Federal authorities have revealed one of the methods they used to gather evidence in an ongoing public corruption investigation in Santa Cruz County: court-ordered wiretaps of phones belonging to former County Assessor Felipe Fuentes and local business consultant Luis Manuel Flores.
In a July 15 letter to a citizen whose calls to Fuentes were apparently recorded incidentally as part of the probe, the U.S. Attorney’s Office included a previously sealed notice advising the recipient that a federal judge had authorized a wire tap on two phone numbers in 2019. The notice doesn’t identify the owners of the phones, but one number matches Fuentes’ cellphone and the other is that of Flores’ Nogales-based business.
According to the notice, the tap on the phone matching Fuentes’ number was authorized May 30-31, 2019, and then extended three more times during the period of June 6 to Aug. 31, 2019. (Federal law limits individual wiretap orders to 30 days.)
A judge also approved a wiretap for the number corresponding to Flores’ business from Aug. 2-31, 2019.
“During the period of authorized interception, wire communications to or from your telephone were intercepted and/or your wire communications were intercepted,” the notice says.
It wasn’t clear how many people received the notice. Federal law requires anyone named in a wiretap application to be notified within 90 days of the termination of the order. It’s up to the judge to decide whether it’s “in the interest of justice” to inform any other people whose communications were intercepted.
Fuentes has already pleaded guilty to his role in the corruption scam, admitting in April that he took cash and other gifts from a local property owner in exchange for using his authority as assessor to benefit the bribe-payer.
Flores, the alleged middle man in the conspiracy, was arrested on Jan. 27 and indicted on seven counts in April. He has pleaded not guilty and his lawyer previously told the NI that he and Flores planned to “vigorously defend against the charges.”
Fuentes, who served as county assessor from 1998 until his resignation in April 2020, was originally scheduled to be sentenced on Aug. 2. However, that date has been pushed back until Feb. 13, 2023. Flores’ jury trial is currently set to begin Sept. 20, with a plea deal deadline of Sept. 2.
The person who allegedly bribed Fuentes has not been charged and is named in court documents only as “Person A.” However, details about the person match the profile of local property owner Dino Panousopoulos, who has not responded to numerous requests for comment since the case became public.
‘Most serious crimes’
The indictment of Flores that was filed in April contained detailed transcripts of conversations among the three alleged co-conspirators, which suggested that the FBI had a cooperating witness in the case, and/or had obtained permission to use a wiretap or bugging device. The July 15 letter from U.S. Attorney’s Office now confirms that for at least three months of the investigation, the FBI was listening to the suspects’ phone communications.
The fact that the FBI sought and received wiretapping permission in the case is significant. According to the Frequently Asked Questions page of the FBI’s website, “Wiretapping is one of the FBI’s most sensitive techniques and is strictly controlled by federal statutes. It is used infrequently and only to combat terrorism and the most serious crimes.”
It’s unclear what evidence investigators had obtained by the end of May 2019 in order to convince a judge to let them tap Fuentes’ phone. However, according to the indictment of Flores, Fuentes “reduced the valuation of a large concrete parcel” for Person A’s financial benefit in 2018. By June 2019, the FBI was allegedly gathering direct evidence of additional criminal activity through wiretaps.
The indictment details discussions among the alleged conspirators starting in late June 2019 that involved inflating the value of a parcel of land in the Preston Mobile Home Park, “owned by one of Person A’s companies.” County records show that the property is owned by Delta Properties LLP – a company belonging to Panousopoulos.
The Arizona Department of Transportation was planning to purchase the parcel for a renovation project along Interstate 19, and inflating its value could allow Person A to sell the parcel for a higher price to ADOT. On June 21, 2019, investigators learned that an unnamed staff assessor working under Fuentes had sent Flores an email with the subject line “Preston.” It read: “right now the value is at $0.75/a square foot, if you change it to commercial it will be at $3.00/square foot.” The email was reportedly forwarded to Person A’s son.
The indictment then details a series of phone calls made that same afternoon. At 1:12 p.m., Fuentes reportedly spoke by phone to another staffer at his office to confirm that information had been relayed to Person A. At 2:10 p.m., Fuentes called Person A’s produce company. Person A wan’t there, so Fuentes called the person’s real estate company and left a voice mail message asking him to call back “in regards to the Preston Mobile Home Park.”
At 3:54 p.m., Flores called Fuentes and said Person A wanted Flores to talk to Fuentes about changing the Preston parcel’s assessment from multi-family residential to commercial. “(O)nce it is changed to commercial,” Flores reportedly said, “they have to pay us a bit better.”
However, Fuentes noted that the change would raise the taxes on the entire property, not just the parcel that ADOT planned to buy. As an alternative, he told Flores he would write up an opinion letter for Person A, disclosing inflated values for the land.
At that point, the FBI wiretap apparently recorded Fuentes expressing regret that he “didn’t give [Person A] everything he asked for” during the year, noting that the property owner had appealed the tax assessments on “seven or eight” of his 400 properties, and Fuentes “couldn’t do anymore.”
Then, he reportedly said: “But now the one who is in need of something is me.”
That’s when Fuentes told Flores that his wife was graduating from an online college in Minneapolis, but the couple didn’t have the money to attend the ceremony in person. A transcript of the phone conversation, in which Fuentes is referred to as “Public Official 1,” reads like this:
Public Official 1: “And I wanted to ask your opinion, and see what you think.”
Public Official 1: “Since you work closer with [Person A].”
Public Official 1: “I really don’t talk to him that much throughout the year, unless it’s...”
Public Official 1: “... it’s necessary.”
Flores: “I understand you perfectly. And honestly [Public Official 1], there is no other option, you have to go. The thing is that we, more or less ... how much paperwork are we talking about?”
Public Official 1: “Of two.”
Public Official 1: “Because it would just be for the airplane.”
Public Official 1: “I already have enough for me.”
Flores: “You are talking about the rest?”
Public Official 1: “Uh-huh.”
Flores: “Alright, why don’t you let me discuss it with [Person A] early tomorrow? When do you have to leave?”
Public Official 1: “No, me? Not until August.”
Flores: “Oh, we still have time.”
On June 28, 2019, Flores allegedly called Fuentes saying he had a “file” for him at his office.
“On or about June 28, 2019, Flores paid Public Official 1 approximately $1,500 in cash,” the indictment says.
On July 1, two airline tickets from Tucson to Minneapolis were purchased from Fuentes’ account. On July 5, a total of $1,500 was deposited into Fuentes’ bank account. On Aug. 23, Fuentes and his wife traveled to Minneapolis for the graduation ceremony, the document says.
Calls kept coming
The wiretap authorizations for Fuentes’ and Flores’ phones ended on Aug. 31, 2019, according to the notice seen by the NI.
Even so, the FBI continued to gather evidence from phone calls after that date, suggesting that they either obtained new wiretap permission, or convinced one of the suspects to be a cooperating witness.
For example, in regard to the plane ticket payment, the authorities allege to have evidence of a phone call Fuentes made to Flores on Nov. 5, 2019, in which he thanked Flores for the “gift” and asked Flores to convey his appreciation to Person A, who was reportedly in Greece at the time.
According to the indictment of Flores, when Person A returned from Greece, he and Fuentes had the following exchange. Once again, Fuentes is referred to as “Public Official 1” in this transcription:
Public Official 1: “…talking about vacations, I wanted to thank you for the money. I had a very nice time with my wife.”
Person A: “We already talked about this. What – don’t worry about anything.”
Public Official 1: “I won’t worry about that. Well, thank you anyway.”
Person A: “Yes, of course.”
The indictment of Flores alleges he took part in the conspiracy from June 2019 until March 2020. Federal prosecutors allege a number of additional crimes during that time period, including:
• In December 2019, Flores allegedly handed Fuentes a white envelope with $1,000 in cash and said it was a gift from Person A.
• In exchange for working in the interest of Person A, Fuentes was granted “free use” of a 17-acre ranch in Santa Cruz County, “owned, in part” by one of Person A’s businesses.
• Fuentes altered the value on “multiple undeveloped lots in Tubac” owned by Person A.
• On March 20, 2020, Flores gave Fuentes an envelope containing $2,000 cash during a meeting at Flores’ office. Fuentes had allegedly agreed to “fix” the tax assessment on the cement parcel that Person A was upset about.
However, the factual basis of Fuentes’ plea agreement says that the three alleged conspirators’ criminal conduct ran from “at least” 2007 until October 2019. That time frame does not include the alleged “Christmas bribe” in 2019 or the $2,000 payout in March 2020.