Bear Stearns Bankers Bite Bullet in El Paso County Corruption Case

DALLAS — A massive federal investigation of corruption in El Paso County, Tex., has claimed two Bear, Stearns & Co. investment bankers, who last week pleaded guilty to bribery and fraud charges.Roberto Gerardo “Bobby” Ruiz, former managing director for bond underwriter Bear Stearns in Dallas, pleaded guilty Friday before U.S. District Court Judge Frank Montalvo to four counts of conspiracy to commit mail fraud, wire fraud and a scheme to bribe elected officials. Ruiz’s associate, Christopher Chol-Su Pak, known as Chris Pak, pleaded guilty to one count of engaging in a scheme to bribe an El Paso County commissioner. Neither Ruiz nor Pak could be reached for comment.While the federal document used in Pak’s plea mentioned only a single unidentified commissioner, Ruiz and Bear Stearns worked with every bond issuer in the county. The federal document in Ruiz’s plea mentions El Paso Independent School District, El Paso Community College, and the city of El Paso.While Bear Stearns declined comment on the Ruiz and Pak cases, the company issued a statement that read: “Bear Stearns is a leader in the public finance industry, and we hold our company and our employees to the highest business and ethical standards. Bear Stearns is not a subject of the inquiry; we will continue to cooperate with the authorities regarding this matter.”Ruiz and Pak bring to six the number of people who have pleaded guilty to charges involving bribery and fraud involving votes on government contracts. Those who entered guilty pleas include former county commissioner Betti Flores; John Travis Ketner, former chief of staff to the county judge; former El Paso ISD trustee Carlos “Coach” Cordova; and former EPISD contractor Bernardo Lucero Jr., vice president of Lucero/Melendez Architects.Bear Stearns has been the primary underwriter for bond issues in the county totaling more than $1.8 billion over the past eight years.Ruiz devised a scheme to “bribe elected members of those respective boards and councils to secure their votes for certain vendors seeking to do business with the various public entities,” according to a statement from the U.S. attorney’s office.Bear Stearns was identified in Ketner’s information on his guilty plea in June, although only the company’s initials were used. Also identified in that information was El Paso County’s former financial adviser First Southwest Co.Since that information was filed in June, Ruiz left Bear Stearns, and Hector Zavaleta, former managing director of First Southwest resigned and said through his attorney that he was cooperating with the federal investigation. Neither Zavaleta nor First Southwest has been named as targets of the investigation.El Paso chief financial officer Carmen Arrieta-Candelaria said the city quit doing business with Bear Stearns when its name came up in the federal investigation in June.El Paso ISD issued a statement that “the district is incensed to learn of these crimes. The individuals and their former employer are not directly related to EPISD’s bid process or financial adviser contract; rather, the individuals worked for a brokerage firm that has purchased bonds from the district in the past. That firm was not involved in the district’s latest bond sale.”