Wired For Sound – FBI Builds Insurance Corruption Case

Humana representative Andrew Grove, whom prosecutors named as an unindicted co-conspirator, recorded a May 2013 conversation between himself, Mullen and Hernandez……………..After being confronted by the FBI, Haff agreed to cooperate and began secretly recording conversations ……………….Joshua Cerna was cooperating with the FBI by then, and in a recording of their conversation………………………..

Ex-SAISD trustee testifies at her federal trial

By Alia Malik

Published 8:02 pm, Monday, December 18, 2017

Testifying in her own defense Monday at her federal bribery trial, former San Antonio Independent School District trustee Olga Hernandez denied accepting gifts to help steer contracts that benefited a local insurance brokerage firm and said she wasn’t aware of any conspiracy to do so.

Hernandez said she was trying to do right by SAISD employees when she listened to detailed briefings from insurance broker Sam Mullen and his associates about insurance contracts before she voted for them — and that she thought of the plane tickets, complimentary hotel stays, jewelry, meals and campaign contributions she received from them simply as favors from friends.

“Now that I’ve heard all these stories, of course, you know as I do that they were no friends,” Hernandez said under questioning by her attorney, William T. Reid IV.

“I didn’t feel like I was advocating for them,” Hernandez said of the Mullen Pension & Benefits Group. “I was advocating for our employees.”

Mullen, his former employee Joshua Cerna and William Haff, a consultant who advised school districts on insurance, have all pleaded guilty in the case and testified last week that Hernandez was a key ally on the board whom they coached on how to push for contracts that would bring the firm hundreds of thousands of dollars in commissions. The discussions often occurred during periods when bidders for the contracts were forbidden by school district rules from talking to trustees, they said.

Cerna and Haff testified that Hernandez understood that the gifts were payment for her help. All three government witnesses mentioned other current and former board members who supported the firm with their votes. Haff said some of them also received meals and trips from Mullen.

Hernandez is the only SAISD trustee, current or former, who has been charged. She went to SAISD schools as a child, graduating from Jefferson High School, and worked for the district for three decades, mostly as a secretary. She retired in 2003 and was elected to the District 6 school board seat three years later, when the incumbent stepped down.

“I lived in the district and I worked for it,” Hernandez testified. “I just felt like it was my life.”

Twice re-elected, she stepped down in February, after her indictment on charges of conspiracy to commit honest services wire fraud and conspiracy to solicit and accept bribes.

Hernandez said she met Mullen, Cerna and their wives at school board conferences and bonded most of all with Diane Mullen, whom she described as “nice” and “religious.” Hernandez and her husband shared a love of casinos with the Mullens, and said the couples exchanged gifts. Hernandez said she gave the Mullens a roll-away bed that she’d inherited from her mother, gave jewelry to Diane Mullen and that both couples brought each other food during hard times.

The Cernas were younger, but their children were the same age as Hernandez’s grandchildren, and Hernandez said the families would get together for kids’ birthday parties. She said she didn’t know Sam Mullen was bribing Haff to help win contracts. She said she never committed to voting a certain way based on conversations with Mullen and didn’t think she was breaking rules prohibiting contact between trustees and vendors because contract renewals did not have a seperate version of the rules that governed the “request for proposals” process for choosing new contracts.

Humana representative Andrew Grove, whom prosecutors named as an unindicted co-conspirator, recorded a May 2013 conversation between himself, Mullen and Hernandez, in which Mullen told Hernandez she needed to run SAISD’s adversarial risk manager “out of there,” and Hernandez said, “Mmm-hmm.” Hernandez said Monday that her response indicated that she was listening, but not agreement.

After being confronted by the FBI, Haff agreed to cooperate and began secretly recording conversations with Hernandez. During a lunch just hours before a June 2013 board meeting, Hernandez was recorded as saying she had spoken to Mullen “and saw insurance stuff on the agenda for today and I wanna make sure he’s getting what he’s supposed to get.” Hernandez testified Monday that she wanted to address Mullen’s complaints that the school district was falling behind on payments.

Regarding Haff’s testimony that Hernandez voted to promote interim superintendent Sylvester Perez to superintendent on the condition that he support the Mullen Group and fire the risk manager, she said, “That’s ridiculous. …We practically begged Mr. Perez to stay on,” adding that she liked him because he was from San Antonio and was friendly with employees. The risk manager was not fired and eventually took a job as director of human resources at another school district.

Hernandez said she asked SAISD’s lawyer, Pablo Escamilla, whether it was ethical for her to accept complimentary plane tickets to Reno from the Mullens in 2013, and Escamilla told her to “go and have a good time.” In rebuttal, FBI agent Darren Holmes testified that he interviewed Escamilla twice, and Escamilla said Hernandez never asked him about any trips offered to her.

Hernandez said she didn’t lobby for the district to keep Wortham Insurance, the firm that employed Haff, after the consulting contract expired in 2014, voting instead to hire another firm at the risk manager’s recommendation.

On Super Bowl weekend in 2015, Hernandez and her husband were witnesses to the Cernas’ renewal of marriage vows at a chapel in Las Vegas. Days later, Joshua Cerna met Hernandez for lunch. He, too, was cooperating with the FBI by then, and in a recording of their conversation, he said the vow renewals were important to him. Later during the lunch, Cerna said, “I know when we go self-funded, you’ll look at it and push it.”

“Yeah,” Hernandez responded, in the recording played by prosecutors.

Cerna also said the Mullen Group had a chance for the district’s disability insurance contract and thanked Hernandez for everything she did. In the middle of discussing insurance issues, prosecutors said, Cerna gave Hernandez a $500 James Avery jewelry gift card. Hernandez said she took the gift as a token of appreciation for her friendship and for supporting Cerna’s wife when his previous extramarital affair became public.

On May 7, 2015, two days before school board elections, Cerna gave Hernandez $500 in cash to buy snacks for her campaign volunteers.

“So I don’t need to report this?” Hernandez said during their recorded conversation. Cerna told her to report it however she wanted, then said, “You’ve been our biggest advocate, you know, for the Mullen Group, and we need you on the board.”

Hernandez said she later realized she’d forgotten to report the campaign contribution, but did nothing about it until after the FBI first talked to her in September 2016.

“Josh had a bad-boy reputation,” she testified. “I figured it might be best to leave it alone.”

Under cross-examination by Assistant U.S. Attorney Mark Roomberg, Hernandez denied she, Mullen, Cerna and Haff benefited financially from each other and agreed that taking anything of value from a friend in exchange for an official act is wrong.

“That’s why I never did it,” Hernandez said.