A federal grand jury may soon begin delving into the fraudulent dealings behind the payment of more than $800 million in federal funds to El Paso’s former National Center for Employment of the Disabled before 2007 under its former CEO, Robert E. “Bob” Jones, Newspaper Tree has learned.

Federal authorities aren’t talking about any aspect of the investigation, but people close to the case say they’ve been told a grand jury will be convened in mid-August in El Paso to work on indictments.

“It’s close. It’s very, very close,” said one potential witness in the case against Jones and NCED who spoke on condition that his name not be used. “I know it’s going down soon. They’re tying things up and are itching to get it done.”

None of those interviewed for this story would allow their names to be used because they have been asked by the FBI not to discuss the investigation or because they have clients under investigation.

From a public standpoint, the first indication that federal authorities were conducting a major investigation in El Paso came on the morning of May 9, 2006, when 65 agents executing a search warrant swarmed NCED's Eastside headquarters on Allen Bradley.

Two months earlier. Jones had resigned as NCED’s president and CEO. He stepped down after four months of local newspaper reports alleging that NCED had been violating its federal contracts resulted in the suspension of its biggest defense contracts.

Since renamed ReadyOne Industries, the nonprofit had manufacturing contracts with the military worth $276 million in 2005. Jones was installed as CEO at NCED in 1994 when the company only manufactured boxes for the government and was on the verge of bankruptcy.

The company and Jones became major players in El Paso society, political and business circles. Jones’ world was at its brightest in October 2005 when the Greater El Paso Chamber of Commerce named him Entrepreneur of the Year.

Questions had arisen in a U.S. Senate committee hearing that summer about the extravagant salaries being paid to executives running nonprofits in the Javits Wagner O’Day program, established decades ago to employ severely disabled people under federal set-aside contracts with nonprofit corporations.

The committee took no action, but a month after Jones picked up his entrepreneur award, the El Paso Times and this reporter broke the first story alleging that able-bodied workers held jobs intended for the disabled at NCED.

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Now 62, Jones has faced a barrage of civil lawsuits by ReadyOne and others and has surrendered millions of dollars worth of property, including three major Downtown buildings, since being overtaken by the NCED scandal.

His longtime wife, Ester, has sued him for divorce, and he was arrested in July 2007 for allegedly hitting her. That charge is still pending in the El Paso County district attorney's office.

The two-year-old divorce case also remains unsettled and is complicated by ongoing child visitation disputes that pulled the Joneses back into court just two weeks ago.

He has been living with his girlfriend, Ruth Sutherland, who was the executive assistant to former County Judge Dolores Briones.

While a principle target of the federal investigation, Bob Jones still enjoys the rich life. He keeps a low profile these days, but people report seeing him coming and going in a Porsche SUV from the gated Estancias Coronado community near Coronado Country Club.

There, he owns a palatial house on Camino Estancias valued on the tax rolls at more than $1.7 million.

That mountainside home is just one of the perks made possible by the nearly $15 million NCED paid Jones from 1999 to 2005 through the Jones Family Trust to run the empire that NCED – set up as a charity to provide jobs for the severely disabled – became.

Before the highly publicized raid on NCED, the FBI had been conducting a quiet, go-slow, wiretap investigation into public corruption for more than a year.

After the raid, the investigation picked up speed quickly and spread across El Paso’s political landscape like spilled paint, reaching the county courthouse, the two biggest school districts and dozens of individuals, many of them current or former public officials.

So far, nine people have voluntarily pled guilty to federal offenses involving bribery, wire fraud and the subversion of honest government. [npt background]

In a memorandum opinion, Federal Judge Frank Montalvo recently disclosed new that there are 12 separate public corruption investigations under way involving more than 80 “persons of interest." Of those 35 are past or current public officials, 13 are lawyers and three are or were judges.

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The investigation into Jones’ financial dealings – including suspicious bank and property transactions, and the very apparent fraud by NCED under his leadership – has been conducted on a separate but parallel track from the public corruption investigation.

The investigations have overlapped in some areas, notably regarding Access HealthSource, the third-party administrator of health plans for the city, county and several school districts that Jones wrested from Steve Young, who died recently.

Neither Jones nor his lawyer, Joe Spencer, could be reached for comment regarding this article.

In addition to Jones, the former NCED executives and board members who are known targets of the investigation include former plant manager Ernie Lopez, former spokesman and crisis manager Marc Schwartz and Frank Apodaca, a former NCED board member and head of the Access companies.

While nine targets of the public corruption investigation have come forward to plead guilty to charges and to cooperate with investigators in exchange for a lighter sentence later on, that hasn’t happened in the NCED cases.

The risk of a long prison sentence, it seems, is too high,
even with cooperation.

“If someone calls to ask you to cooperate, you have to ask, ‘What’s in it for me?’ said one lawyer who has a possible client in the case and who asked not to be named. “If they knocked the amount involved down to say a $30 million fraud, that’s still a lot of (prison) time.

“My client can’t go for it.”

Another attorney with a client targeted in the corruption investigation said much the same.

“I know they have renewed their interest in the NCED cases that have been on something of a back burner because of the corruption cases,” he said, speaking on condition of anonymity to avoid upsetting investigators and prosecutors.

“The NCED players are not willing to come forward and cop a plea, so they’re just conducting it like a normal investigation and going to the grand jury,” he said.

Because of the very high dollar amounts involved and federal sentencing guidelines that dictate prison terms in proportion to the money involved, he said, a suspect interested in cooperating must lock in an agreement on sentencing, he said.

But the chief prosecutor in the corruption cases, Assistant U.S. Attorney Debra Kanof, has been unwilling to make those kinds of offers.

“She isn’t giving them because she doesn’t want other clients to use that against a testifying witness by asking, ‘How many years are you getting off in exchange for your cooperation?’ ” the defense lawyer said. “She’s holding that back.

“So, it’s worth the risk for my client to go to trial and try to beat this.”

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At issue in the NCED case are the staggering sums of money that were paid to the nonprofit and its officers as a purported result of deception, fraud and outright embezzlement.

In 2005, NCED employed 4,000 workers. The company’s federal contracts for manufacturing chemical protective suits and uniforms for U.S. soldiers and boxes for the Post Office and other agencies exceeded $250 million.

From 2001 until early 2006, when the Defense Department began suspending the manufacturing contracts it had with NCED, the company was paid more than $750 million.

Those contracts all required 75 percent of the labor to be performed by severely disabled workers.

Jones adamantly insisted that NCED was complying with that requirement in response to questions in late 2005 from the El Paso Times concerning allegations by former NCED managers that only a small percentage of the workers were disabled, much less severely disabled.

But the Times’ articles sparked an internal investigation by the federal agency that oversaw the program, the Committee for Purchase from Workers Who Are Blind or Severely Disabled, that revealed fewer than 20 percent of NCED’s workers qualified as severely disabled.

The second lawyer whom Newspaper Tree interviewed for this story said all of the money paid to NCED during those years could be regarded as fraudulently gained, even though the federal government received the chemical suits and other goods it paid for.

“If the offense involves $200 million, you’re talking about a sentence of 168 to 210 months under the guidelines for larceny, embezzlement and other forms of economic offenses,” he said. “If the amount is in excess of $400 million in a multi-year offense in NCED contracts … that’s life (in prison).”

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To reach David Crowder, write to dcrowder@epmediagroup.com or call (915) 351-0605