Stories lead to federal corruption charge against former county housing commissioner

Carlos Madrid calls reporter “my number one enemy.”

See 2006 series here and here

By Todd Bensman


December 2008

SAN ANTONIO, TX. -- A former Bexar County Housing Authority board member has pleaded guilty to a federal charge that he illegally accepted more than $100,000 in contracts from a Dallas company while it was benefiting from his board votes and position.

Carlos Madrid Jr. stood accused of the charge “deprivation of honest services,” and could face up to 20 years in prison.

According to an FBI affidavit, Madrid accepted and failed to disclose the payments his consulting company received from Southwest Housing Development Inc. while he served on the board between 2002 and 2006.

Madrid resigned in May 2006, shortly after the San Antonio Express-News filed an open-records request with the agency that resulted in articles about his contracts with Southwest Housing.

“It is my belief and assertion that Madrid defrauded the public of his honest services as an appointed official and misused his position as a commissioner on the Housing Authority of Bexar County ... to personally enrich himself in a series of transactions,” wrote FBI Special Agent Fred Olivares, who investigated the case.

When reporter Todd Bensman sought comment from Madrid in court, Madrid would only say, “You are my number one enemy. You caused all of this.”

Neither he nor his attorney would comment further. Federal agents and prosecutors also declined to comment.

Madrid was allowed to remain free on a personal recognizance bond.

The Express-News reports disclosing some of Madrid's business arrangements with Southwest Housing prompted an FBI investigation.

According to Olivares' affidavit, the investigation centered on construction consulting contracts Madrid arranged for his company with Southwest starting in 2002.

That was when the housing agency board on which he served partnered with Southwest to build the now-completed $14.3 million Rosemont at Miller's Pond in the 6200 block of Old Pearsall Road and the $25.4 million Rosemont at Palo Alto in the 10000 block of Texas 16 South.

By teaming up with the county agency, Southwest qualified for property tax exemptions and acquired federal tax credits worth hundreds of thousands of dollars.

The housing authority, in turn, became eligible for portions of the developer fees, some revenue and eventual ownership of both properties.

According to the affidavit, Madrid's company began doing work on other Southwest projects in South Texas and eventually on the Rosemont at Palo Alto project while serving as a county board member and voting on Palo Alto business.

At one point, according to the affidavit, Madrid ordered a housing authority employee to alter minutes of a meeting to reflect that he “abstained” from a vote regarding the project, when recordings show he had voted.

Southwest Housing's former owners, Brian and Cheryl Potashnik, are under indictment in Dallas for allegedly paying bribes in various forms to area officials. The Potashniks, as well as indicted former Dallas City Council members and recently re-elected state Rep. Terri Hodge, have said they are innocent.

Trials are expected to begin sometime next year.

But law enforcement authorities familiar with the case have said Madrid had no knowledge of the Dallas situation and was unable to cooperate with authorities on that case.