BROWNSVILLE, Texas (ValleyCentral) — The CEO of a shelter for unaccompanied migrant children will remain in federal custody without bond.
Ruben Gallegos Jr., who is the CEO of International Educational Services, Inc. (IES), was arrested on Thursday by the FBI on charges of conspiracy and theft concerning programs receiving federal funds, a federal indictment stated.
Gallegos appeared before U.S. Magistrate Judge Ronald G. Morgan, who ordered that he be held without bond. His next detention hearing is set for 1:30 p.m. Wednesday.
IES was a non-profit company that had a contract with the U.S. government under the Unaccompanied Alien Child Program to provide temporary shelter care for children.
A stipulation of the contract prohibits the use of grant funds to pay salaries above a certain rate.
According to the indictment handed down Aug. 30, Gallegos and two others whose names remain sealed are accused of using the federal funds to pay themselves salaries that were “hundreds of thousands of dollars” above the salary cap imposed by regulations.
Gallegos Jr. and the others are accused of using real estate holding companies to conceal ownership of properties that were being leased to IES.
The indictment also stated that IES used federal grants to pay for construction property owned by Gallegos Jr., and consultant fees, which are prohibited by federal regulations.
The federal government alleges the trio discussed increasing their pay at IES.
Over the course of several years, beginning in 2014, the three received salaries ranging from a quarter million dollars to more than $500,000 annually. The federal cap limit was no more than $187,000 during that span.
The indictment alleges that in a 2014 meeting, Gallegos Jr. wanted his salary at IES to be $350,000 annually. His pay was increased to $1,000 more than the amount he requested.
In that same meeting, another of the men’s salaries was increased to $250,000, plus a bonus. That same year a third person’s salary was approximately $505,541.68, according to the indictment and Gallegos Jr. was paid $491,540.04.
A breakdown of Gallegos pay, as detailed in the indictment:
- 2014: $491,540.04
- 2015: $492,001.62
- 2016: $492,001.62
- 2017: $435,416.77
Each year’s salary surpassed the government’s imposed cap limit of $187,000, according to the federal indictment.
The defendants are also accused of leasing properties in which they had a financial interest to IES. The indictment says the defendants were paid for those leases in excess of the limits set by federal regulators.
In June 2014, the indictment claims Gallegos bought a property in San Benito for $1,000,000 that would become the IES San Benito Shelter. The following month he signed a five-year lease with IES in which IES rented the property from Gallegos at a monthly rate of $35,000, The indictment indicates the rate was far in excess of federal limits.
The defendants are accused of claiming the shelter would serve 1,040 children the following year. According to the indictment, the shelter never opened in 2015.
In count two, the federal indictment says the defendants, “under a federal grant program, did, embezzle, steal, obtain by fraud and otherwise without authority knowingly convert to the use of any person other than the rightful owner, and intentionally misapply, property that is valued at $5,000 U.S. dollars or more and is owned by, and is under the care, custody, and control of such organization, that is, federal grant funds paid to Defendants as salary.”
Gallegos Jr. has been ordered to forfeit $100,000 in cash, plus land and buildings on Maverick Road in Brownsville.
Brownsville police told ValleyCentral that Gallegos Jr. is being held at the Brownsville city jail.