La Joya ISD – Politics, Money & Insurance Brokers


“……when a competing company made a “donation” of $15,000 to one of the current board members……..that all changed……”Contracts are just being bought and paid for,” Peña said. “This new insurance agent that happens to be the one that had all the complaints back prior to 2006, Bob Trevino, is able to walk in without going though a bid process.”

See video tape – Discussion of Bribes? –

Peña described why the confidence and blatant disregard for the legal process is what most concerns him. “It’s very troubling that is so blatant,” he said. “The corruption in this case it’s done with almost no fear of consequence.”

A raid at a La Joya ISD school board member’s home may be connected to allegations of bribery and corruption. Federal agents raided the the home of school board member J.J. Garza Wednesday morning. See News Video – and

The U.S. Attorney General and HUD Office of the Inspector General remained tightlipped about the incident, only confirming that there is an active investigation. Agents were seen loading boxes of paperwork from Garza’a garage and from his office at the La Joya Housing Authority, which is where Garza is the director.

Action 4 News has learned that there is currently a lawsuit against La Joya ISD, J.J. Garza and several other board members. Ruth Villarreal Insurance ( filed the lawsuit alleging that the contract was broken because another company bribed a school board member. See

“I don’t know if it has to do with this investigation or the contract rigging, but he is the individual-the one raided,” said Javier Peña, an attorney for the insurance company. “J.J. Garza came out on camera talking about the money he received and how he would explain it if it ever came up.”

According to the company’s lawsuit, the school board awarded them a contract with the school district in November 2012. According to court documents, when a competiting company made a “donation” of $15,000 to one of the current board members Garza, Joel Garcia, Jesus Avendano, and Oscar Salinas, that all changed.


“Contracts are just being bought and paid for,” Peña said. “This new insurance agent that happens to be the one that had all the complaints back prior to 2006, Bob Trevino, is able to walk in without going though a bid process.”

Peña described why the confidence and blatant disregard for the legal process is what most concerns him. “It’s very troubling that is so blatant,” he said. “The corruption in this case it’s done with almost no fear of consequence.” Peña stated that his client just would like what they were promised, which is for their original contract to be honored.

Millions at stake in La Joya ISD health Insurance Suits

La Joya ISD leaders believe they’ve missed out on millions of dollars in savings promised by their insurance company. At the same time, La Joya Independent School District’s former insurance broker, Ruth Villarreal, believes the district owes her more than $2 million after terminating her contract in January.

The tangled controversy surrounding the district’s employee health insurance is being played out in two different district courts. It all started in February when Villarreal filed a lawsuit in the 92nd District Court alleging La Joya ISD breached its contract when the school board voted to terminate her as its broker in January.

Attorneys for the school district fired back, filing a motion to dismiss because the court lacked jurisdiction and stating the district’s contract is with HealthSmart Benefit Solutions. Villarreal as the insurance broker is merely a third party and was not a signatory on the contract, states Miguel Saldaña, district attorney.

Visiting Judge David Welling Chew ruled against the district, indicating the court has jurisdiction over the case. Attorneys for the school district took the ruling to the 13th Court of Appeals on Aug. 5; a hearing on the appeal is set for Thursday.

Meanwhile, the week before, a different set of attorneys hired by the district filed a lawsuit in the 275th District Court against HealthSmart and Ruth Villarreal, alleging they breached their contract with the district by “charging fees in excess of those represented and agreed, charged duplicative and/or overlapping fees and costs and/or charged fees and costs for members for which no fees were owed, resulting in substantial over charges to Plaintiff.”

The suit quickly was amended, dropping Villarreal, but her attorneys turned around, intervened and filed a counterclaim.

To Villarreal’s attorney, Javier Peña, the fact that Villarreal originally was included in the district’s lawsuit proves she is a stakeholder in the matter.

At a hearing Wednesday in the 275th District Court, attorneys for the school district and attorneys for HealthSmart made an agreement to seek an audit of the finances.

“We will cooperate with the audit and find out whether HealthSmart has done it right or not,” said Norman Jolly, attorney for the district. “This will give us a chance to work it out.”

The district also agreed to file an amended petition and instead of requesting money damages, the petition will request an investigation of a potential claim.

Attorneys for the district also argued against allowing Villarreal to intervene, stating that the case filed in the 275th District Court is completely separate from the 92nd District Court and has nothing to do with Villarreal.

Peña, Villarreal’s attorney, said rulings made in the district’s case has a direct effect on the case filed in 92nd District court. He’s filed a motion to combine the cases to the 92nd District Court, but because Chew’s ruling is being appealed, that case is frozen.

“They’re trying to get around those rules; they’re trying to circumvent those rulings,” Peña said. “It’s very creative pleading. We’re at risk of having inconsistent rulings on all of the same issues.”

Instead, Peña suggested 275th District Court Judge Juan Partida himself move the case over to the 92nd District Court. There may be different attorneys, Peña said, but the parties are the same.

La Joya ISD attorney Norman Jolly said Villarreal was included because of a lack of communication. He also read from the complaint filed by Villarreal alleging the current insurance broker bribed members of the school board. Jolly said he doesn’t want to get involved in that aspect of the argument.

“We don’t want to work with the other lawyers,” Jolly said. “Our case has nothing to do with the problems that they’re having in politics.”

As of Wednesday, Judge Partida had not issued a ruling on the motion to strike Villarreal as an intervenor.

Additional Reading Material:  (click on headline below)

Controversy Follows Insurance Agents In Rio Grande Valley

Saturday, March 16th, 2013

Editor’s Note: The La Joya ISD’s insurance problems have been brewing for many years – here is just one example of a concerned citizen calling the district to task over a RFP for group medical insurance – La Joya ISD RFP Fiasco.

Insurance bid rigging in the Lower Rio Grande Valley is Old Hat –

Indicted contractors not new to Valley scandals

 Carlyn Ray Mitchell | Posted

McALLEN — The two contractors indicted in connection with an allegedly elaborate bribery scheme involving a handful of PSJA school district officials have been implicated over the past decade in a long string of questionable contract negotiations throughout the Rio Grande Valley.

Well-known Harlingen-based insurance agent Arnulfo “Arnie” Olivarez, 57, and George Hernandez, a 50-year-old private contractor who owns an area roofing company, were both accused in a May 22 federal indictment — made public Tuesday — of allegedly bribing school board members with vacations, concert tickets and prostitutes.
Admitted Felon Oilyvarez Convicted Felon Arnulfo C. Olivarez

The U.S. District Attorney for the Southern District of Texas says the bribes were in exchange for lucrative contracts to provide the district’s employee health insurance coverage, as well as to build new schools and other district buildings.

The federal indictment also lists seven unnamed contractors who may or may not be indicted in the future in connection with the alleged briberies.

Olivarez operates Insurance Associates of the Valley, the business address of which is listed as 521 S. 77 Sunshine Strip in Harlingen. A call to that office on Tuesday seeking comment from an attorney was not returned.

In 2006, Olivarez, a Rancho Viejo resident, ran for and lost the Texas House District 38 seat in Brownsville, the same seat state Rep. Eddie Lucio III now holds.

The charges

The indictment states that between 1998 and 2001, Olivarez served as an insurance agent-of-record for the district, recommending to the board which health and life insurance bids to accept.

Then in August 2002, and again in 2003, the board awarded its health insurance contract to a provider and benefits administrator Olivarez represented.

The scope of those contracts and which insurance company received them wasn’t clear Tuesday. But insurance agents can earn thousands of dollars in commission from such contracts.

Olivarez is accused of giving PSJA school board member Raul Navarro $4,000 to pay for a band at a December 2003 reception for a Navarro family member.

The indictment against Olivarez alleges that in 2004 he provided Navarro with a Fourth-of-July weekend trip to South Padre Island.

Not the first time

This isn’t the first time the names of Olivarez and Hernandez, referred to in the indictment as “Contractor Defendants,” have come up in connection with suspicious public contracts in the Valley.

A look at Olivarez finds his hands in the La Joya school district health insurance contract process — which has been hotly disputed.

Last fall, the district’s school board awarded its employee health insurance contract to AAG despite a claim by Blue Cross Blue Shield, which Olivarez represented, that the AAG bid was $2 million higher than Blue Cross Blue Shield’s bid.


Bribery accusations in Edcouch-Elsa school district case    Edcouch Indictment

Prominent insurance agent Arnulfo “Arnie” Olivarez faces additional accusations that he paid thousands of dollars in bribes in exchange for public contracts.
The latest charges stem from business Olivarez’s insurance-company clients received from the Edcouch-Elsa school district between 1999 and 2005.
The agent allegedly gave gifts of money, plane tickets and condo rentals to then school board president Aaron Luis Gonzalez and other district officials in exchange for votes on insurance contracts with the district, according to a three-count federal indictment issued March 18. Investigators value those kickbacks at more than $26,000.


Insurance Agent to Be Arraigned Tomorrow – Allegedly Sold Non-Existant Insurance Policies