New Allegations cont...
Reynolds' acceptance of payments from Premier during a time when he was actively helping the company win contracts exposes him to felony bribery and money laundering charges, according to the affidavit.
As investigators began pressing Reynolds about the Premier payments this summer, he came forward with what he said was proof that he had in fact given the $22,500 away in the form of "Optimists" scholarships to needy college kids. Investigators say he controlled an account titled in the name of the civic club years after any association had ended.
The proof Reynolds offered investigators were three unsigned receipt letters in the name of the "Ernie Orgovan Awards" on stationery with the letterhead "Optimists." Deputy Orgovan served as president of a deputy sheriffs union known as the Law Enforcement Organization until suddenly resigning the post this summer.
Each of the letters, dating to the summer of 2006, purported to be a receipt for $7,500 -- in cash -- awarded as a scholarship to a student. Some of the money was delivered in plain white envelopes to parents, in one instance delivered in the parking lot of a local eatery and in another handed over packed in $100 bills, the document states.
But in actuality, according to deposit and withdrawal dates listed in the affidavit, Reynolds had long since spent the Premier "donation" money after funneling it in cash from his Optimists account to his regular checking account.
None of the supposed scholarship recipients had applied for the funds and were not aware they received the money. Two of the three students didn't find out about their good fortune until investigators came knocking this summer, the document alleges. As it turns out, one of them was the child of one of Lopez's deputies, George Little. Another was a long-time associate of Reynolds.
One of the students whose parent received the $7,500 in a plain white envelope, for instance, told investigators "he did not know the name of the organization that awarded him the scholarship money, he didn't know about an organization named Optimist, nor does he know what the word 'optimist' means."
Investigators suggest, by showing dates of bank deposits and withdrawals, that Reynolds found a way to quickly come up with the $22,500 -- by laundering money from the sheriff's campaign coffers into his "Optimists" bank account, a practice in which Reynolds is said to have systematically engaged since at least 2001.
His defense attorney, Roy Barrera Jr., called the district attorney's allegations about the cover-up "half the loaf" and insisted the scholarships funded by Premier's payments to Reynolds' "Optimist" account were legitimate.
"There's no cover-up," he said. "Just because it wasn't done the way things are normally done does not, frankly, make it criminal."
Barrera said he looks forward to an opportunity to prove the scholarships were real, and by extension, show that the donations that Reynolds received from Premier were not bribes for his help landing the jail contract.
"They're assuming the whole thing is somehow corrupt. It's not!"
In a telephone interview Thursday, Orgovan, who is still a department employee, said he had testified before a grand jury under subpoena about his role in the alleged scholarship caper. He said he remembers that Reynolds once approached him asking for the names of people who could use scholarship money but that he had no idea that Reynolds had later used his name in the three award letters until investigators confronted him this summer.
"Let's face it, I didn't know about the Ernie Orgovan Award," said Orgovan, who is widely considered to be a close ally of Reynolds and the sheriff. "Why he put my name on there, you'd have to ask him. Maybe it was because I was president of LEO at the time."
Orgovan said he was hardly offended to learn how Reynolds had used his name without authorization.
"I thought that was his way of trying to give me credit for something, you know politics," he said. "Let's face it, everyone likes a pat on the back. I didn't see anything wrong with it at the time."
In a brief telephone interview Thursday, Little would not say how he spent the $7,500, citing grand jury rules about revealing his testimony.
But he did say, "I haven't done anything wrong, and I'm not about to get zapped for violating an order of the grand jury.
"I'd love to cooperate with you a hundred percent because I have nothing to hide," Little said.
Another parent who received $7,500 was longtime Reynolds associate Henry Grady Adams, a smalltime Democratic political activist who with Reynolds has sold voter lists to various campaigns since the 1990s. Adams, who works as a teacher in the Harlandale School District alternative school, picked up his envelope at Reynolds' northwest San Antonio home, which was raided Wednesday. Adams did not respond to telephone messages.
A third parent also works for the school district as an instructional aide and is a colleague of Adams but is not named in the affidavit. She also did not respond to telephone messages.
Beyond the purported cover up, the affidavit offers a much wider window into what district attorney investigators believe and what kind of material they have amassed in their investigation, which since March has revolved around the commissary contract that Lopez and Reynolds were largely instrumental in giving to Premier.
But the affidavit leaves the impression that investigators believe Reynolds, possibly in conjunction with Lopez's wife, Nancy, has been raiding the sheriff's campaign finance accounts for years. Reynolds, for instance, has moved thousands of dollars worth of campaign money into his Optimist and other charity accounts he controls, then slowly siphoned it out as cash he would either deposit in his regular checking account, a business account in the name of Systems Analysts, or use as "walking around money," the affidavit alleges.
Subpoenaed banking and credit card records also show that Reynolds used the sheriff's campaign money to pay down his personal credit card balances, which included such purchases as a dental bill, Foleys, and Rebel Hobbies.
Nancy Lopez, however, had signature authority over the sheriff's campaign accounts. According to the affidavit, Nancy Lopez signed thousands of dollars worth of checks that ended up deposited in Reynolds' charity accounts, which would then be siphoned out.
State law carries only civil penalties for office holders who use campaign money for personal expenses.
The Key Players
John Reynolds - Campaign manager for Sheriff Lopez. He is accused of bribery, laundering money through a fake charity.
Ralph Lopez - Has been indicted and accused of taking gifts from Premier Management Enterprises, hired to run the jail concessions.
Nancy Lopez - The affadavit says sheriff's wife signed checks from his campaign account to the fake charity.
George Little - Sheriff's deputy whose son received a $7,500 cash 'scholarship' in a blank envelope from the fake charity.
Henry Grady Adams - Harlandale teacher received 'scholarship' cash supposedly meant for his daughter and a co-worker's son.
The Alleged Scheme
Reynolds controlled a bank account for a phony 'Optimists' charity.
Premier and the sheriff's campaign wrote checks to the charity.
Reynolds later tried to cover up the payments by giving 'scholarships' to three students who didn't apply for the awards.
Reynolds also deposited large sums into his personal bank account, often on the same day withdrawals were made from the Optimists account.