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Puerto Rico's former education secretary, others arrested in federal fraud probe

Former education secretary Julia Keleher and five others have been arrested on charges of steering federal money to unqualified, politically connected contractors.
Image: Julia Keleher
Puerto Rico's Secretary of Education Julia Keleher visits Escuela Isaac Del Rosario in Catano, Puerto Rico during a school open house on August 11th 2018.Nicole Acevedo / NBC News

SAN JUAN, Puerto Rico — Puerto Rico's former secretary of education and five other people have been arrested on charges of steering federal money to unqualified, politically connected contractors.

Federal officials said Wednesday that the FBI has arrested former Education Secretary Julia Keleher, former Puerto Rico Health Insurance Administration head Ángela Ávila-Marrero, businessman Fernando Scherrer-Caillet and education contractors Glenda E. Ponce-Mendoza and Mayra Ponce-Mendoza, who are sisters. They face 32 counts of money laundering, fraud and other related charges.

FBI director Douglas Leff also confirmed the arrest of businessman Alberto Velázquez-Piñol, who was also indicted, during a press conference Wednesday morning.

According to Leff, Velázquez Piñol went to the sheriff's office in Connecticut, where he lives, and turned himself in.

The alleged fraud involves $15.5 million in federal funding between 2017 and 2019. Thirteen million was spent by the Department of Education during Keleher's time as secretary, while $2.5 million was spent by the insurance administration when Ávila was the director.

Keleher, a native of Philadelphia, drew controversy during her two-year tenure as the island's education secretary. She closed hundreds of schools, citing the realities of a shrinking student population. She also implemented the island's first charter school, hoping to expand these schools' presence.

Officials said there was no evidence that Keleher or Ávila-Marrero had personally benefited from the scheme, but Rodríguez said Velázquez Piñol had improperly taken advantage of contacts in the education and health insurance agencies to win federal contracts and illegally used federal money to pay for lobbying.

Glenda E. Ponce-Mendoza worked as Keleher’s assistant and both she and her sister were friends of the former education secretary. Officials said Keleher bypassed regular bidding procedures to steer contracts toward her friends.

"It's a pity that we see this kind of scheme," Puerto Rico's head prosecutor, Rosa Emilia Rodríguez, said at a press conference in San Juan on Wednesday. "It's a shame because there is a lot to do for Puerto Rico and the people accused here profited from this, they sought to benefit their own personal interests and did not think they could help or that they were in a position to help Puerto Rico ... It's embarrassing."

The six defendants arrested on Wednesday are could face up to 5 years in prison for conspiracy and up to 20 years for each money laundering and electronic fraud.

“It was alleged that the defendants engaged in a public corruption campaign and profited at the expense of the Puerto Rican citizens and students. This type of corruption is particularly egregious because it not only victimizes tax payers, it victimizes those citizens and students that are in need of educational assistance,” said Neil Sanchez, special agent in charge of the U.S. Department of Education’s Office of Inspector General’s Southern Region.

The accusations come in the wake of multiple Puerto Rican officials, from current and previous administrations, who have also been hit by charges of corruption and misuse of funds.

"This should send a message to all of those individuals an companies that receive federal money through government contracts. This kind of behavior won't be tolerated," said José Luis Soto Santiago of the U.S. Department of Health's Office of Inspector General in Puerto Rico and the U.S. Virgin Islands.