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Associated Press

Latest Corruption Scandal Stirs Indignation, Rattles Establishment In Puerto Rico


January 26, 2002
Copyright © 2002
Associated Press. All Rights Reserved.

SAN JUAN, Puerto Rico (AP) - The education secretary had a safe installed in his office to hold some of the millions he extorted from government contractors, and lived in a villa donated by a grateful businessman, prosecutors say.

The corruption scandal that culminated in the arrests of former Education Secretary Victor Fajardo and 16 others this week has embarrassed one of the island's major parties and stirred indignation.

"It's something incredible, inconceivable, that they play in this way with money that's for the schools," said Jerson Nieves, a history and geography teacher at University Gardens High School in San Juan.

While part of his school is sinking due to faulty construction and sometimes needed books don't arrive, Nieves said public officials seem to have worked on a "my pocket first" basis.

The scandal is the latest in a series that have brought down dozens of police officers and public officials, and led to the downfall in 2000 elections of Fajardo's New Progressive Party, which governed for most of the past decade.

Fajardo's lawyer, Osvaldo Carlo, said Friday that his client will plead guilty to some charges in a deal with prosecutors and is cooperating with investigators. It appeared authorities are seeking evidence against other officials.

"That I used a position of power to advance ideological and personal positions does not excuse my actions," Fajardo said after his release on $200,000 bail Wednesday.

The education secretary of this U.S. Caribbbean territory presides over a centralized system with more than 600,000 students at 1,500 schools - more than New York City's government, which oversees 1,200 schools.

Prosecutors say Fajardo - education secretary from 1994 to 2000 - and his deputy, Jose Omar Cruz Mercado, began by asking government contractors for money for the New Progressive Party in 1995.

Fajardo and his subordinates allegedly extorted about $4.3 million from contractors doing business with his agency, and some dlrs 1 million ended up in the coffers of the party, which at the time launched a massive, unsuccessful drive to make Puerto Rico the 51st state of the union.

Authorities say Fajardo also kept large amounts for himself. They found $390,000 in Fajardo's house, and said he also had a safe installed in his office to hold extorted funds.

Another arrested in the case, Richard D'Costa, quit his post as president of Puerto Rico's Chamber of Commerce on Thursday.

D'Costa and his wife, Victoria Vargas, allegedly participated in the scheme through Universal Career Counseling Center and World Learning Systems, two companies they owned.

In late 2000, they delivered $10,000 in cash to Fajardo's sister-in-law, Maria Ramos Matos, to give to Fajardo, prosecutors said. Ramos also faces charges.

Between March 1999 and December 2000, Fajardo awarded more than $1.8 million in contracts to Universal Career and more than $1 million in contracts to World Learning, prosecutors said.

D'Costa, who was free on $150,000 bail, has not returned calls seeking comment.

Fajardo and other defendants face charges including theft from programs funded by federal money, interference with commerce by extortion, conspiracy to interfere with commerce by extortion, and conspiracy to launder money.

If convicted, they could receive prison sentences of 10 to 20 years.

But lawyer Carlo said that because Fajardo is cooperating, his sentence could be shortened to 5 or 7 years. Fajardo's next hearing has not yet been scheduled.

Government contractors Jesus Emilio Rivera Class, who turned himself in in Orlando, Florida, and Norman T. Olson Jr., who turned himself in in Chicago, will appear in court in Puerto Rico on Monday, FBI spokesman Eric Rivera said.

Fajardo awarded $44.7 million in contracts to Rivera Class' Quality Educational Services company between 1996 and 2000, and Rivera Class gave Fajardo a home in the San Juan suburb of Guaynabo in June 2000, prosecutors said. It has been valued at $600,000.

Gov. Sila Calderon, who supports Puerto Rico's current commonwealth status , has condemned corruption under the administration of former Gov. Pedro Rossello and has pledged campaign finance reform.

Other prominent figures from Rossello's New Progressive Party charged in recent corruption cases include Rep. Edison Misla Aldarondo, former House president, and Angel Luis Ocasio Ramos, Rossello's deputy chief of staff. Both maintain they are innocent.

In Rossello's last year in office, high-ranking administrators were convicted of stealing $2.2 million meant for AIDS patients, and funneling some of it to the party. Rossello was not linked to any wrongdoing.

The party's new president, Carlos Pesquera, said this week that corruption was "a cancer" that would not be tolerated.

Another federal indictment handed down Friday brought new extortion charges against the first elected official from Calderon's Popular Democratic Party to be accused of corruption. Juan Laureano Cruzado was arrested in October for alleged money laundering, extortion and embezzlement, and lost his position as mayor of Vega Alta.

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