between 2000

9 A. That is the way the financial officer prepared 9 and —— 2000 and 2015, They had a contract with the

l O it‘ l O Hidalgo County Regional Mobility Authority that served as

l l Q. But Integ, when it sent the invoice, did 1.5 l l the executive director for numerous years. so they had a

l 2 pcrccnl 0f both lhc engineering and 1hc consiruction 12 contract also to do work for them.

l 3 costs. Correct? l 3 Q, (BY MR, COWEN) And for what years did Integ have

l 4 A. Inlcg sent Ihc $213935 l, I cannot lcll you, l 4 a contract With Hidalgo County Regional Mobility

l 5 without looking in detail, if that included the 29,000 or l 5 Authority?

l 6 not, l 6 A, I cannot be exact, but I think it was maybe 2009

l 7 Q. The next page, 12, also there is a l7 to 2011, '12,

l 8 differentiaijon between engineering costs and construction l 8 Q, And what work did lnteg d0 for the Hidalgo County

l 9 costs. Correct? l 9 Regonal Mobility Authority?

2 O A. Thc bill that was prepared by thc financial 2 O A. lt sewed as the executive director in assisting

2 l officer identifies engineering costs and construction 2 1 it in the preparation of the development of the 100p

2 2 costs being SCparalCd. YCS, Sir. 22 system for Hidalgo County. which consisted of developing a

2 3 Q. Did she ever ask you whether they should both be 2 3 toll road, which was about a billion—dollar project.

2 4 included on lhc 1.5 percent? 2 4 Q, How was it paid?

2 5 A. No, sir. 2 5 A, How was Integ paid?

Page 74 Page 76

l Q. You never told her to include both on the 1.5 l Q. Yeah.

2 percent? 2 A. Integ was paid 0n a salary, plus it was paid 0n a

3 A. No, sir. It was her job to prepare the bills t0 3 commission.

4 identify what intake was supposed t0 be paid. 4 Q. What kind of --

5 Q. And the last page, 13, actually lists —— they are 5 A. A percentage.

6 listed as construction costs. Correct? 6 Q. A percentage ofwhat'?

7 A. Yes, sir. 7 A. A percentage ofthe funds that Integ was able to

8 Q. Okay. So this first invoice that we're talking 8 generate in finding grants or finding federal fimds

9 about that‘s dated April l 1th, 2008, what period of time 9 available for it.

10 does this cover? 1 O Q. Did Integ hire any additional employees m1 l A. (Pause.) 1 l d0 — t0 work With Hidalgo County Regional Mobility

12 The ending period of 12/3 1/07. And the first 12 Authority?

1 3 invoice shows a 3/3 1/07 0r 12/3 1/07. 3, 8, 6. It's got 1 3 A. No. It had a similar contract with the Mobility

14 various —- I'd have t0 100k through to see how long -- 14 Authority to provide an office space, t0 provide a

1 5 Q. Work done in 2007, though? 1 5 secretary, to provide staffing needs.

1 6 A. Yes, sir. 1 6 Q. So from 2009 to either 20] l, 20] 2, wouldjust you

1 7 MR. SHAW: Okay. If we're at a convenient 1 7 and your wife, as needed, Integ served as the director for

1 8 stopping point, if that's the end ofthat particular 1 8 both the Drainage District and the Regional Mobility

1 9 exhibit, we can maybe think about what we‘re going t0 do 1 9 Authority?

2 O about lunch. 2 O A. Yes, sir.

2 l MR. COWEN: Whenever you want. 2 l Q. And also served as a construction manager on all

22 (Discussion offthe written record.) 22 these projects?

23 THE VIDEOGRAPHER: It‘s 12:05. We're off 2 3 A. Yes, sir.

2 4 the record. 2 4 Q. Do you have diaries 0r anything else that keep

2 5 (Break) 2 5 track of, you know, what you did each say?

l9 (PageExHibitV 76)

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Page 77 Page 79

l A. No, sir. There are calendars at the District 1 companies hired to work on the project?

2 where my secretary would keep track of meetings or 2 A, I don't remember if I recommended, but Dannenbaum

3 appointments that I had besides whatever other information 3 was one of the engineers that was on the list,

4 came in, reports and so forth, 4 Q. Were you aware 0f any 0f the controversy

5 Q. Who were the decision-makers who hired 5 involving Dannenbaum at the Port of Brownsville?

6 you -- hired [meg to do work with [he Hidalgo County 6 A, That was common knowledge throughout the whole

7 Regional Mobility Authority? 7 South Texas area.

8 A‘ The Board ofDirectors‘ 8 Q, That Dannenbaum had been paid tens of millions of

9 Q. And who were the Board of Directors there? 9 dollars 0n a project where ground never broke?

l 0 A‘ They have changed now. I don't recall who [he l O A, Again, that was just a lot ofhearsay, a lot of

l l Board of Directors are there now, but the chairman is l 1 information that came out in the media.

l 2 appointed by the governor. The other Board members are l2 Q, And were you aware that Dannenbaum, around the

l 3 appointed by the elected Officials 0f the county. And l 3 same time that they were doing work for the District

l 4 another Board member is appointed by the largest city 0f l 4 actually, paid a $1 million civil forfeiture t0 the

l 5 the county. 1 5 Cameron County district attorney to resolve the issues

l 6 Q‘ Were any ofthe Board members 0n the Hidalgo l 6 involving the bridge to nowhere in Port 0f Brownsville?

l 7 County Regional Mobility Authority also commissioners on l 7 MR. SHAW: Objection; form.

l 8 the bus— -- Drainage District? l 8 A. l don't know anything about that,

1 9 A- N0, Sir. 1 9 Q7 (BY MR COWEN) You never read that in the paper?

2 O Q‘ Whose idea was it for you -- for Integ t0 2 O A. l don't remember reading anything 0fthat.

2 l contract with the Hidalgo County Reg’onal Mobility 2 1 Q, And that Louis Jones also paid an additional

2 2 Authority? 22 amount out ofhis own pocket as a civi] forfeiture t0

2 3 A. The commissioners saw that there was a vacancy on 2 3 resolve the potential criminal matters?

2 4 the Board ofdirectors at the RMA and asked me ifI would 2 4 A, Don't know anything about it.

2 5 be interested to apply, 2 5 Q, And were you aware that ——

Page 78 Page 80

1 Q. As a director? 1 MR. SHAW: Let me get my obj ection in.

2 A. Yes, sir. 2 THE WITNESS: I'm sorry ——

3 Q. And what did you say? 3 MR. SHAW: Objection.

4 A. l said sure. 4 Q. (BY MR. COWEN) And were you aware that the Port

5 Q. Which commissioners, the Regional Mobility 5 of Brownsville had actually sued Dannenbaum over that

6 Authority commissioners or the -— 6 deal?

7 A. No, the County commissioners. 7 A, Only what I read in the paper.

8 Q. The County commissioners. 8 Q. And were you aware there were issues that

9 And which commissioner suggested that? 9 Dannenbaum was involved in corruption, governmental

l O A. l don’t remember who it was back then. l O corruption and kickbacks involving the Port of Brownsville

l l Q. As part of your work with Integ, did you ever l 1 deal?

l 2 review the contract between Dannenbaum and Valley Data? l2 A, Only what was put in the paper,

l 3 A. N0, sir. l 3 Q, Are you aware that Damenbaum has recently been

l 4 Q. You never looked at it? l 4 raided by the federal law enforcement authorities?

l 5 A. N0, sir. l 5 A, Only what I’ve read in the paper.

l 6 Q. As part of your work with lnteg, did you ever l 6 Q, You don‘t have any idea what that's about?

l 7 review the contract between Lhe District and Dannenbaum? l 7 A, Only what the papers put out.

l 8 A. Yes, sir. l 8 Q. And what did you learn from the paper?

l 9 Q. And did you communicate 011 a regular basis with l 9 A, That their office was raided.

2 O anyone from Dannenbaum? 2 O Q, Did that come as a suqm'se to you?

2 l A. I communicated with MI, Richard Sites,I 2 1 A, Yes.

2 2 communicated with MI. Louie Jones, l communicated with 22 Q. Have you heard any other rumors involving

2 3 several of their engineers that were there, some of their 2 3 Dannenbaum doing anything improper or illegal?

2 4 inspectors. 1 can’t remember who they are now. 2 4 A, Only what the papers put out.

2 5 Q. Did you recommend that Dannenbaum be one of the 2 5 Q, Were you aware that any contractor or

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1 subcontractor working on —— on the District proj ect was 1 to have Valley Data paid as a subcontractor?

2 subcontracting with Valley Data? 2 A. I don't think ——

3 A. Could you repeat the question? 3 M R. SHAW: Object —-

4 Q, Sure, Were you aware that Valley Data was doing 4 MR. NEWTON: Object to the form ——

5 any work related to Distn'ct projects? 5 M R. SHAW: Objection; form.

6 A, I had heard that Valley -- yes, 6 MR. NEWTON: —— on that.

7 Q. How did you hear about that? 7 Are you asking on -- paid by the county?

8 A, In conversations that were -- that were made out 8 MR. COWEN: That's an imprope ——

9 there. 9 MR. NEWTON: Well, I ——

10 Q. That were what? l O MR. COWEN: No, no. "Objection; form" is

l 1 A. That were made out there. l 1 the rule. You’re coaching at this point.

l 2 Q, Okay. Because your wife also worked for Valley l 2 MR. NEWTON: Okay. Objection; fonn.

l 3 Data even before she became the owner of it. Correct? l 3 M R. COWEN: Thank you.

l 4 A. Yes. l 4 MR. NEWTON: The question is vague. It

l 5 Q, And before your Wife owned it, your sons owned l 5 doesn’t designate by --

l 6 it. Correct? l 6 MR. COWEN: No, that is also improper. Youl7 A, Yes. l 7 can say "Objection; form," and l said, l have to -- unless

l 8 Q, How often would you see your son -- your l 8 I ask you, that’s all you get to say. That's the rules.

l 9 children? l 9 And because people coached witnesses like this before

2 O A, I'd I run into my son maybe every two, three 2 0 1999, that’s why we have the rule.

2 1 weeks. 2 1 A. Can you repeat the question, please?

22 Q, Did you ever, at a public meeting, disclose t0 22 Q. (BY MR. COWEN) Sure.

2 3 the District commission that Valley Data was owned by your 2 3 Did you ever get authority from the Board, the

2 4 children 0r your wife? 2 4 commissioners of the District for Valley Data to be paid

2 5 A. I've mentioned it at fimctions. 2 5 as a subcontractor on any District contract?

Page 82 Page 84

1 Q. Okay. I'm asking you, though, at a —— a1 a 1 MR, SHAW: Objection; form,

2 official meeting -- 2 MR. NEWTON: Objection; form.

3 A. No. 3 A. I don‘t think it was required based 0n my4 Q. -- when the whole commission was there? 4 contract t0 get any of the subs‘ approval to get paid

5 A. No. 5 because my contract did not have an interpretation in

6 Q. Did you ever disclose in writing to the District 6 there by me regarding the subs getting approval by the

7 that Valley Data was owned by either your wife or your 7 Board to get paid.

8 children? 8 Q. (BY MR. COWEN) You don‘t believe it was a

9 A. N0. 9 potential conflict of interest Io have contractors that

1 O Q. Did you ever get a written approval fiom the 1 O you're managing pay money to a company owned by either

1 1 District to have a company owned by family members of 1 1 your wife or your children?

1 2 yours receiving money on a project the District was 1 2 A. Not according to ——

1 3 funding? 1 3 MR, SHAW: Objection; form,

l 4 A. l never felt it was required, no. 1 4 Let me get my objection in, Godfrey, please,

1 5 I‘d like to clarify one item, It was brought up 1 5 You can g0 ahead now,

l 6 when Judge Garcia mentioned ig it was in December, 1 6 A. Not according to my contract.

1 7 regarding my wife‘s ownership in the company. 1 7 Q. (BY MR. COWEN) And you never felt like it was a,

l 8 Q. And what year was that? 1 8 potential conflict?

1 9 A. 2014, Ibelieve. 1 9 A. No.

2 O Q. Prior to 2014, at a meeting ofthe commission, 2 0 Q. And you never felt like it was something you

2 1 did you ever disclose to the District that a company owned 2 1 needed to disclose to the District that not only were you

2 2 by either your wife or your children was being paid as a 2 2 getting paid millions of dollars through Integ for

2 3 subcontractor? 2 3 so—called construction management, but that your wife and

2 4 A. No. 2 4 children were also getting millions of dollars through

2 5 Q. And did you ever get approval from the commission 2 5 their company as subcontractors?

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1 MR. NEWTON: Objection; form, l Q, D0 you know if anyone else told her that Valley

2 MR, SHAW: Objection; form, 2 Data was owned by either your Wife 0r your children?

3 A. No, because it was not so-called constnlction 3 A, Ido not know.

4 management because I was complying with thc language of my 4 Q. But t0 be clear, as someone that was acting as a

5 contract on the management of it, 5 manager of the District, you had actual knowledge that a

6 Q. (BY M'R. COWEN) But as -- in your capacity acting 6 company owned by your family members was being paid as a

7 as the manager of the Disu‘ict, you never felt like you 7 subcontractor and you did not reveal that fact t0 either

8 had an obligation to tel] the Board that a company owned 8 Ms, Briones or to the Board. Correct?

9 by first your children and later your wife was being paid 9 MR. NEWTON: Objection; form,

1 0 as a subcontractor on a District project? l O MR. SHAW: Same objection.

1 1 MR, NEWTON: Objection; form l l A. I was going by my understanding ofwhat was -- my1 2 MR. SIIAW: Objection; form. 12 requirements were based on what was written in my1 3 A. No, based on my understanding 0f my contract and l 3 contract.

l 4 my obligations on my contract. l 4 Q. (BY MR. COWEN) But you did not inform

1 5 Q. (BY M'R. COWEN) And you never told the District l 5 Ms, Briones. Correct?

1 6 that when it was paying these contractors like Dannenbaum l 6 A. No.

1 7 and TEDSI that in turn were hiring your wife or your l 7 Q, You did not inform the Board?

1 8 children's company as a subcontractor, that some of that l 8 A. l went by what was written in my contract. had t0

1 9 money was going to flow through to your family through l 9 comply with whatever my obligations were.

2 O Valley Data? 2 O Q. That wasn't my question.

2 1 MR. NEWTON: Objection; form, 2 1 Did you inform the Board?

2 2 MR, SHAW: Same objection. 22 A, I went by what was required in my contract t0

2 3 A. It was not in my contract’s understanding that it 2 3 comply with stipulations in there.

2 4 was my responsibility. I followed what was my 2 4 MR. COWEN: Objection, nonresponsive.

2 5 understanding in my contract and the financial officers 2 5 Q. (BY MR. COWEN) My question is simple. Yes or

Page 86 Page 88

l were auditing the bills according Io their requirements, l no, did you inform the Board?

2 and the invoices were being processed and placed on the 2 A. l went by what was required in my contract.

3 agenda for payment. 3 Q. I didn‘t ask what -- about your contract. I

4 Q. (BY MR. COWEN) Did anyone disclose to the 4 asked whether or not you informed the Board.

5 financial officers that Valley Data was owned by either 5 A, I went by what the requirements were in my6 your wife or your children? 6 contract. 1f my contract required me t0 d0 it, then]

7 MR. NEWTON: Objection; form, 7 would have done it,

8 MR‘ SHAW: Same objection. 8 Q. Did you do it?

9 A. That would be something that needs to be talked 9 A, My contract did not require me to do it.

l O to with the financial officers, which were the ones that 1 O Q. So did you d0 it?

l l were processing the invoices that were being submitted by 1 l A, My contract did not require me to do it.

l 2 the consulmms‘ 12 Q. Okay. This is a yes—or-no question. Did you

l 3 Q. (BY MR. COWEN) And who are the financial 1 3 ever inform the Board that a company owned by your family

l 4 officers? 1 4 members was being paid as a subcontractor?

l 5 A. Financials, Lora Briones. 1 5 A. I informed some 0f the Board members,

l 6 Q. Did you ever tell Lora Briones that Valley Data 1 6 Q. Okay. Who did you inform?

l 7 was owned by either your children or your wife? 1 7 A, Commissioner Oscar Garza.

l 8 A. l was never asked who the owners or who the subs 1 8 Q. Anyone else?

l 9 were 0n any contract, and it was never my understanding 1 9 A. No, sir.

2 O that it was our responsibility to be telling them who the 2 O Q. When did you tell Commissioner Oscar Garza?

2 1 subcontractors were on any of the proj ects. 2 l A. At functions that we would attend

22 Q. My question is, did you ever tell Lora Briones 22 Q. What functions?

2 3 that Valley Data was owned by either your wife or your 2 3 A. Functions that the elected officials would have.

2 4 children? 2 4 Q. Like What kind 0f functions?

2 5 A. N0. 25 A. They would have political functions, they would

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1 have get—togethers. l Correct?

2 Q. Okay. And so what did you tell Mr. Garza? 2 A. True.

3 A. Basically my son would show up at the function; 3 Q. Did you ever specifically tell any commissioner

4 "This is my son, he is the owner of Valley Data." The 4 that Valley Data was working as a subcontractor on the

5 engineers would be there. They would say, "Yes, he‘s 5 District projects and that it was owned by your family?

6 doing work with us.” 6 A. I do not recall.

7 Q. Okay. And which engineers said that? 7 Q. At some point did —- was there a transfer of

8 A. Whatever engineers were there. 8 money from Integ to Valley Data?

9 Q. Wha —— what were the dates of these things? 9 A. There was a loan, yes.

l O A. I could —— I couldn’t tell you what dates. I l 0 Q. When was that loan made?

l 1 couldn't tel] you what specific engineers. l l A. I think it was around 2008 or 2009.

l 2 Q. Did you tell any other commissioner? l 2 Q. Okay. Why was that loan made?

l 3 A. Commissioner Hector "Tito" Palacios. l 3 A. My son had bought a piece of property or a

l 4 Q. Where did you tell ”Tito" Palacios? l 4 building, and the bank was going to foreclose on it.

l 5 A. At political functions that they would have, l 5 Q. And so lnteg then transferred money t0 -- not t0

l 6 barbecues that they would have. l 6 your son directly but to Valley Data?

l 7 Q. Okay. And where were these held? l 7 A. That's correct.

l 8 A. Somewhere in his precinct. l 8 Q. Why to Valley Data and not your son directly?

l 9 Q. What were the dates 0f the conversation? l 9 A. Because Valley Data was the one that was buying

2 0 A. I couldn’t tell you the dates 0f the 2 O the building.

2 1 conversations. 2 1 Q. And what building was that?

2 2 Q. Do you have any witnesses who can back up your 2 2 A. The office building that he bought.

2 3 smry that you told Commissioner Garza and 2 3 Q. Okay. Where is that located?

2 4 Commissioner Palacios? 2 4 A. In McAllen.

2 5 M R. N EWTON: I'm going to object to the fotm 2 5 Q. What’s the address?

Page 9 O Page 9 2

l ofthat. l A. I don‘t know the address

2 MR‘ SHAW: Same objection. 2 Q. What street‘s it 0n?

3 A. You would have to talk t0 the commissioners 3 A, 23rd Street

4 themselves 0r talk to all the engineers that are around 4 Q. That‘s —- Who did he buy it from?

5 about. 5 A. Apparently, he bought it from the bank or

6 Q. (BY MR. COWEN) Were there any witnesses in -- 6 from —— I think it was an attorney by the name ofMark

7 that you can name that could back you up that —— that's —— 7 Cantu,

8 that would have been there that would have heard you tell 8 Q. Okay. How much money did lnteg lend t0 Valley

9 them that ”My son owns this company and this company is 9 Data in either 2008 0r 2009?

l O getting paid as a subcontractor 0n District projects"? 1 O A. 1t was between 75,000 and 100,000.

l l A. I didn‘t say that I told them that they were 1 l Q, How was the money -— was it a check? Was it a

l 2 getting paid on District projects I said that they were 1 2 wire? Was it cash? How did it ——

l 3 working for the consultants. 1 3 A. I think it was a check

l 4 Q. Did you say specifically they were working for 1 4 Q. Was itjust one check?

l 5 the consultants 0n the project for the District? 1 5 A. I don‘t recall.

l 6 A. I don‘t recall if I told them specifically for l 6 Q‘ Was itjust one loan?

l 7 the District projects. That would be something you need 1 7 A. For the building it was one loan.

l 8 t0 talk to the consultants l 8 Q. Were there ever any other loans from [meg t0

l 9 Q. Because the engineefing firms had other projects, 1 9 Valley Data?

2 O Correct? 2 O A. We would let him borrow money if he needed $1,000

2 1 A. Yes, they did. 2 l or $500 or $2,000, and he would pay it back as needed if

2 2 Q. Okay‘ And so just -- even ifyou told one 2 2 he was shy on money.

2 3 commissioner that a company owned by your family was 2 3 Q, Okay. And so when your son needed money, Integ

2 4 working with a contractor does -- that doesn't follow that 2 4 would then lend money t0 Valley Data so that Valley Data

2 5 they were necessarily working on the District project. 2 5 could give it t0 your son?

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l A. If that’s what he needed it for, yes, sir. 1 Q. (BY MR, COWEN) Ilow much money was repaid by -»

2 Q. Was any 0f the money lent so that Valley Data 2 from Valley Data t0 Integ?

3 could get up and going and hire people and —— 3 A. I couldn’t tell you the dollar figure. A11 I

4 A. It was probably lo make payroll or if he had a 4 know is whatever wc -- Intcg let Valley Data borrow, which

5 light bill or if he had something he had to pay. 5 the majority was that —- that building loan, that it was

6 Q. Was there ever any written agreement between 6 paid back,

7 Integ and Valley Data regarding these loans? 7 Q. Okay. And so some of the money, then, that the

8 A. No, sir, 8 subcontractors paid Valley Data on the District project

9 Q. Was there ever any repayment made from Valley 9 then Valley Data would have used to repay Integ?

l O Data lo Inleg? 1 O MR. SHAW: Objection; fonn.

1 1 A. Yes, sir. 1 1 MR, NEWTON: Objection; form

l 2 Q. Are there -— is there any documentation ofwhat 1 2 Q. (BY MR, COWEN) Isn’t that true?

l 3 payments were made and when? l 3 A. I wouldn't know because they did work for other

l 4 A. Only whatever Check would show up showing that 1 4 projects that were not related to the Drainage District.

l 5 we —— Imeg would let him borrow $1,000 0r —— and he would 1 5 Q. Did Imcg charge any interest to Valley Data for

l 6 write the check back 10 Integ, 1 6 these loans?

1 7 Q. Without having the checks in front of you, can 1 7 A. No, sir.

l 8 you give us the details of what checks were written and l 8 Q. Have you had any other business deals where a

l 9 when and how much? 1 9 corporation lends money without interest that you've been

2 O A. No, sir, 2 O involved in?

2 1 Q. Okay. Do you still have access to those checks? 2 1 A, Yes,

2 2 A. No, sir, 2 2 Q. Tell me about them,

2 3 Q. Would those checks be entered in the Peachtree 2 3 A. When -— when Integ deposited money in its

2 4 accounting system for either company? 2 4 accounts it had money in the bank for four or five years

2 5 A. They could be. 2 5 drawing zero money because it didn't invest it, It just

Page 94 Page 96

l Q, Do you still have access t0 Integ's Peachtree 1 had it sitting there.

2 accounting system? 2 Q. Okay.

3 A, Maybe for a year 01‘ two years back, 3 A. So it’s not unusual for Integ to have had money4 Q. What happened t0 the other data? 4 sitting in a brokerage account not drawing any money.

5 A, Some of the data got corrupted and some of 5 Q. But as far as lending it to other people and not

6 Peachtree doesn't g0 very far back. They only g0 back a 6 charging interest.

7 year or two years and it clears out and moves on forward, 7 A. Well, the bank used it to lend to other people.

8 Q. D0 you know if Valley Data still owes any money 8 So what's thc difference between Intcg letting somebody

9 to Integ? 9 borrow it and the bank having it there. They don't just

1 O A. l don't think Valley Data owes any money t0 l 0 sit on it.

1 1 Integ. l 1 Q. Did Integ lend money to anybody else besides

12 Q. How did you keep track of Whether 0r not Valley l 2 Valley Data?

1 3 Data had paid back all the money it owed Integ? l 3 A. Not that I'm aware of.

1 4 A. On our tax retums. l 4 Q. Did Intcg cvcr lend any money directly t0 Cithcr

1 5 Q, Okay. Loans and repayments show up on the tax l 5 your wife or any of your children?

1 6 returns? l 6 A. I don’t recall.

1 7 A, On money due or money out. l 7 Q. Would you agree that it would be improper for

1 8 Q. Okay. Anywhere else other than your annual tax l 8 Intcg t0 be hired as a subcontractor on a District project

1 9 return Where you'd keep track of What was borrowed or what l 9 Without disclosing it to the District?

2 O was paid? 2 0 MR. SHAW: Objection; form.

2 l A, No. 2 1 A. According to my understanding of my contract, it

2 2 Q. You didn‘t have a ledger somewhere you kept? 2 2 would have bccn improper, if Intcg was hired by a

2 3 A, (Nods.) 2 3 consultant that was doing work for the District, and Integ

2 4 MR. SHAW: You need to answer out —— 2 4 not disclose it to thc District, and then thc District, at

2 5 A‘ No. 2 5 that time, would have the option to either let Integ

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l continue the work or not continue the work, or if Imeg 1 violation of the contract.

2 had received compensation, then i1 would be up Lo the 2 Q, But you agree that Valley Data received money as

3 District to tell Imeg to give the money back to the 3 a subcontractor on a District proj ect. Correct?

4 consultant, 4 A. I agree that Valley Data was doing work 0n

5 So there is a clause in there which allows Lnteg 5 contracts that were being funded by the District.

6 to d0 work for consultants that are doing work for the 6 Q. So lhc money gels paid from lhc District Lo thc

7 District. And that was the whole reason why the contract 7 contractor and then the contractor pays Valley Data,

8 was written for Inleg to have the ability 10 do work. 8 Correct?

9 Q. (BY MR. COWEN) And if you go to Exhibit 5, and 9 MR. SHAW: Objection; form.

l O the page that's 350, Bales No. 350. So it says "Prior to l O MR. NEWTON: Objection.

1 l entering into any contract or business relationship or l l A, I don‘t —— I don't know where the contractor was

l 2 receiving any payment from any individual or entity who is 1 2 paying Valley Data fiom.

l 3 financially interested in a contract or project with the 1 3 Q, (BY MR COWEN) But Valley Data was doing work on

1 4 District or who is a director or employee of any such 1 4 the project as a subcontractor?

l 5 individual or entity, Imeg shall disclosed the proposed 1 5 A, n appears, from the information that I've sccn,

l 6 contract, business relationship or payment to the Board of 1 6 Valley Data was doing work with subcontractors, as a

l 7 Directors of the District." Did I read that correctly? l 7 subcontractor, for work that was being done at lhc

l 8 A. Yes, sir. 1 8 District.

l 9 Q. "Integ‘s disclose shall be entered into the 1 9 Q. And ifyou wanted to find out more details, you

2 O minutes of a meeting of the District," Correct? 2 O lived in the same home as your wife, who was also employed

2 l A. Yes, sir. 2 1 by Valley Data at the same time. ConeCt?

2 2 Q. This is the conflict 0f interest section you were 22 MR. NEWTON: Objection; form.

2 3 talking about? 2 3 A. Yes, she worked for Valley Data, but it does not

2 4 A. Yes, sin 2 4 mean that we have a conversation 0n every work or job that

2 5 Q. Okay. Did Imeg ever disclose that it had —— Io 2 5 she does.

Page 98 Page 100

1 the District that it had loaned money to a subcontractor, 1 Q. (BY MR, COWEN) Iknow. But if you wanted to

2 Valley Data? 2 find out What Valley Data was doing, Whether it was

3 MR. SHAW: Obj ection; form. 3 related to the District 0r not, you would just ask your

4 A. That's whcrc I do not believe that thc intent of 4 wife or ask your kids.

5 this contract was related to lending money but for Integ 5 MR. NEWTON: Objection; form.

6 doing work with any consultant or any contractor. It is 6 Q. (BY MR. COWEN) Correct?

7 y'all’s interpretation that that is related to any type of 7 MR. SHAW: Same objection,

8 other business venture, and this contract was specifically 8 A. 1f 1 Wanted t0 find out or if I needed t0 know.

9 written for Integ to be doing work. Integ already had 9 Q. (BY MR, COWEN) But did -- you never disclosed to

l 0 real estate, had already had ventures out there. So thc l O the Board of Directors 0f the District that you were

l 1 contract was written in an attempt for Integ to be doing l 1 receiving loan payments from Valley Data, Correct?

l 2 or ifit was going to do construction management work. l 2 A. No.

l 3 Q. My question was did you ever inform the Board of l 3 Q. Okay, Let me re—ask it, because it might be a

l 4 Directors Ofthc District that Intcg had lent money to one l 4 double negative.

1 5 ofthe subcontractors, Valley Data? 1 5 Did you ever disclose to the Board of Directors

l 6 A. No, because it was not in Violation ofthc l 6 0f the District that [meg was receiving loan payments

1 7 contract. l 7 from Valley Data?

l 8 Q. Did you cvcr inform the Board of Directors ofthc l 8 MR. NEWTON: Objection; fmm.

l 9 District that Integ was receiving payments, repaying that l 9 A. No, because I did not feel that according to the

2 O loan from Valley Data, one Ofthc subcontractors on the 2 O contract, there Was a conflict 0f interest there.

2 1 contract —— 0n the project? 2 1 Q. (BY MR, COWEN) And you would agree that Valley

2 2 A. No, because I don't know ifthc payments that 2 2 Data Was financially interested in the project with the

2 3 were being given to Integ were being —— funds were being 2 3 District because it was being paid as a subcontractor,

2 4 uscd from any project that Valley Data might havc bccn 2 4 wouldn't you?

2 5 doing for the Drainage District or if even it was in 2 5 MR. NEWTON: Objection; form.

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l MR. SHAW: Same objection, 1 subcontract —— I‘m sorry.

2 A. Can you ask that again? 2 You would agree i1 doesn't pass -- il would not

3 Q. (BY MR. COWEN) Valley Data was being paid as a 3 pass a smell test to have a contractor paying Gilbert

4 subcontrastor on the project. Correct? 4 Godfrey (sic) money individually while a company owned

5 MR. NEWTON: Again, objection; form, 5 solely by Gilbert Godfrey (sic) —— I can’t even talk.

6 A. On some projects. 6 MR, NEWTON: He‘s a comedian.

7 Q. (BY MR. COWEN) Therefore, it was financially 7 (Discussion off the written record.)

8 interested in the project because it was being paid as a 8 Q. (BY MR. COWEN) Can you see the possibility for

9 subcontractor, Wouldn't you agree? 9 bad things happening if a company can be managed on the

1 0 MR. NEWTON: Obj action; form. l 0 construction management side by Integ, which is owned by

1 l MR. SHAW: Same objection, l l Godfrey Garza, but yet would still be able to pay Godfrey

1 2 A, 0n some projects, l 2 Garza individually as a consultant on the same deal?

1 3 Q. (BY MR. COWEN) On some projects Valley Data was l 3 MR. NEWTON: Objection; form.

1 4 financially interested in the project, Correct? l 4 MR, SHAW: Objection; form,

1 5 A. Yes, l 5 A. {could see there would be some questions.

l 6 Q. Would you agree that it would be —— that ifyou l 6 Q. (BY MR. COWEN) But you don't think there is any

1 7 personally, Gilbert Godfrey, Jr. (sic), wanted to work as l 7 questions if they hire a company that's owned by your

1 8 a consultant for one 0f the contractors on the project. 1 8 Wife?

1 9 that you would have had to have disclosed that to the l 9 MR. NEWTON: Obj ection; form.

2 O District? 2 O MR. SHAW: Same objection,

2 1 MR. SHAW: Objection; form, 2 l A. No, I don‘t, because I‘m not the one that owns

2 2 A, Could you ask it again, please? 2 2 that company, and I'm complying with the requirements in

2 3 Q. (BY MR. COWEN) Yeah, Okay. Hypotheticauy, 2 3 my oomract-

2 4 let's say Dannenbaum said, "Hey. we want t0 hire you as a 2 4 Q‘ (BY MR- COWEN) And are you familiar With the

2 5 consultant to help us on this project and we want to pay 2 5 Texas concept 0f Community property?

Page 102 Page 104

l you $100,000 to do it," Would you have an obligation to 1 MR, NEWTON: Objection; form.

2 disclose that t0 the Board of Directors at the District? 2 A‘ I am more -- I can speculate on the community

3 A, Are you asking Godfrey Garza, Jr, or are you 3 property because it was always my belief that the

4 asking lnteg? 4 community property law only came into play when you got

5 Q, I‘m asking Godfrey Garza, Jr. 5 divorced 0r you died, And it appears that there is more

6 A. 1 think l would have because Godfrey Garza is 6 questions to the issue on community property laws‘

7 pan of the contract. So [would bear to go on the 7 Q. (BY MR. COWEN) 1‘11 give you an example, I am8 critical side, knowing what I‘m knowing now, the way y'all 8 the sole owner of my law firm, of the corporation. If I

9 are interpreting the contract, that I would be very 9 did something stupid and stepped out on my wife, do you

l 0 hesitant 0n everything and present everything questioning l O think she'd say it was yours or do you think she'd want

l 1 to the Board, 1 1 half of it?

l 2 Q. But d0 you believe that you would have an l 2 MR. SHAW: Objection: form.

l 3 obligation, if during the time that Integ, the company 1 3 MR, NEWTON: Objection; form.

1 4 that you solely owned and managed, was contracted to be l 4 A‘ I don't know your wife.

1 5 Lhe District manager and project manager -— construction l 5 Q. (BY MR. COWEN) Okay. What would you think?

1 6 manager 011 this project, if someone wanted to hire you 1 6 A. I don‘t know your Wife.

l 7 individually, not Integ, but you individually, to work on 1 7 (Discussion offthe written record.)

l 8 one 0f these projects as a sub, would you agree you'd have l 8 Q‘ (BY MR. COWEN) I will tell you she would want

l 9 an obligation to disclose and get approval from the 1 9 half 0r more, She would not say "it's all yours."

2 O District first? 2 0 The other leases of real property that Imeg did,

2 1 MR, SHAW: Obj ection; form. 2 1 the fourplexes and whatever else it had, did it have

2 2 A. Based 0n the contract, l would tend to g0 t0 the 2 2 leases with the tenants?

2 3 side and say I would go talk to the Board, 2 3 A. Uh—huh,

24 Q. (BY MR. COWEN) Because you agree that it doesn't 2 4 MR. SHAW: Is that a "yes"?

2 5 pass -- it wouldn't pass a smell test t0 have 2 5 Q. (BY MR. COWEN) Is that a "yes"?

26 (Pages EfifiifiileOM26 of 40

Page 105 Page 107

1 A, Yes. Sony. 1 A. N0, sir.

2 Q. Okay, So let‘s go back in the period 2007 to 2 Q, Did you actually see anyone from Dos Logistics

3 2014, What rental properties did Integ own, again? 3 doing work on the proj ect?

4 A. [think all 0f the properties were 501d by then, 4 A, Oh, definitely.

5 Q. Okay, But back when Integ had offices to lease, 5 Q. What did you see them d0?

6 it would have a written lease. Correct? 6 A, I saw [heir trucks out [here doing inspection. I

7 A, Uh—huh, Yes, 7 saw their engineers out there doing design work. I saw

8 Q. But with Valley Data, Integ did not have a 8 their engineers at Dannenbaum doing design work, I saw

9 written lease? 9 their plan sheets with their names on them. I saw them

10 A. No. l O attending meetings with DHS. I saw letters 0f

l 1 Q, Or a set rent? l l recommendation from DHS on the quality of work they did.

l2 A. Or a set rent‘ l 2 Q, How did you have time to be the manager for the

l 3 Q, Because Valley Data would pay whatever it could l 3 Reg’onal Mobility Authority —— or the director for the

l 4 afford? l 4 Regional Mobility Authority, the manager for the District,

l 5 A, Yes. l 5 and do construction management?

l 6 Q. And if it didn't have any money that month, it l 6 A, I'm very good at What I d0.

l 7 wouldn't pay anything? l 7 Q. So you had enough hours in the day to do all

l 8 A. Yes. l 8 three ofthose jobs?

l 9 Q. What was the period of time When your wife was l 9 A. (Nods.)

2 O working for both Integ and Valley Data at the same time? 2 0 MR. SHAW: Is that a "yes"?

21 MR. SHAW: Objection; form, 2 l A. Yes.

22 A. I guess forever, Okay‘ 2 2 Q, (BY MR. COWEN) And how much did you end up

2 3 Q. (BY MR. COWEN) Okay, So basically everybody in 2 3 getting paid by the Regional Mobility Authority?

2 4 the -- let me rephrase the question 2 4 A, Oh, I don't know, maybe 6-, $700,000.

2 5 From 2007 to 2014 your wife worked for both Integ 2 5 Q. Did you ever delete any of your e—mails on your

Page 106 Page 108

1 and Valley Data? 1 Drainage District e-mai] account?

2 A. As -- as Integ needed her to either type up an 2 A. No, sir.

3 invoice for me 0r —— 0r for Integ, or type a letter for 3 Q. Never?

4 Integ, or write some checks for Integ, she would spend her 4 A. (Nods.)

5 hour7 or for 45 minutes, or two hours to do that. AndI 5 Q. Did you ever --

6 would assume that she would do the same thing for Valley 6 MR, SHAW: Is that a "no“?

7 Data if she needed to go and work for them for an hour, or 7 A. N0.

8 two hours‘ Neither company -- and ['11 speak on [meg -- 8 Q. (BY MR, COWEN) Did you ever direct any documents

9 was she there 8:00 to 5:00 every day. She wasn‘t there at 9 to be shredded at the District?

1 O [meg 8:00 to 5:00 every day, l 0 A. N0, sir.

l l Q. Do you know what Dos Logistics did 0n these 1 1 Q. Did you cvcr shred any documents at the District?

12 projects, on the Drainage District projects? 12 A. No, sir.

1 3 A. Dos Logistics was a subcontractor. l 3 (Exhibit 29 was marked.)

l 4 Q. And who did they subcontract through? l 4 Q. (BY MR, COWEN) Let me show you what I've marked

1 5 A. Through Dannenbaum Engineering. l 5 as Exhibit 29. And I'm only going Lo ask you about the

1 6 Q. And d0 you know Wha -- what Dos Logistics did as l 6 cover page right now. Is that a letter that‘s on

1 7 a Subcontractor? l 7 letterhead, Exhibit 29, from the District?

1 8 A. They did both engineering, surveying, inspection, l 8 A. Yes, sir,

1 9 management, I would assume, l 9 Q. And docs it, in the upper lcfl-hand comer, say

2 O Q. There was an allegation made by someone at 2 0 "Godfrey Garza Jr, Manager" on the letterhead?

2 l Damlenbaum that they had Io cut Dos Logistics in for 2 1 A. Yes. sir.

2 2 40 percent oftheir money to get the -- to get the deal. 2 2 Q. And did you sign that letter?

2 3 Have you ever heard ofthat‘? 2 3 A. Yes, sir.

2 4 A. No, sir. 2 4 Q. And What is under your name?

2 5 Q, You‘re not aware of that? 2 5 A. Godfrey Garza, Jr., CFM, District manager,

27 (Pages EfifiifiileO8)27 of 40

Page 109 Page lll

l Floodplain Administrator. l proj ect save and except the land acquisition cost.

2 Q. What docs "CFM" mean? 2 Q, Okay, Is lhcrc cv- -- any document that says

3 A. Certified Floodplain Manager. 3 that Imeg is going to be paid money on the Federal Border

4 Q. Is Intcg on lhcrc at all? 4 Infrastructure Improvement Project?

5 A. No, sir. 5 A. It said that Integ was going to get paid the one

6 Q. You‘re not saying Intcg Corporation by Godfrey 6 and a half percent of everything rclatcd to 1hc Hidalgo

7 Garza? 7 County Drainage No. 1, Master Drain Plan Phase II.

8 A. N0, sir. 8 Q, But anything that specifically -- a ncw contract

9 Q. You're signing it Godfiey Garza. Correct? 9 or anything that referenced by name the Federal Border

l 0 A. ch, sir, l O Infrastructure Improvement Project?

l 1 Q. And then putting your position with the District? l l A. No, sir. It just included everything on the

12 AA ch, sir‘ 12 Phase II.

l 3 Q. And I‘m going to hand you what I‘m marking l 3 Q. Did you ever go on any trips with any contractors

l 4 Exhibit 30, which is an c-mail -- a printout of an c-mail l 4 that worked on Ihcsc projects?

l 5 you sent. l 5 A. When we refer to "contractors," is the question

l 6 (Exhibit 30 was marked.) l 6 lhc building contractors or arc you considering lhc

l 7 Q. (BY MR. COWEN) On Page 2 of that document —— l 7 engineers‘ contractors?

l 8 A. This onc, sir? l 8 Q, Anyone, including thc engineers.

l 9 Q. Yes, sir. On the second page. Is that —— was l 9 A. Yes, sir.

2 O that your c-mail signature you normally used? 2 O Q, Tcll Inc about that.

2 l A. Yes, sir. 2 l A. We did numerous trips to E1 Paso.

22 Q. And it said "Godfrey Garza, Jr,, CFM, District 22 Q, Okay.

2 3 Manager“ —— 2 3 A. And trips up to Austin and trips up to

2 4 A. ch, sir, 2 4 Washington, D,C,

2 5 Q. —— "Hidalgo County Floodplain Administrator." 2 5 Q. Why did you go to E1 Paso?

Page 110 Page 112

l Correct? 1 A. To E1 Paso we went with the County Judge JD

2 A. Yes, sir‘ 2 Salinas, Commissioner "Tito" Palacios, Commissioner Oscar

3 Q. So When you Signed OE on e—mails, the e—mafl 3 Garza‘ Danncnbaum, representatives of Danncnbaum t0 mcct

4 signature said that you were the District Manager for the 4 with the International Boundary and Water Commission,

5 Hidalgo County Drainage District No, 1? 5 that's where their headquarters is it, to facilitate the

6 A. Yes, sir‘ 6 development of a Memorandum of Understanding to be able to

7 Q. It did not mention Integ anywhere, Correct? 7 work on the lcvy system.

8 A. N0, sir. 8 To Austin, we went to meet with the governor‘s

9 Q. And the address that's listed there is the 9 office, It was Govemor Pen'y with JD Salinas, Judge,

1 O Drainage District's address? 1 0 Hector Palacios, myself, staff from the judge to receive

l 1 A_ Yes, sir. Below the signature, it had Hidalgo 1 1 support to move forward with the possibility ofparmcring

l 2 County Drainage No. 1 902 North Dittle —— Doolittle. 1 2 with the Department of Homeland Security.

l 3 Q. You don‘t have Integ's address on there anywhere? 1 3 To Washington. D.C. we went with a delegation of

l 4 A. No, sir. 1 4 Judge JD Salinas, commissioners, representatives from

l 5 Q. And you actually —— the —— the "from" —— the 1 5 Darmcnbaum to mcct with the Department 0f Homeland

l 6 e—mail account G.G.HCDD1 .org, this is actually a Drainage 1 6 Security, Congressman Henry Cuellar, other representatives

l 7 District e—mail account you were sending it from. 1 7 to meet with DHS on the possibility of working together on

1 8 Correct? 1 8 the development of the border wall issue along the levy

l 9 A. Yes, sir. 1 9 system.

2 O Q. Now, the contracts Where Integ was being paid for 2 0 Q. Did you ever go on any other trips with any

2 l construction management said it was going to be paid 2 1 contractor or subcontractor on the project?

2 2 1.5 percent ofactual construction costs on the Phase II 2 2 A. I don‘t recall,

2 3 drainage project. Correct? 2 3 Q. You ncvcr went on any vacations with them?

2 4 A. Yes, sir, the actual construction costs 2 4 A. I went on vacation —— personal vacations,

2 5 considered —— consisted 0f everything related to the 2 5 Q. Okay. What personal vacations had -- did you g0

28 (Pages EfifiifiilelZ)28 of 40

Page 113 Page l 15‘

l on with any contractor or subcontractor? l would give them a bottle of wine, I'd give them a ham, I‘d

2 A. I went on fishing trips with —— with Mark Lupher. 2 give them a turkey.

3 Q. Who else? 3 Q. Did you directly or indirectly share any ofthe

4 A. That's i1. 4 money that Intcg or Valley Data got with any elected

5 Q. Where did you and Mr. Lupher go fishing? 5 official?

6 A. We went fishing in Cabo. 6 A. No, sir.

7 Q. Cabo San Lucas? 7 MR, NEWTON: Objection; form,

8 A. Uh—huh‘ 8 A. No, sir.

9 Q, How many times? 9 Q. (BY MR, COWEN) What did Integ do with the money

l O A. Once‘ l O that it made on this project?

1 1 Q, Any other fishing trips? l 1 MR, SHAW: Objection; form

12 A. N0. l2 A. Keep it.

l 3 Q, Who paid for the trip? l 3 Q. (BY MR, COWEN) Docs Intcg still have it?

l4 A.[pfldfirnw1fip l4 A.NQl 5 Q. He didn't pay for anything? l 5 Q. Okay. Where -- what -- what happened to it?

l 6 A. Nope. l 6 A. Spent it, living expenses.

l 7 Q. When was this trip? l 7 Q. Your own living expense. Conect?

l 8 A. Oh, God. This was, I don't know, early 2000, I l 8 A. Uh-huh

l 9 believe. l 9 MR. SHAW: Is that a "yes”? Is that a

2 O Q. And no other fishing trips other than lhal‘? 2 O "yes"?

21 A. Uh—uh. 21 A. Yes,

2 2 MR, SHAW: Is that a "n0"? 2 2 Q. (BY MR, COWEN) So the money flowed to you as the

2 3 A. No. 2 3 owner?

2 4 Q. (BY MR. COWEN) Ever go hunting with any 0fthe 2 4 A. It flowed to mc as the owner or wc acquired

2 5 contractors or subcontractors? 2 5 properties or we spent it.

Page 114 Page 116

l A. Ihave my own place to go hunting. Oh, yes, I 1 Q. Okay. And the properties acquired would have

2 did go hunting with Mr. -- Judge Salinas -- 2 been in your name or in Integ‘s name?

3 Q. Okay. 3 A. Integ‘s name,

4 A. -- at his place, didn't shoot anything. 4 Q‘ Does Integ still have any properties?

5 Q. Okay. When was that? 5 A. U'h—huh‘ Yes, sir.

6 A. Sometime in the 20005. I went hunting with 6 Q‘ Okay‘ What properties does it have?

7 Commissioner Garza. 7 A. It has a 400—acre ranch, and it has a rental

8 Q. Did you ever receive any gifis from any 8 property on Zenaida [phonetic], and that is all the

9 contractor or subcontractor? 9 propeny that Integ has.

l O A. Such as -- 1 0 Q‘ Do you know what happened to the money that

l 1 Q. Anything. 1 1 Valley Data made?

12 A. Oh, suppers, some bottles of wine. 1 2 MR. NEWTON: Objection; form.

1 3 Q, Okay, 1 3 A. I would have no knowledge of what Valley Data did

l 4 A. Candies. 1 4 with their money, Oh, excuse me. And we have a beach

1 5 Q. Okay. 1 5 house,

l 6 A. That type of deal. 1 6 Q. (BY MR. COWEN) Where?

l 7 Q. Did you ever take any ofthe commissioners on any 1 7 A. At the island.

l 8 trips? 1 8 Q‘ South Padre?

1 9 A. No. 1 9 A. Uh—huh_

2 O Q. Ever give any -- 2 0 Q. [s that a "yes“?

2 1 A. I went with them. 2 1 A. I'm sony, yes.

22 Q. Okay. With you paying or Integ paying? 22 MR. SHAW: Why don't we take a break?

2 3 A. No, them paying. 2 3 THE VLDEOGRAPHER: It‘s 2:06, We‘re offthe

24 Q. Did you ever give any commissioners any gifis'.’ 2 4 record.

2 5 A. Yes, sir, I would give them —— at Christmastime ] 2 5 (Break)

29 (Pages Eifiibfipvilm29 of 40

Page 117 Page 119

l ”HIE VIDEOGRAPHER: It is 2:29 and we are 1 office?

2 back 0n the record. 2 A. (N0ds.)

3 Q. (BY MR. COWEN) Are you aware that the contract 3 M R. SHAW: ls that a "yes"?

4 between the District and Dannenbaum called for Dannenbaum 4 Q. (BY MR. COWEN) Is that a "yes"?

5 t0 perform construction management services? 5 A. Yes. I'm sorry.

6 A. Yes, sir. 6 Q. Who else could —— could testify to that, to back

7 Q. Did you tell anyone at the District that 7 you up?

8 Dannenbaum was being paid for doing the same thing that 8 A. I guess checking on my calendar, the calendar the

9 [meg was doing? 9 District had there.

l O MR. SHAW: Objection; form. l O Q. And was it electronic or paper calendar?

1 l MR. NEWTON: Objection; form, l 1 A. It was paper.

1 2 A. Dannenbaum's contract called to do construction l 2 Q. Have you ever been convicted of a felony?

1 3 management at a certain level. Those contrasts or those 1 3 A. Many years ago I had an issue.

1 4 supplementals are items that were negotiated with l 4 Q. Okay. Tell me about that?

l 5 Dannenbaum to do construction management were not a 1 5 A. I had an issue regarding the writing 0f an

l 6 duplicate ofthe work that Integ was going to be doing 0n l 6 insufficient check, and I got convicted. I did my1 7 the project, l 7 adjudication and it was clear.

1 8 Q. (BY MR. COWEN) Did you ever tell the Board 0f l 8 Q. But it was a felony conviction?

1 9 Directors ofthe District that, "Hey, you know, Integ is 1 9 A. It was adjudicated, so it didn't show up 0n the

2 O charging you millions 0f dollars to d0 consnuctiou 2 O record.

2 l management, but Dannenbaum is really doing the work and 2 1 Q. So you’re saying it doesn't show up on your

2 2 I'm spending most of my time managing the RMA and the 2 2 record?

2 3 District"? 2 3 A. No, sir.

2 4 MR. NEWTON: Objection; form, 2 4 Q. But it was a felony, wasn’t it?

25 MR, SHAW: Objection; form, 25 A. I think. l don't recall. l was —-l was 20

Page 118 Page 120

l A. No, because Danncnbaum was not the only one doing 1 years,

2 the construction management. So was lnteg. 2 Q. When you applied t0 g0 work as an employee

3 Q, (BY MR. COWEN) D0 you have any way to kind of 3 initially with the District, did you disclose that you had

4 parse out how many hours a week you spent doing management 4 a felony conviction?

5 things for the District, how many hours a week you spent 5 A, They didn't ask for it in the application,

6 doing management stuff for the RMA, and how many hours a 6 Q. But did you ever disclo se t0 anyone in the

7 wcck you spent doing construction management for the 7 District that you were —- that you had a felony?

8 District? 8 A. No, sir.

9 A, Al] I can say, that during the time that the 9 Q, Are there any other companies or entities in

l O levies were under construction, l would say 90 percent of l O which you 0r any family member 0f yours, including your

l 1 the time was spent related t0 the levy work. l 1 wife or your children, received payment for any kind of

l 2 Q. And how —- do you have any documentation to prove 12 work related t0 a Dism'ct project?

l 3 that? 1 3 MR. SHAW: Objection; form.

l 4 A, N0, Just the volume ofpaperwork and the amount l 4 A. Run that by again.

l 5 ofwork that was being done by the District or by myself 1 5 Q, (BY MR, COWEN) Okay, We know that Valley Data

l 6 related to the levy and the documentation coming in and l 6 received payment as a subcontractor 011 the proj ect.

l 7 out of the office, trailers coming in and out ofthc 1 7 Correct?

l 8 office, the amount of time out of the office, the calendar l 8 A. Okay.

l 9 identifying meetings that I was going to. 1 9 Q, Are there any other companies owned by you 01' any

2 O Q. How many times a week were you actually out at 2 O of your family members that received any payment related

2 l construction sites actually supervising what they were 2 l to this project, from anyone?

2 2 doing? 2 2 A. No.

2 3 A. [would say 90 percent of thc time you were out 2 3 Q, When the District paid Integ, would it send the

2 4 in the field. 2 4 check by mail?

2 5 Q. 90 percent of the time you wcrc out of the 2 5 A. Yes.

3o (Pages EifiibfiWHO)30 of 40

Page 121 Page 123

l Q. At what banks did Integ have accounts? l it?

2 A. Integ had accounts at Security and at Compass. 2 A. Yes, it does.

3 (Exhibit 39 was marked) 3 Q. Okay. Do you know why you would be sending any

4 Q. (BY MR. COWEN) I'm going to hand you what we've 4 kind of e—mails from your wife's e—mail account lo a Patty

5 marked as Exhibit 39, Do you recognize that document? 5 Rodriguez at the District?

6 A. Yes, sir. 6 A. No, Idon‘l.

7 Q. What is it? 7 Q. Who is Patty Rodfiguez?

8 A. It is the grant application, It‘s called Federal 8 A. My secretary,

9 Financial Assistance Award. 9 Q. Your secretary at the District?

l 0 Q. And who is the recipient ofthe award? l 0 A. Yes, sir,

1 l A. Hidalgo County Drainage District No, I .l l Q. A District employee?

1 2 Q. Okay. And it was issued by the United States l 2 A‘ Yes, sir,

1 3 Department 0f Homeland Security? l 3 Q. And d0 you remember ever wanting her t0 d0 the

1 4 A. And U.S. Customs and Border Patrol —— Protection, 1 4 things listed on this e-mafl‘?

1 5 I'm sorry, l 5 A. Can I finish reading it?

l 6 Q. And the title ofthe —— ofthe grant is "Hidalgo l 6 Q. Sure,

1 7 County Border Infrastructure Improvement Program." 1 7 A. (Pause.)

1 8 Correct? 1 8 The only thing that I ——

1 9 A. Yes, It was in their —— it went in the top ofa l 9 MR. SHAW: Can I see that, please?

2 O cooperative agreement, 2 0 THE WITNESS: Yes, sir,

2 l Q. It doesn't saying anything about Drainage 2 1 MR. SHAW: Has this been produced?

2 2 District Phase II 0n this document, 2 2 MR, BLANCHARDI Yes,

2 3 A. No, sir. 2 3 MR. SHAW: It doesn‘t have a Bates stamp

2 4 Q. And as the recipient contact. it says "Godfrey 2 4 number 0n itr

2 5 Garza, Program Manager, Hidalgo County Drainage District 2 5 MR- BLANCHARDI IVS in the PSD file that W6

Page 122 Page 124

1 N0, l." Con'ect? l sent you guys a long time ago, the Outlook file.

2 A. Yes, sir‘ 2 A. The only thing l can say 0n that is the

3 Q. It does not list Integ. 3 following: That it‘s dated May 7th, 2008, and my birthday

4 A. N0, sir. 4 was May 6, that we might be out 0f town somewhere andl

5 Q. Did you or anyone else from Integ ever notify the 5 had my wife type it up and e-mail it from wherever we were

6 federal govemment that Imeg was going to receive 6 at.

7 1.5 percent of the federal funds spent on this project? 7 Q. (BY MR, COWEN) And who is the "Sylvia" that the

8 MR. SHAW: Obj ection; form. 8 e—mail refers to'?

9 A. Integ never received 1.5 percent ofthe federal 9 A. Sylvia Sanchez.

1 0 funds‘ l O Q. One thing you —— you noted in the first paragraph

1 1 Q. (BY MR, COWEN) Okay. Did you ever —— or Integ l l t0 Sylvia is,"I d0 not appreciate hearing from the

1 2 ever infonn the federal govemment that Integ was going to l 2 independent auditor the comments listed on his e—mail."

1 3 receive any money 0n this project? l 3 What were you talking about?

1 4 A. N0, sir. 1 4 A. The independent auditor was probably complaining

1 5 (Exhibit 41 was marked.) l 5 about Lora,

1 6 Q. (BY MR. COWEN) I'm going to hand you what I‘ve l 6 Q. Okay. What about her?

1 7 marked as Exhibit 41, l 7 A. That she was not submitting her paperwork on time

1 8 MR, SHAW: Godfrey, there is 41, 1 8 for the independent auditor 0r Ricky, which was the

1 9 Q. (BY MR, COWEN) And d0 you recognize that 1 9 independent auditor, to submitting in his paperwork for

2 0 document? 2 O the completion of the audit.

2 1 A_ (Pause) 2 l Q. And that's because he was focusing 0n the DHS2 2 No, I don‘t remember iL 2 2 project?

2 3 Q. Okay, Does it look like something you wrote? 2 3 A. (Reviewing document aloud.)

2 4 A. N0, it doesn't. 2 4 That was apparently the excuse that she

2 5 Q. Okay. It's got your name on the bottom, doesn’t 2 5 was -- that Lora was giving to the independent auditor,

31 (Pages Efifiifiile24)31 of 4O

Page 125 Page 127

1 Q. And the term you used was ”DHS project." l the record.

2 C01Tect7 2 Q. (BY MR. COWEN) What is Exhibit 45?

3 A. Department of Homeland Security. 3 A. 45 is a cover letter that was sent to me by

4 Q. You didn’t say Phase II? 4 Ms, Lora Briones regarding a affidavit or a form that

5 A. No, sir. 5 we —— we at the District would submit to the independent

6 Q. I'm going to hand you what we’ve marked as 6 auditor regarding any potential questions or conflicts

7 Exhibit 2 -- I’m sorry. —- 42. 7 that we would see during the year at the District

8 (Exhibit 42 was marked.) 8 regarding any impacts or transactions that might have

9 A. (Pause.) 9 taken place during the year.

l O Okay, l O Q. A11 right, And you filled this out as

l 1 Q. (BY MR. COWEN) What is that e-mail'? l l "Mr. Godfrey Garza, Jr., CFM, District Manager"?

12 A. I have no idea. l 2 A‘ I signed it as "Godfrey Garza, Jr., District

l 3 Q. Okay. l 3 Manager. "

l 4 A. I don‘t know who these gentlemen are. 1 4 Q. Yeah, you did not have -- "Inleg" is not written

l 5 Q. Okay. Who is Daniel Rios? 15 anywhere on this document?

l 6 A. Danny —— Daniel Rios is a VP for S&B l 6 A. No, sir.

l 7 Infrastructure. l 7 Q. Okay. And Question No. 1 you were asked, "Have

l 8 Q. Okay. It says "Information you requested for 1 8 you or any related patty of yours had any material

l 9 Trey." ls Trey —- you have a son named Trey. Correct? l 9 interesi, direct or indirect, in any of the following

2 0 A. Yes, sir, uh—huh. 2 0 transactions 0r pending transactions since January lsl,

2 l Q. Okay. Are you requesting contact information for 2 1 2012, to which the Hidalgo County Drainage District No. J

2 2 Trey so Trey can get business for Valley Data? 2 2 was, or is lo be, a party?"

2 3 A. l don‘t know who these gentlemen are. 2 3 Correct?

2 4 Q. Okay. Did Trey own Valley Data back in 2008? 2 4 A. Yes, sir.

2 5 A‘ Yes, sir. 2 5 Q. And you put "no" for every —— you put "no" for

Page 126 Page 128

1 Q. And you don‘t know who any 0f those people are? l every category. Correct?

2 A. No, sir. 2 A‘ Yes, sir,

3 Q. Okay. Why would you be requesting people's phone 3 Q. You did not disclose any interests that Valley

4 numbers for your son? 4 Data had as -- working as a subcontractor?

5 A. My son might have asked me for something. I 5 A. I didn’t have any interest in Valley Data.

6 don't recall who these individuals are. 6 Q‘ Okay‘ But your wife owned it in 2012. Correct?

7 Q. You don‘t think it —— if you‘re asking for 7 A. I didn’t have any interest in Valley Data.

8 information for your son to get business, it creates the 8 Q. Okay. It said "any related party." Is your wife

9 impression that you want Valley Data, his company, to get 9 related t0 you?

1 0 the business? l 0 A‘ Yeah, but she's the owner ofthe corporation.

1 1 MR, SHAW: Objection; form, l 1 Q. Okay.

12 MR. NEWTON: Objection; form. 1 2 A. I didn‘t have any interest in the corporation.

1 3 A. I don‘t know who these gentlemen are. If my son l 3 Q. So you did not disclose it. Correct?

1 4 asked me to get some names, I don't know who they are or l 4 A‘ I did not have any interest in Valley Data.

1 5 what they're for. l 5 Q. And what was your understanding 0f the —— 0f the

1 6 Q. I‘m going to go ahead and hand you 44 to 47 and l 6 meaning of the term "related party"?

17 49 t0 50. l7 MR, SHAW: Objection; form,

l 8 (Exhibits 44 through 50 were marked) l 8 A‘ That ifI had any interest in than

1 9 MR, COWEN: Just t0 make it go more quickly, l 9 Q. (BY MR. COWEN) So you don‘t think your wife is

2 0 let‘s take a break so you can look at them and then 2 O a related pany?

2 1 we‘ll —— I‘ll go ask you about them. 2 1 A. She was an owner of a corporation, and t0 me22 THE VIDEOGRAPHER: It is 2:42, we're offthe 2 2 that's a separate entity.

2 3 record, 2 3 Q. Okay. So you didn‘t disclose it?

2 4 (Break) 24 MR. SHAW: Objection: form.

2 5 THE VIDEOGRAPHER: It‘s 2:47, we‘re back on 2 5 A. Because it was a separate corporation.

32 (Pages Efifiifiile28)32 of 4O

Page 129 Page l3].

1 Q. (BY MR. COWEN) And the next exhibit is 44? l A. Only What I delineated in the form.

2 A. ch, sir. 2 Q, So you did not disclose that Intcg and Danncnbaum

3 Q. You also did not disclose anything about payments 3 had been paid for doing the same construction manage

4 to Valley Data 0n your 2013 conflict of intnrcst form. 4 work -- management work?

5 Correct? 5 MR. NEWTON: Objection; form.

6 A. ch, sir. 6 MR. SHAW: Objection; form,

7 Q. Now, No. 2 you said ”yes” “you or a related party 7 Q. (BY MR. COWEN) Correct?

8 has bccn indebted or had a receivable from...Hidalgo 8 A, Wc wcrc not doing thc same construcu'on

9 County Drainage District No. 1 at any time." 9 management. Iwas doing the duties as laid out in myl 0 And you said, "Pending final closure of contract, l O contract, and Danncnbaum was doing lhc duties as laid out

l 1 if required." l l in their contract.

1 2 What -- what 1's that talking about? l 2 Q, And you also did not disclose that a company

l 3 A. I don't recall why I put that 0n there in 2013. l 3 owned by your wife or your children had been paid as a

l 4 Q. Prior to 2012, did you have to fill out thcsc l 4 subcontractor. Correct?

l 5 forms every year? l 5 A. I had no interest in that company. That was a

l 6 A. Similar form but I also -- back to that onc. I l 6 corporation in itself,

l 7 also did sign that as ”District Manager and Consultant.“ l 7 Q. And you didn‘t disclose it. Correct?

l 8 I don't know why. l 8 A, I was complying with what was in my contract.

l 9 Q. Okay. But you don‘t have the word ”Integ” 0n l 9 Q. But you did not disclose it. Correct?

2 0 thcrc any- -- anywhere. Correct? 2 O A, I was complying with my contract.

2 1 A. ButI did sign it as ”District 2 l Q. Yes or no, did you disclose —— disclose it?

2 2 Managcr/Consultant.” 2 2 A, I did not disclose it because it was not in my2 3 Q. A11 right. As both. Correct? 2 3 contract to do so.

24 A. ch, sir. 2 4 Q, Now, Qucsu'on No, 8 someone asked -- you wcrc

2 5 Q. And then the next Exhibit, 46, was a Fraud 2 5 asked, "If someone were going to steal and cover it up,

Page 130 Page 132

1 Questionnaire. Is that correct? l how would they d0 it?"

2 A. l think 46 replaced —— were the forms that were 2 Can you read your answer?

3 utilized prior to these forms that were utilized. 3 A. "Submittal of fraudulent invoices, through

4 Q. Okay. And then you had —— again, it was issued 4 collusion between two district employees With

5 t0 "Godfrey Garza, District Manager." Correct? 5 authorization ability or with a District consultant,

6 A. 201 1. 6 engineer, contractor 0r supplier."

7 Q. And you signed it "Godfrey Garza, Jr., District 7 Q, So one way to steal from the District is t0 have

8 Manager." Correct? 8 someone enter in —— submit invoices that weren‘t proper.

9 A. Yes, sir. 9 Correct?

1 O Q. You don't have "Integ" 0n there at all? 1 O A. Yes, sir.

1 1 A. No, sir. 1 l Q, And weaknesses in the District's internal

12‘ I think my contract read 0n it that I was serving 1 2 controls included the —— "Possible i11...accounting"

1 3 as a district manager for Hidalgo County Drainage District 1 3 because "0f lack of separation 0f duties due t0 small

1 4 No. 1. 1 4 staff“?

1 5 Q. Because you were. Correct? 1 5 A, Where -- what —-

16 A. Yes, sir, 1 6 Q. No. 11.

1 7 Q. Serving as district manager? 1 7 A. No. 11. "Possible accounting, lack 0f separation

1 8 A. According t0 my —— 1 8 0f duties due t0 small staff." That's in 201 1 , yes, sir.

1 9 MR. SHAW: Objection; form. 1 9 Q. And, again, on all these fraud questionnaires you

2 O A. According t0 my contract, l was serving as a 2 O never disclosed that Valley Data, a company owned by your

2 1 stipulation that's laying in there, 2 l family, was getting paid as a subcontractor, Correct?

2 2 Q. (BY MR. COWEN) And you said you were not aware 2 2 MR. SHAW: Obj action; form.

2 3 of any actual instances of fraud or you did not have any 2 3 MR. NEWTON: Objection; form.

2 4 reason to suspect that fraud would —— may be occum'ng. 2 4 A. No, I d0 not disclose because I didn't know at

2 5 Correct? 2 5 that time if they were doing work for the District or not.

33 (Pages Efifiifiile32)33 of 40

Page 133 Page 135

l Q, (BY MR. COWEN) Earlier you testified that 1 out of the contract.

2 Valley Data paid a variable amount of rent to Integ‘ What 2 Q, (BY MR. COWEN) And has Integ been sued before

3 was the lowest and the highest rent payments you remember? 3 by anyone else?

4 A, I don‘t remember‘ 4 A, N0.

5 Q, You don't remember the range of any of them? 5 Q. Okay. Do you —— do you have actual knowledge as

6 A. No, sir‘ 6 to whether or not a -- an insurance policy, as

7 Q, Hundred thousand? 7 contemplated by the contract, would cover a lawsuit for

8 A. No, sir‘ 8 breach offiduciary duty or for breach ofcontract?

9 Q. More or less? 9 MR. SHAW: Objection; form.

l O A. No, sir‘ l 0 A, I do not understand the issue because I am not an

1 1 Q. You have no idea what they were? 1 1 insurance agent, and related as it is to fiduciary duty I

l 2 A. No, sir‘ l 2 do not believe that Integ or myselfhad a fiduciary duty

1 3 Q. If we wanted t0 find out 110W much those payments l 3 because we were never employees of the District. Andl 4 were, where would you 100k? l 4 related t0 potential claims, I would leave that up t0 an

1 5 A. I'd —— I'd have to go try to find some record or l 5 insurance agent to delegate the actual coverages and the

l 6 some check identifying how much they paid‘ l 6 claims that the -- [he District might have 0n us.

1 7 Q. And where would you g0 to find those records? l 7 Q. (BY MR. COWEN) As the manager of the District,

l 8 A. Probably to the bank‘ l 8 what steps did you take Lo make sure that the District

1 9 Q. Okay, Now, you're —— you have complained that l 9 provided the insurance for Integ for your company?

2 O the District did not provide appropriate insurance for 2 0 MR. SHAW: Objection; form.

2 l Integ. Is that conect? 2 1 A. The contract indicated that the District would

2 2 A. I have -- 2 2 provide the insurance required as stipulated in the

2 3 MR. SHAW: Objection; form, 2 3 contract. I never had any doubt that the District would

2 4 A. I have complained that the District has not 2 4 provide the required insurance as every year I provided a

2 5 complied With certain conditions as stipulated in my 2 5 copy of the insurance requirement that the District had of

Page 134 Page 136

1 contract, and one of those conditions has been that the l Integ, was required, our general workmen‘s comp and our

2 District has not provided the proof of the insurance that 2 insurance policy, so I gave that to them.

3 they were required to provide for me. 3 So I gave the District what Imeg was required Io

4 Q. What type of—- 4 give to them and I just trusted the District because I had

5 (Simultaneous speaking) 5 been working with them for all these years, and I assumed

6 Q. (BY MR. COWEN) What type ofinsuranoe are you 6 that they were providing the coverage that was required

7 complaining about? 7 under the contract,

8 A. Basically the insurance that's delineated in my 8 Q. Who do you think got the coverage?

9 contract that they were supposed to provide, 9 A. Financial officers who I turned over my insurance

1 O Q. How have you been harmed by not having that l O requirements to.

l 1 insurance? l l Q, Did you ever ask for a —— a declarations page 0r

l 2 A. Basically on the claims that the District has l 2 a copy of the contract?

1 3 filed against me, Integ is having to pay for its own legal l 3 A. When I lefi I asked them for some copies or a

l 4 defense because there are no insurances that have been l 4 copy ofthe insurance, which is what l turned over to our

1 5 made available to Integ. And TML, which is the insurance l 5 legal counsel, which is what they submitted over t0 the

l 6 carrier, has sent notice to lnteg that there is no carrier l 6 TM L, and that when we first found out that there was no

l 7 coverage. l 7 coverage, there was no endorsement.

l 8 Q. What evidence do you have that these claims would l 8 Q, But what I‘m asking you is while you were a

l 9 be covered by insurance? l 9 District director, did you ever direct anyone to purchase

20 MR. SHAW: Objection; form. 2 O insurance?

2 1 A. I’m not an insurance agent, but in the past, in 2 l A. I trusted the District.

2 2 other contracts that l’v -— or lnteg has had, we 2 2 Q. Did you ever direct anyone to d0 it?

2 3 presented our contracts to insurance agent and the 2 3 A, No, I didn‘t.

2 4 insurance agent provides the insurance coverage to protect 2 4 Q, Okay. But you were the one running the District.

2 5 any and all claims that are delineated or could come out 2 5 Right?

34 (Pages Efifiifiile36)34 of 4O

Page 137 Page 139

l A. I was there for the District as the manager of l answer,

2 the District. and I assumed that everybody had their 2 Q‘ (BY MR, COWEN) Have you had any -- 0r Integ had

3 responsibilities to do. 3 any harm due t0 a lis pendens being filed?

4 Q. Did you ever check t0 see if the insurance had 4 A. Yes‘

5 been purchased? 5 Q. What harm was that?

6 A. No, I did not. 6 A‘ In the issue regarding moving properties, trying

7 Q. And while you were working there, did you ever 7 to sell some properties.

8 ask to see a copy of the -- of a certificate ofcovemge 8 Q‘ Okay. What properties were you trying t0 sell?

9 or a dec page? 9 A. We were trying to generate seen —— some cash t0

1 O A. N0, I did not. l O continue the cost 0f legal fees.

l l Q. How much in attorneys fees has Integ paid so far? 1 l Q. Okay, And what —— what is the specific sales

12 A. A little over $500,000. 1 2 that you were unable t0 Close 0n?

l 3 MR. SHAW: Not just to me. Talking. from 1 3 A. We were transfelring a contract we had on that

1 4 the beginning for my —— for the 202. l 4 office building that I referred to in Mission.

l 5 Q. (BY MR. COWEN) Are there other ways in which you 1 5 Q Okay,

l 6 believe that the District has breached its contract with 1 6 A‘ And we were unable to proceed until the lis

1 7 Integ‘? 1 7 pendens was cleared up.

1 8 A. Ibeh'ev —— and, again, I'm not an 1 8 Q‘ Okay.

1 9 attorney —— but I believe in the way that the Disu‘ict has 1 9 A~ And W3 are now Proceeding With the sale 011

2 O publicly relayed itself and has exposed itself and my firm 2 0 that --

2 1 has been a —— a very trag'c experience and not dealing 2 l Q. You are now proceeding With the sale,

22 itselfin a very professional manner as t0 the work that 2 2 A‘ CNOdS)

2 3 I've done for the District and dragging myself and my firm 2 3 Q. IS that correct?

2 4 and my reputation and the work I've done for so many years 2 4 A‘ Yes, Sir.

2 5 for the District, I think the District should be very 2 5 Q- Y0“ haVe 11m IOSt a 53167

Page 138 Page 140

l ashamed of itself, especially Mr. Ramon Garcia. l A. We are proceeding. Hopefully we'll close on it.

2 Q. Okay‘ 2 Q. Has thc building lost any value?

3 MR. SHAW: Ithink the question he‘s asking 3 A. I don't know.

4 you are really more about the legal claims -- 4 Q. You can't say the building is worth any less

5 Q. (BY MR. COWEN) Yeah, do you —— 5 today than it was a year ago, can you?

6 MR. SHAW: -- that you're asserting. 6 A. No, sir.

7 Q. (BY MR. COWEN) Has the —— has —— any other way 7 Q. And the pn'ce hasn’t changed on the contract, has

8 that you believe the District has violated the contract -- 8 it?

9 A. [think that‘s it. 9 A. No, sir.

l O Q. Okay‘ l O Q. How much are you selling it for?

l l A. I‘m not an attorney to tell you any of the other l l A. 400-somc-odd thousand.

l 2 legalities within it, but I think there should be some l 2 Q. Who are you selling it to?

l 3 clauses in them l 3 A. To some company out ofArkansas.

l 4 Q. So you don‘t think the taxpayers have a right to l 4 Q. What’s the name of the company?

l 5 investigate and question the fact you were paid millions l 5 A. I don't recall offhand.

l 6 ofdollars to do a part-time job because you had two other l 6 Q. Do you have any way to show what work

l 7 full—time jobs? l 7 Specifically you did on the federal project, like the

l 8 MR. SHAW: Objection; form‘ l 8 itemized, and show how much time you spent?

l 9 MR. NEWTON: Objection; form, l 9 A. N0, sir.

2 O MR. SHAW: You don't have to even answer the 2 O MR. SHAWI ObjCCliOH; form

2 l question 2 l A. No, sir, only the —— the time that‘s associated

2 2 Q. (BY MR. COWEN) You don't think the taxpayers 2 2 with what's on thc calendar and thc time that I was out of

2 3 have a right to investigate and bring this claim? 2 3 the office inspecting the proj ects.

2 4 MR. SHAW: Yeah, you don't need to answer 2 4 Q. (BY MR. COWEN) I'd like you t0 look at

2 5 the question. It‘s argumentative. I instruct you not Io 2 5 EXhibit 21-

35 (Pages EfifiifiilellO)

35 of 40

Page 141 Page l 4 3

l A. (Pause.) l Q. But didn't you tell her not to put it on the

2 Okay. 2 agenda and process it?

3 Q. What is Exhibit 21'? 3 MR. SHAW: Objection; form.

4 A‘ Basically Exhibit 21 is a request that was being 4 A, Until thc actual acquisition 0f thc asset was

5 put together by the financial officer regarding an invoice 5 done.

6 from [meg for the amount of$83,574‘08 regarding the 6 Q, (BY MR. COWEN) Okay, Did you cvcr lcll hcr 10‘

7 purchase of assets by the Drainage District from the 7 process it?

8 County on the Raymondville Drain that S&B Infrastructure 8 A, I gavc instruction based 0n lhc memo that's

9 was doing, and two, the request of approval of the budget 9 attached here to wait until that language was clear.

l O amendment in the District general fund ofthe same amount. l O Q, Okay, And aflcr it's cleared, did you ask that

l l Q. Was this ever actually submitted? l l it be done?

12 A‘ According to the notes here, it was not 12 A, No, sir.

l 3 submitted. l 3 Q. Why not?

l 4 Q‘ Why not? l4 A, But it -- because it said wait until the language

1 5 A. According to the notes, says, "Lora —- This does l 5 is clear.

l 6 not go on the agenda until we clear on the Raymondville l 6 Q, Was lhc language cvcr clear?

l 7 Drain -— language will not be the same —- as per GG." l 7 A. Well, the asset was purchased.

l 8 Q‘ Who is GG? l 8 Q, Okay.

1 9 A. Godfrey Garza. l 9 A. So that means that the language was clear.

2 O Q‘ And why did you instruct that this not go on the 2 O Q, Did you cvcr ask that it bc done?

2 l agenda? 2 l A. She had the invoice in her hand —— or in —— in ——

2 2 A‘ Because apparently the language on the 2 2 if thc District had thc invoice, they should havc

2 3 Raymondville Drain had not been cleared 0n the board yet, 2 3 processed the invoice because the instructions they had

2 4 which would have been the purchase ofthe assets, 2 4 was to wait for lhc language to bc clcarcd.

2 5 Q. Did the purchase ever happen? 2 5 Q. Did you ever ask that it be put on the agenda at

Page 142 Page 144

1 A. Yes, sir. l an open meeting?

2 Q. Did you cvcr invoice the District for this money? 2 A. No, sir.

3 A. I invoiced the District. 3 Q. Are you sure you did not?

4 Q. Did you cvcr gct paid? 4 A. It was dis -- it was discussed at an open

5 A. No. 5 meeting.

6 Q. Did you ever complain about it? 6 Q. Okay. And were you the one that asked it be

7 A. That's when I basically left the District. 7 placed on the agenda?

8 Q. Okay. Exhibit -- I’m sorry, page 5 of 8 A. I do not recall.

9 Exhibit 21,

it’s handwritten. So keep the same exhibit, 9 Q. Okay. Did you place it on the agenda?

l O just g0 to -- one more, another one, right there. l O A. I do not recall.

l l Whose handwriting -- the handwritten pan. l l Q, Thc $500,000 you say that had bccn incurred in

l 2 A. Okay. l 2 attomeys' fees, is that just for Integ or does that also

1 3 Q. Whose handwriting is that? l 3 include attomcys' fccs for you personally?

l 4 A. Not mine. l 4 A. I don't know which -- what the difference is

l 5 Q. It's not yours? l 5 between me and Integ.

l 6 A. Huh-uh. Nope. I don't write that good. l 6 Q, Okay. How about any attorneys' fees for your

1 7 Q. On these documents though, it says -- for l 7 wife, your children, or Valley Data? Have those been

l 8 dcpamnent head it says Godfrey Garza, JL? l 8 separate or is that included in the 500?

l 9 A. Uh-huh. l 9 A. There, you need to discuss Valley Data with

2 0 Q. Yes? 2 O Valley Data.

2 1 A. Yes, sir. 2 l Q. Did you ever meet with the prime contractors on

2 2 Q. And did you cvcr instruct Lora Brioncs to submit 2 2 the Phase II project at Lansky & Brats in McAllcn?

2 3 this invoice? 2 3 MR. SHAW: Objection; form.

2 4 A. I submitted the invoices to Ms. Briones and then 2 4 A. I would meet with numerous people at Lansky &2 5 she is the one that processes the invoices. I don't. 2 5 Brats.

36 (Pages Efifiibfipviw)36 of 40

Page 145 Page 147

l Q. (BY MR. COWEN) Did you ever meet with all the l A. I do not remember.

2 prime contractors a1 once? 2 Q, Do you know what year?

3 A. Iwouldn‘t say all of them. {probably met with 3 A. No, sir, I don't.

4 4O percent of them. 4 Q, Was it fairly early in the process?

5 Q. An —— 5 A. I couldn‘t tell you.

6 A. 50 percent, 6 Q, Have you cvcr bccn interviewed by lhc FBI on this

7 Q. —— would you ever, when you were there at 7 matter?

8 Lansky & Brats, pull one person or individuals lo another 8 A, No, sir.

9 table to talk business in private? 9 Q. When you and your son Trey met with engineers,

10 A. If they had some discussions, we would pull aside l O whcrc would you mccl?

l 1 from the other group. l l A. The only time that I remember Trey being at

l 2 Q. IfHugo Gonzalez says he was at progress meetings l 2 meetings with engineers was either at functions Ihat wc

l 3 where you and Trey were present and there was no one else l 3 would have with the elected officials, if they were having

l 4 from the District present, would you agree 0r disagree l 4 a political function, and Trcy would show up there, 0r

l 5 with that statement? l 5 Trey would drop by while we were having a drink there at

l 6 MR, SHAW: Objection; form, l 6 Lansky's.

l 7 A. I would agee. l 7 Q. So sometimes you'd be having a drink at Lansky &l 8 Q. (BY MR, COWEN) Why would Trey be —- l 8 Brats steakhouse with engineers that wcrc working on lhc

l 9 A. Oh, wait a minute. Excuse me. l 9 project. Correct?

2 O I'm sorry, Rephrase the question. 2 O A, Uh-huh,

2 l Q. Yeah. Were there progress meetings where you and 2 l Q. Yes?

2 2 your son Trey were present with contractors? 2 2 A, Yes.

2 3 A. What do you mean by con— —— are you talking about 2 3 Q. And your son, Trey, would show up and meet With

2 4 the engineers or are you talking about construction 2 4 you guys?

2 5 contractor? 2 5 A. He would be there with a friend of his and he'd

Page 146 Page 148

l Q. Either way. l come by and say hi at the table and g0 0n his merry way.

2 A. Well, one 0fthe -- one of the questions is Trey 2 Q. Okay. And do you know when that happened, that

3 would not be present at a meeting with a construction 3 Trey met with you and engineers at Lansky & Brats?

4 contracmr because I don't think Valley Data did any work 4 A. No, sir.

5 with a construction contractor. 5 Q. You can‘t give us a year?

6 Q. Was Trey ever present at any meetings that you 6 A. No, sir.

7 had With engineers that worked on the project? 7 Q. An estimate 0f what year it could have been?

8 A. Yes. 8 A. [t was more than once, so I'm sure it was more

9 Q. Okay. How many times? 9 than one year.

1 O A. I don't know. 1 O Q. And d0 you have an estimate what years they were?

1 l Q. More than once? 1 1 A. No, sir.

1 2 A. l would say yes. 1 2 Q. Was Trey ever present at formal progress meetings

1 3 Q. And the engineers knew that he was your son? 1 3 with engineers?

1 4 A. Yes, sir. 1 4 A. Not that l recall.

1 5 Q. And they knew that he was owner ofValley Data? 1 5 MR. COWEN: I‘m think I'm done. I just want

1 6 A. Yes, sir. 1 6 t0 break t0 g0 through my notes, ifwe can.

1 7 Q. Do you know who Bernard Nizinsky, 1 7 THE VIDEOGRAPHER: The time is 3: 13, We‘re

1 8 N-l-Z—I-N-S—K-Y, is? 1 8 off the record.

1 9 A. Nope. 1 9 (Break)

2 O Q. Or Herman Properties, LLC'? 2 O THE VIDEOGRAPHER: It's 3:19 and we're back

2 l A. Nope. 2 1 on the record,

22 MR. SHAW: Is that a ”n0"? 22 Q. (BY MR. COWEN) Did lnteg ever have Atlas & Hall

2 3 A. N0. 2 3 d0 any legal work for Integ?

24 Q. (BY MR. COWEN) When did you first learn that 2 4 A. No, sir.

2 5 Valley Data was working as a sub 0n the project? 2 5 Q. Or Steve Crane do any legal work for Integ?

37 (Pages Efifiifiilelm)37 of 4O

Page 149 Page 151

1 A. No, sir. l not set meetings, We show up there on Tuesdays or

2 Q. Did you personally have either Atlas & Hall or 2 Thursdays 01‘ Wednesdays, whenever, and the engineers would

3 Steve Crane do any legal work for you? 3 show up, and the commissioner would show up. We'd sit

4 A. No, sir. 4 there and have some drinks, On occasions Trey would show

5 Q. Did Steve Crane or Atlas & Hall ever do any legal 5 up and he’d be there with his friends, come over to the

6 work for Valley Data? 6 table, say hi, sit for a while, and move on his merry Way.

7 A. No, sir. 7 Q. All right. So as I understand your answer, these

8 Q. Did Steve Crane or Atlas & Hall ever do any legal 8 weren‘t prescheduled meetings, where there were invitees

9 work for your wife or your children? 9 ofcertain engineers or certain commissioners or cefiain

l O A. No, sir. 1 O people?

l l M R. COWEN: Thank you. I'll pass the 1 l MR, COWEN: Objection; form, leading,

l 2 witness. 1 2 A. Commission -— some ofthe commissioners —- one of

l 3 THE WITN ESS: ] want to --l want to clarify 1 3 the commissioners who would mostly show up would be

l 4 one item regarding the —— you made a comment regarding l 4 Commissioner Hector "Tito" Palacios. Then later on in the

l 5 claims on the insurance. l d0 have a claim regarding the 15 time, Commissioner Joseph Palacios would show up, There

l 6 insurance on that $84,000 that I haven‘t gotten paid yet. 1 6 was a couple oftimes that Jeff Ramon Garcia showed up

l 7 M R. SHAW: A claim that you’ve as serted for 1 7 there at Lansky. He didn‘t sit with us, but he showed up

l 8 84,000. l 8 there,

l 9 TH E WITN ESS: That I've asserted for 84,000. 1 9 Q. (BY MR, NEWTON) Okay, And I guess my question

2 O MR. SHAW: I think he talked t0 you about 2 O is, 1's this a routine weekly 01‘ scheduled meeting 0r

2 1 that. You talked to him about that earlier. But he had 2 1 gathering at a water hole?

2 2 asked —— you had asked him what claims —— 2 2 A. Well, for me it was, I used to dn'nk. I don't

2 3 MR. COWEN: Yeah. 2 3 drink anymore because of my surgery and stuff.

2 4 MR. SHAW: —— when he went into all 2 4 Q. Okay.

2 5 this stuff -- 2 5 A. So usually I'd be there once or twice a week to

Page 150 Page 152

1 MR. COWEN: Yeah, Iremember, l go have a drink, and most 0f the engineers 0r people that

2 MR. SHAW: —— and then l said —— 2 wanted to see me would g0 by and say -- check out and see

3 MR. COWEN: I know what he’s talking about. 3 if I‘m there or not.

4 MR. SHAW: —— it‘s the claim. But [just 4 Q‘ A11 right. And it's during working hours or

5 want t0 make sure you-all know that is -- it’s 84,000, the 5 after working hours?

6 lis pendens, and the insurance. 6 A‘ Again, my hours were fluctuating. Sometimes I'd

7 MR. COWEN: Okay. 7 be there at 7 o‘clock in the evening. Sometimes it would

8 MR. SHAW: Okay. 1 don't have anything. 8 be at 5 o‘clock.

9 EXAMINATION 9 Q. Okay.

10 BY MR. NEWTON: l O A‘ So there was no specific time.

l 1 Q. Let me ask a few questions, Mr. Garza. Just for l l Q. And s0 would commissioners show up?

l 2 the record, let me introduce myself. I'm John Newton, and l 2 A. Yes, sir.

1 3 as you know, I represent Valley Data, your sons, Trey and l 3 Q. And would engineers show up?

l 4 Jonathan, and your wife, Annie. l 4 A‘ Yes, sir.

1 5 MI. Cowen characterized in a series of questions l 5 Q. And was there any preset agenda that was t0 be

l 6 what he called meetings that you attended with engineers l 6 discussed?

1 7 that, on occasion, Trey would -- would attend, And I want l 7 A. It was not an official meeting 0r anything, It

l 8 to follow that up. l 8 was just getting together, shoot the breeze, and talk

1 9 Over what period of time, year span, are we l 9 about what was going 0n.

2 0 talking about these meetings occurring? 2 O Q. If you would have to classify these get—togethers

2 1 A. The -- the commissioners, myself, and engineers 2 l as —— as business or social, how would you characterize

2 2 would sometimes get together, what we would call a 2 2 it?

2 3 watering hole, Lansky & Brats was one of them. We would 2 3 A. I would classify them more as 20 percent business

2 4 get together over, I don‘t know, maybe 12 years, 15 years, 2 4 and 80 percent social.

2 5 16 years, We would go there during the week. But it was 2 5 Q. Okay. And tell me about the times, if you

38 (Pages EfifiiwawZ)38 of 40

Page 153 Page 155

1 recall, that Trey would show up. l CORRECTION PAGE

2 First, was he ever specifically invited to show 2 WITNESS NAME: GODFREY GARZA, JR. DATE: 01/24/2018

3 up? 3 PAGE LINE CHANGE REASON

4 A. N0, sir. Mostly he wouldjust show up. And I 4

5 guess if he was doing work With a consultant, come over 5

6 and say hello and -- say hi, and have a drink, and move 6

7 0n. 7

8 Q. Okay. Now, there were times, I imagine, that 8

9 business was discussed at —— at these get—togethers? 9

1 O A. Probably discussions on how the projects were 1 0

l 1 coming along and the problems they might be having 0n 1 1

l 2 projects, 1 2

l 3 Q. Al] right. Would -- for example, would there be l 3

l 4 multiple engineers there from —— 0r engineers —— 1 4

l 5 representatives from different engineering companies? 1 5

l 6 A. There would be representatives from different l 6

l 7 engineers there, sir. l 7

l 8 Q. A11 right. For example, would you talk about l 8

l 9 Dannenbaum business in front of L&G representatives or how 1 9

2 O did that occur? 2 0

2 1 A. Well, you try not t0 because usually an engineer 2 1

2 2 didn’t want t0 be talking about his project in front 0f 22

2 3 another engineer, So you move around t0 another table and 2 3

2 4 talk t0 them about whatever they wanted t0 talk t0. 2 4

2 5 Q. Okay. And you mentioned Ramon Garcia would show 2 5

Page 154 Page 156

l 11p? l SIGNATURE PAGE. ‘ _ 2

2 A. ch, s1r. Hc showed up a couple of tlrncs, but hcL GODFREY GARZA, JR” have read [he foregoing

3 basically stuck to himself. Usually he would go over to 3 dcposition and hcrcby affix my signaturc that same is true

4 the lounge area While your table was being prepared over4

and wma’ excel“ as Howl 0n the “memo" pagc‘

5 in the restaurant area. 5

6 Q. And What about the predecessor county judge?6 W

7 Would he show up? 7

88

A: JD would '—— Rene would show up there. Rene9 THE STATE OF TEXAS )

9 RaImrcz [phonctlc] would show up thcrc also. COUNTY OF )

, , . 1 Ql O Q. Okay. Okay. I thlnk that clanfles 1t. Thank

1 l Bcforc me 0n this day personallyl l you. appeared known to me [or proved to

l 2 MR. SHAW: I don't have anything. Do you12 me 0“ ‘he “3‘“ “f

. .

°.’ ”"9“gh

. — (descrlptlon of 1dent1ty card orl 3 have anylhlng CISC? 1 3 other document)] to be the person whose name is subscribed

l 4 EXAMINATION to the foregoing instrument and acknowledged to me that

‘1 4 he/she executed the same for the purposes and

l 5 BY M R. COWbN: consideration therein expressedI

l 6 Q. But you would agree that the engineers knew that 15 Gwen “Dd“ my hand and seal 0f Office [his

,

9day 0f

,201 8.

l 7 Valley Data was owned by your famlly. Correct. 1 6

l 8 A. Yes, sir. 17

l 9 MR. COWEN: I'll pass the witness. 1 8 m2 O MR. SHAW: All right. We'll reserve our THE STATE OF T E X A S

2 1'

'11 d Th nk h

1 9questlons untl a ater ate. a you very muc . 2O My Commission Expires:

2 2 THE VIDEOGRAPHER: It’s 3:25 p.m.. Wc'rc

2 3 off the record. g:2 4 (Deposition concluded at 3:26 p.m.) 23

2 42 5

2 5

39 (Pages EfifiifiileSM39 of 40

Page 157 Page 159

L CNEENQCfifllfi£V

1 FURTHERCERHFKMJKMQUNDERRLLE203TRCP2 HIDALGO COUNTY DRAIhAGE § 1N THE DISTRICT COL RT 0F

2DISTRICT No. 1, §3

Pl_

“ff§

‘ HIDALGO COLNTY VIVEXAS3 The original deposition was/was not returned t0 the

4

am‘

§

9 ‘

4 deposition officer on ;

5

vs. § 5 Ifretumed, the attached Changes and Signature pag

INTEG CORPORATION, ET §z75TH JUDICIAL DISTRICT6 “mums any Lhang‘v? af‘d ”1" 103$?“ lhmfo‘;

6 AL. § 7 Ifreturned, the orlgma] deposmon was dellvered to

7 Defendamj 68 MICHAEL COWEN, Custodial Attorney;

8”

9 That $ is the deposition officer‘s9

D$§g¥g§g§gggfi§¢g2§7A JR1 O charges lo Plaintiff for preparing lhc original deposition

1 o TAKEN JANUARY 24, 201 a l 1 transcript and any copies 0f exhibits;1 1 I: Tam” Chaim” cemfie“ Slm‘hand ReV‘mer i“ l 2 That the deposition was delivered in accordance with

and for the Slale of Texas, hereby cenify to Ihe‘ ‘

12 following: l 3 Rule 203.3 and that a copy ofthls cemficate was served“13““? W‘mBSSv GODFREY GARZAs JR» W35 duly SW0") 1 4 on a1] panics Shown herein and filed with the Clerk,

l 3 by Ihe officer and that Ihe transcrlpl ofthe oral, .

deposifion 15 a true record ofthe testimony gwen by the l 5 cenlfied t0 by me thls— day 0f14 wuness; 16 2013

That the deposition Iranscripl was submitled on’

l 5 Io the witness or to Ihe atlomey forl 7

the \vlmess for examination, signature and relum Io 1 81 6 REPUBLIC SERVICES SAN ANIONIO» LLC, by

l 9'I'ha‘ the amoum oftime used by each party al the —1 7 derivsition IS as fUUOWSI Tamara Chapman, CSR, CRR, RPR18 MICHAEL COWEN r 03: 17

MICHAEL Bh‘NCHARD 7 00:002 O Texas Cert #7248 (Exp. 12/3 l‘/l8)

19 ETHAN L SHAW r 00:00 Republic Services San Antonio LLC"m” W‘ ”EMON ’ 00:04

2 1 12108 Radium StreetwThat pursuant m informatinn given In the deposition San Antonio, TX 782 16

71 officer at the time said Ieslimony was Iaken, flle.

following includes counsel for all parties of record:2 2

$616213?:‘92812;§)938-630022 am - -..

MICHAEL COWEN - REPRESENTING PLAINTIFF -

2 3 MICHAEL BLANCHARD - REPRESENTING PLAINTIFF2 3 F‘rm Reg" N0" 563

ETHAN L‘ SHAW - REPRESENTING DEFENDANT 2 4

24 JOHN W. NEWTON - REPRESENTING DEFENDANT 2 52 5 I fimher cemfy thal I am neither counsel for,

Page 158

1 action in which this proceeding was lakcn, and funhcr

thatI am not financially or othelwise interested in the

2 outcome of the action.

Further certification requirements pursuant t0 Rule3 203 of TRCP will be certified to after they have occurred.

Certified to by me this 25th day ofJanuary, 2018.4

5

6

7 Tamara Chapman, CSR, CRR, RPRTexas Celt #7248 (Exp, 12/3 1/18)

8 Republic Services San Antonio LLC12 108 Radium SlIeet

9 San Antonio, TX 78216Telephone: 210»298»6300

1 0 Fax: 2 10-298-63 03

Firm Reg, N0. 563l l

1 2

l3l 4

1 5

l 6

l 7

1 8

1 9

2 O

2 l

2 2

2 3

2 4

2 5

related to,

4O (Pages 157 to 159)

nor employed by any of the parties inERMbitY40 of 40