A White-Collar Indictment Shatters a Congressman’s Blue-Collar Image

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Over the years, Representative Henry Cuellar often harked back to the small house in Laredo, Texas. It was there that his parents, one-time migrant workers who spoke no English, raised him and his seven siblings to value hard work and beware the dangers of debt.

The references in speeches, campaign advertisements and interviews were intended to forge affinity with the largely Hispanic residents of his hometown. They demonstrated that “I am one of you,” as his campaign website put it in 2004, when he first won election to Congress as a Democrat representing Laredo, one of the poorest cities in the country.

By 2013, those hardscrabble beginnings seemed a distant memory.

Mr. Cuellar had become the hub of a bustling small enterprise that blurred the lines between his political operation, his businesses and his family, affording him trappings of affluence even as he sometimes strained to make ends meet.

He had recently purchased a penthouse apartment in Washington’s bustling Navy Yard neighborhood near Nationals Park and a pair of properties in Laredo, including a 6,000-square-foot house with a pool and cabana in a gated community on a street called Estate Drive. He took on an increasing amount of debt, and his net worth declined.

A new source of cash soon revealed itself, federal prosecutors are now saying.

Starting in 2014, Mr. Cuellar and his wife, Imelda Cuellar, accepted at least $598,000 over seven years from a Mexican bank and an oil company owned by the Azerbaijani government, according to prosecutors.

The Cuellars were charged earlier this month with accepting bribes, money laundering and violating foreign lobbying laws by trying to influence the government on behalf of their foreign paymasters. They pleaded not guilty and were released after each paid a bond of $100,000.

In a statement before the indictment, Mr. Cuellar proclaimed his innocence. One of the most conservative House Democrats — and the only one who publicly opposes abortion rights — Mr. Cuellar vowed to continue his campaign for re-election, though the indictment made the seat a more attractive pickup opportunity for Republicans seeking to protect their narrow majority in the chamber.

Two political consultants who prosecutors say aided the Cuellars’ scheme have agreed to plead guilty to conspiring with Mr. Cuellar to launder more than $200,000 from the Mexican bank. A third person, who worked for an affiliate of the Azerbaijani state-owned oil company, pleaded guilty to acting as an unregistered agent of Azerbaijan. All three have agreed to cooperate with prosecutors.

Eric Reed, a lawyer for Mr. Cuellar, rejected any “suggestion that there is a financial desperation that would create a motive for bribery. That didn’t exist.” Mr. Cuellar “lives within his means, and like anyone else, his net worth goes up and down,” Mr. Reed said in an interview “The fact that he’s had success doesn’t change his roots. He’s never forgotten where he came from,” Mr. Reed said, adding, “this is the American dream, and he’s in public service to make it real for others.”

Mr. Cuellar, the lawyer said, has followed campaign finance and ethics rules. “There was no quid pro quo,” Mr. Reed said. “His actions in this matter were lawful, transparent and entirely consistent with the actions of many of his colleagues and consistent with his own principles and the interests of the country.”

Mr. Cuellar’s indictment was only the second time in modern history that a sitting member of Congress was charged with acting as a foreign agent. The first, Senator Robert Menendez, a New Jersey Democrat, has also pleaded not guilty and is set to go on trial this week.

In some ways, though, Mr. Cuellar’s story — as detailed in the indictment, campaign finance filings, property records and congressional disclosure statements — traces a familiar Washington trajectory. Newcomers to Congress are often tempted by the spoils of office and soon find their finances and political lives intertwined.

Deep-pocketed special interests dangle political action committee contributions and junkets, as well as paydays for family members. In Washington, members of Congress are invited to exclusive clubs and black-tie gala functions by donors, wealthy colleagues and lobbyists. In their districts, they are courted by business owners seeking favor.

The lure can be harder to resist for the relatively small group of politicians from humble backgrounds who sometimes struggle to make ends meet while balancing family lives back home with the high cost of living in Washington much of the year.

Mr. Cuellar suggested in his statement that the House Ethics Committee and an unnamed “national law firm” had cleared his financial activity.

The proclamation, and his lawyer’s comments, hint at a possible defense. They cast his behavior in Congress as typical policymaking unrelated to any outside interests. Mr. Cuellar’s statement intimates that any payments to his wife were for consulting work based on skills that she was entitled to use to earn a living.

While there are pages and pages of rules restricting outside income, gifts and campaign spending, members of Congress often surround themselves with sycophantic staff members disinclined to push back, as well as sophisticated lawyers who offer advice on navigating laws restricting the spending of taxpayer and donor money.

Mr. Cuellar meeting with Elin Suleymanov, the Azerbaijani ambassador, in an image released by Mr. Cuellar’s office.

“It’s an old story. It happens to people,” said Jackie Speier, who stepped down last year after 15 years as a Democratic representative from California. “You see when their light gets too bright, their moral compass has no way to measure right from wrong.”

Ms. Speier had been a leading congressional supporter of Azerbaijan’s regional rival Armenia.

The indictment does not identify Ms. Speier by name, but it refers to text messages in which Mr. Cuellar and his Azerbaijani contacts sought to neutralize her efforts to provide funding to Armenia, which Azerbaijan regarded as a slap in the face. She declined to comment on the charges against Mr. Cuellar, saying only that Congress can be “an intoxicating environment.”

The spending detailed in the indictment includes using the foreign money to pay off $58,000 in credit card payments and other debts, fund living expenses and make purchases including a $12,000 custom gown for Ms. Cuellar and a $7,000 down payment for a new car. It presents a very different picture of Mr. Cuellar from the one he projected back in Laredo.

Some constituents said the Cuellars never showcased their wealth, even as they moved to the gated community. Melissa R. Cigarroa, a Laredo city councilwoman who has backed Mr. Cuellar through his recent primary races, said the Cuellars, and specifically Ms. Cuellar, were “not ostentatious.”

Mr. Cuellar has repeatedly told the story of how his parents toiled for years as migrant farm workers before settling in Laredo, when Mr. Cuellar, their firstborn, was a toddler. They raised him and his siblings on as little as $300 in monthly wages his father earned as a gardener, and his children were often enlisted to help with the work.

“Other kids got up on Saturday and watched the cartoons,” Mr. Cuellar told The Houston Chronicle for an article he posted on his official House website in 2014. “My dad told us, ‘You finish your work first.’ So we would be out at the crack of dawn, mowing and raking, so we could watch ‘The Jetsons.’”

Mr. Cuellar told The Chronicle that his father, who died in 2019, “doesn’t like debt.”

In a campaign advertisement, he said that “I washed dishes while I worked hard on my way from Laredo College to Georgetown University.” After earning graduate degrees in business and the law, he said in the ad, “I turned down jobs in big cities and came home to Laredo to make a difference.”

He started his own law practice and was elected to the Texas House of Representatives in 1986 at age 30, serving for 14 years. In 2001, he was chosen by Rick Perry, a Republican serving as Texas’ governor, to be secretary of state.

Along the way, he assembled a small portfolio of rental properties in Laredo. He created a company called HC Rentals to manage the properties, including his childhood home, which is owned by his sister, and the house next door, which he owns. Another company he controlled, HC Air, operated a small private plane he bought before his election to Congress.

His political operation came to overlap with his businesses and his family.

During his early congressional runs, his campaign committee reported to the Federal Election Commission that it paid $11,500 in rent to his law firm and HC Rentals, though the filings also show that Mr. Cuellar donated about $159,000 worth of rent, office furniture and equipment to his campaign. The campaign paid about $92,000 to HC Air for air travel, before he sold his plane in 2011 for as much as $100,000, F.E.C. filings and personal financial disclosure statements show.

His campaign would later pay a total of more than $15,000 to his family members, F.E.C. filings show, including his wife, his two daughters and his sister Rosie Cuellar, a former Webb County official now running for the Texas State House. Mr. Cuellar’s brother Martin is the Webb County sheriff.

In 2013, Mr. Cuellar disclosed that he had taken on debts totaling as much as $1.15 million, including a loan that initially ranged from $50,000 to $100,000 from a donor to buy another property in Laredo. The donor, Rasoul Khaledi, owns a chain of duty-free stores along the Mexican border, including in Laredo, as well as two elsewhere in Mexico. He and his family donated tens of thousands of dollars to Mr. Cuellar’s campaigns, and four of Mr. Khaledi’s children were given unpaid internships in the congressman’s office, as reported by the Center for Public Integrity. Mr. Khaledi did not respond to requests for comment.

When the loans started appearing on Mr. Cuellar’s personal financial disclosure statements, he blamed the economic downturn.

“This recession has impacted all Americans — from farmers to small-business owners to public servants — and I am not exempt from it,” he told The Fort Worth Star-Telegram.

His net worth dipped as low as $29,000 in 2013, down from a minimum of $200,000 the year before, according to an analysis of the disclosure filings by the nonpartisan website OpenSecrets. (These filings require officials to list only a range of their assets and liabilities, rather than precise amounts.)

It is not clear why the Azerbaijani and Mexican interests initially reached out to Mr. Cuellar, though the Azerbaijani oil industry, including the state-owned company that prosecutors say funded the payments to the Cuellars, maintain a presence in Texas.

In 2013, a nonprofit funded by the state-owned oil company arranged and paid for a trip to Istanbul and Baku, the capital of Azerbaijan, for Mr. Cuellar and his wife. The trip, which cost more than $26,000, included briefings with officials from the Azerbaijani government and oil company, meals and tours of museums and palaces, according to a congressional disclosure statement.

Shortly after they returned, Azerbaijani officials discussed as “a top priority” the need to cultivate relationships with members of the House Appropriations Subcommittee on State, Foreign Operations and Related Programs, which included Mr. Cuellar, according to his indictment.

The “good news is that Cuellar was just in Baku,” an Azerbaijani diplomat wrote to a representative of the oil company.

About a year later, Mr. Cuellar and his wife were editing a draft of an agreement under which the oil company would pay monthly fees to a company she had created, according to the indictment.

Sylvia Bruni, the chair of the Webb County Democratic Party, in a message to local Democrats, called the claims in the indictment “distressing, casting a dark cloud over all our sincerest efforts on behalf of our community.” But she wrote that the party would “remain quiet regarding the allegations, presuming innocence and trusting the justice system to work fairly.”

As news of Mr. Cuellar’s indictment spread last week, constituents reacted with shock at allegations they said were so at odds with the man they knew. In interviews with more than two dozen voters in his district, many described Mr. Cuellar as humble, hard-working or simply “un buen hombre”: a good man.

“He is one of us,” said Juan Eladio Rivera, 68, a Democrat and retired carpenter in Roma, Texas. “People want to knock him out of power because he has been in office for so long, but he has been in office for so long because he has done good things.”

Jazmine Ulloa contributed reporting from Laredo, Texas.



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