The $21 Million Bridge Project
Several blogs have been commenting about the “$21 Million Bridge to Nowhere” and the “$21 Million Bridge Boondoggle” and so on. Only one person has ever asked me about why we settled the lawsuit with Dannenbaum (DEC). Everyone else has just complained but never bothered to ask. I knew that this would come up some day so I wrote down a list of the reasons why we settled. It is important though that the readers get some background regarding the project. I will also fill in some additional information about things that happened after the settlement and the status of the project today. Other than the list of reasons why we settled, I am working from memory in order to get this information out to you in an expedited manner. This information is from my point of view. In the end, I know that not everyone will agree with my decision. There are some folks that wanted to go after Dannenbaum at all costs regardless of the outcome. There is also an operator of a blog in particular that has never liked me. He is one of those that has never contacted me yet knows everything about everything. I don’t expect he will agree with my point of view.
Background
In 1997 the Port of Brownsville was able to obtain a Presidential Bridge Permit. The purpose of the permit was to build a truck and rail bridge linking the Port of Brownsville to Matamoros, Tamaulipas, Mexico. The bridge would be located on the east side of Matamoros and Brownsville. The Port owns the land leading to the proposed bridge site on the U.S. side. This means that the Port would own the road leading to the bridge. Overweight trucks would then be able to come in directly to the Port of Brownsville without having to pay for an overweight permit and avoid going through the city. The rail part of the bridge would have allowed the BRG (the Port’s railroad) to transfer train cars directly to Mexico without having to rely on and continue to pay Union Pacific (UP) a transfer fee for each car. This would make the Port of Brownsville more competitive with competing ports (Altamira) as the cost of transporting goods in and out of the port would be cheaper.
It is important to note that all railroad bridges between the U.S. and Mexico are owned by UP. The Port’s bridge project was opposed by UP. In addition, the west rail project was also started on or about the same time. The west rail project is a project to relocate the rail lines inside the city of Brownsville to outside the city. The switching yard was relocated to Olmito from the Fronton and Palm Blvd. areas of the city. The actual west rail bridge project is currently ongoing and appears to be on schedule at least on the U.S. side. This bridge will be turned over to UP once the project is completed.
The Port initially hired an engineering firm to do all of the necessary work for the bridge project. From my recollection, this engineering firm did some initial work but at some point the then existing board members decided to change the engineering firm to Dannenbaum. Initially, Dannenbaum was contracted to perform the engineering work on the bridge project. This involved a whole bunch of things including obtaining different studies and permits from all of the different federal agencies. It appears all this work was being performed according to schedule. The problems began when Dannenbaum decided that they wanted to try to get the Mexican concession for building the bridge on the Mexican side. I don’t have dates but the prior board members then decided to let Dannenbaum try to get the permit going on the Mexican side of the border. The problem with this was that Dannenbaum had never done a bridge project other than actual engineering work. So, they were not familiar with how to get the bridge approved on the Mexican side of the border. They attempted to get the permits at the Mexican federal level without first getting approvals from the City of Matamoros or the State Governor. Apparently, that was not the proper procedure. Although, they did secure some letter from a federal agency referring to the bridge project it was not an approval of the project. Dannenbaum was hiring subcontractors in Mexico to do this. The board was aware of this and still kept giving Dannenbaum Millions to do this. This was a big problem for the Port in the lawsuit.
The lawsuit
In 2004 two new board members were elected. Sometime during 2005 the board started considering a suit against Dannenbaum. However, Dannenbaum had still not completed their engineering work. When they found out that the Port was going to sue them they filed suit first in Harris County (their backyard). They alleged that the Port still owed them money under their contract and that the Port was refusing to pay them. By the time the Port filed suit here in Cameron County it was too late. The case got transferred to Harris County. So the case had to be litigated over there.
The Port was able to secure the services of Susman & Godfrey, a major law firm with offices in Los Angeles, Seattle, New York, Houston, and Dallas. This was a firm hand picked by Peter Zavaletta. The firm was a bit reluctant at handling the case because they were used to dealing with lawsuits involving $100’s of millions. To them this was not that attractive of a case. Nonetheless, we secured their services. We still had the services of Charlie Willette of Willette & Guerra, a local reputable law firm and David Oliveira, of Roerig, Oliveira and Fischer, another local reputable law firm as well as our board attorney Dan Rentfro.
Dannenbaum also had secured the services of a major law firm in Houston. I don’t recall their name but it was believed at the time that Dannenbaum had paid the firm a substantial amount of money throughout the lawsuit perhaps in the $2 million range.
The Alleged Secret Meeting with Dannenbaum
When I was elected to the Port in 2006, the lawsuit was already pending in Harris County. Nobody was doing anything. There was an order from the judge on the case to mediate. We were advised by our attorneys to try to set up a mediation. Harry Susman had looked at our case and wanted to drop us. They reviewed hundreds of boxes full of material and they were just not interested any more. In addition, Dannenbaum had produced sworn affidavits from two former board members that stated that they knew exactly where the money was going.
Dannenbaum wanted to meet with the board members. None of the three previous board members wanted to be involved with the suit anymore. Our attorneys set up a meeting with Dannenbaum to hear what they had to say. We met Dannenbaum and his attorneys together with our attorneys. WE WERE NEVER ALONE WITH DANNENBAUM!!! He had his attorneys and we had ours. The meeting didn’t get anywhere. Dannenbaum still believed that they had the Mexican Diplomatic note permitting the bridge. They were ready to continue with the project. We said NO!!!!
We did review a bunch of the boxes of documents at the Offices of Susman & Godfrey to see where we stood on the project. We had to try to determine if we had good engineering work, studies, permits, and the status on the Mexican side if we were going to go to mediation. We believed then and still believe we have a need for a bridge and that it is still a viable plan with one exception. That it only be a truck bridge and not include a rail bridge. With all of that in mind, we went to mediation and settled the case.
The $1 million
We (the board) were informed about the seizure and forfeiture of the $1 million after the fact. We didn’t just sit there twiddling our fingers. We advised our attorney to draft a letter on behalf of the board and to inquire about getting the money back for the Port. We were advised by the District Attorney that the money was found by the special prosecutor on the case in some account they were able to trace and that it had been dormant for a while. Nobody claimed the money and they reached some settlement with Dannenbaum’s attorneys. I am assuming that the money must have been transferred from a Dannenbaum account and that is why they were part of the suit. In addition, we were also informed that the money was forfeited under Chapter 59 of the Texas Code of Criminal Procedure as contraband. Basically, what that means is that the money is forfeited to the State to be used for law enforcement purposes. The Port Police didn’t have an agreement regarding forfeitures with the DA’s office therefore we would get none of the $1 million. The statute does not provide for a return seized and forfeited property to victims. That is an area of the law that needs revision.
Reasons why we settled:
- DEC had possession of numerous notes and memorandums indicating that both Raul Besteiro and the BND board were fully aware of the payments being made to both DEC and the Mexican Subconsultants.
- DEC produced affidavits from two former board members (Sydney Lassaigne and Julius Collins) stating that they were kept informed by Mr. Besteiro of everything that DEC was doing and that they knowingly approved the payments to DEC (and subcontractors). They would produce a 3rd one if needed (Eddie Rendon).
- Susman & Godfrey was threatening to withdraw from the case if we didn’t settle. Prior to the BND hiring this firm two other firms had rejected the case. After Susman & Godfrey threatened to withdraw, two other firms were approached about handling the litigation for the BND but they also rejected acceptance of the case.
- DEC’s attorneys, one of the top firms in the state, threatened to have David Oliveira’s firm disqualified. Apparently, when word got out that the BND might sue DEC, they (DEC) went to speak to several firms in Brownsville including Rene Oliveira. Although, Rene did not accept they were claiming that they had discussed substantive issues of the case. Rene and David are partners in the firm.
- If the case proceeded to trial, there was a serious risk that we would not prevail on our claims and that DEC could have convinced a jury that BND breached the contract and award a judgment against the BND in the amount of approximately 3 million dollars ($800,000 unpaid from contract and approx. $2 million in attorney’s fees). This does not include our own attorney’s fees which would be anywhere from $500,000 to $1 million just for the litigation part.
- The settlement allows DEC to complete the engineering work at no further expense to the BND. The amount of engineering work remaining to be done is approximately $2.9 million dollars worth of work. Under these terms they are not the project manager. They will do ABSOLUTELY no further work on the Mexican side and on the US side only engineering work.
- If we had lost the suit, BND would have to pay another engineering firm $6 million to redo the engineering work. Starting from scratch would have also taken significant time to complete the work.
- THAT WOULD MEAN ANOTHER $9 MILLION OUT OF TAXPAYERS POCKETS!!!!! ($2.9 million plus the $6 million). I was not willing to take that risk!
- The settlement agreement gives BND the opportunity to recoup $10 million dollars from the contractor obtaining the Mexican concession.
- Our attorney in Houston, Susman & Godfrey, recommended that we settle this suit. Susman & Godfrey is not just one of the top law firms in the State of Texas but also in the United States with Offices in Los Angeles, Seattle, New York, Houston and Dallas. It is a large firm with over 80 attorneys and This was the law firm that Peter Zavaletta selected to represent us in Houston. Peter spoke very highly of them at the time the board voted to hire them.
- Our attorney in Brownsville, Charles Willette of the Willette and Guerra Law Firm, recommended that we settle the lawsuit. Charles Willette was the attorney selected by Peter Zavaletta to conduct the investigation of the $21 million spent on the port bridge project. Mr. Willette is a seasoned attorney who has represented many local governments and has been involved in numerous cases over his 33 years as an attorney. He was recently featured as one of Texas Super Attorneys.
- Our other attorney in Brownsville, David Oliveira, of the Roerig, Oliveira, & Fisher Law Firm, also recommended that we settle the lawsuit. Mr. Oliveira is well respected and seasoned attorney who has practiced law for almost 20 years. He was also brought in by Peter Zavaletta to represent the BND in this litigation.
- Our BND counsel, Dan Rentfro, Jr., recommended that we settle the lawsuit. Mr. Rentfro has been an attorney for almost 25 years. He has been the BND’s counsel for many years. He has experience in a wide areas of practice including state, local, and municipal law, business & commercial law, as well as other areas.
- VENUE – we were at a disadvantage being that we were fighting this lawsuit in DEC’s backyard (Harris County). The people of Harris County are not familiar with our port nor with our public officials. James Dannenbaum, the owner of Dannenbaum Engineering, is a respected member of that community is well known and very politically involved. He’s been appointed to a state board by Gov. Rick Perry. The judge in our case was also appointed to the bench by Gov. Rick Perry.
- The judge in our lawsuit ordered that both parties go to mediation to try to get the case resolved. Peter went to one mediation. Martin Arambula and myself went to two mediations.
Peter Zavaletta knew that we were trying to settle the case. He stopped going to our meetings and missed nine meetings. Some of the meetings that he did attend he did not stay for the executive session where we would have discussed the ongoing litigation. On one occasion he asked me if we were discussing anything important in exec session and I told him yes that we were meeting with our attorneys regarding the Dannenbaum lawsuit. He declined to stay saying he had to pick up his daughter and practically ran out of the board room. He has refused to sign any documents related to the port for 4 or 5 months. This was his way of denying any knowledge of anything regarding the lawsuit and any settlement and to help his claims that we had dealt with Dannenbaum secretly.
Current Status of the Project
We still have an active permit. It is important that our community get involved and voice the need for this bridge. We have been working closer with the city and county governments as well as the Regional Mobility Authority (RMA) and the Brownsville MPO. We need to continue to emphasize the importance of our project and perhaps a priority over other future bridges such as the proposed Flor de Mayo bridge. We must also continue to reach out to the Governor of Tamaulipas to push for this project.
Carlos Masso
All these "politicians" wannabees are "explaining" themselves in your blog because McHale already sold himself, Paz Martinez decided it wasnt worth the nickle and dime.
ReplyDeleteInteresting. And what lessons has Mr. Masso extracted from this mess about the future conduct of business at the port?
ReplyDeleteAnd there are no culpable parties, Mr. Masso?
The culpable parties are the commissioners that kept throwing money at Dannenbaum and the sub-consultants for the bridge project to get approved in Mexico!
DeleteFormer Congressman Solomon Ortiz played a key role in this 21 million dollar fiasco. I wonder how many pockets were filled on this side of the border by corrupt officials!
ReplyDeleteOrtiz announcement sparks fierce battle over bridges
ReplyDeleteby LYNN BREZOSKY
Associated Press Writer
Cameron County Judge Gilberto Hinojosa was surprised last week to hear U.S. Rep. Solomon Ortiz trumpeting a new rail and truck bridge between the Port of Brownsville and Mexico.
"Then I called around, and we found out that it was not going to happen," he said Tuesday. "Bottom line is: Mexico has to approve the bridge."
Hinojosa is lobbying Mexico to build one bridge, while Ortiz supports another one being lobbied by port Director Raul Besteiro. But Mexico won't immediately support both, Hinojosa said.
Ortiz, D-Corpus Christi, announced Friday that a ceremony would mark Mexico's cooperation on the project. But no Mexicans showed up Saturday, and a leader from the city of Matamoros, where the bridge would be located, said officials were not on board.
Ortiz declined to comment Tuesday but sent The Associated Press three documents from Mexico indicating support of the port bridge.
In one, dated Aug. 25, 1997, the state of Tamaulipas governor called the project "critically needed." Another document dated Nov. 12 says environmental studies and several approvals have been completed and the project could be finished by 2006.
A March 24 letter from Enrique Escorza, Mexico's director of international bridges, cites schedule conflicts in declining a "kind invitation for the event where the Port authorities will officially launch a new state in the development of the proposed bridge."
Three bridges now link Brownsville and Matamoros, but the proposed bridge touted by Ortiz and port officials would allow Mexican goods to land directly at the port. Officials say it could market the Brownsville port as an alternative to the Panama Canal and clogged California coast ports.
Paul Cowan, a spokesman for state Sen. Eddie Lucio, D-Brownsville, said politics was at play in the confusion, both in the U.S. and Mexico, where there are tensions between the political parties in Mexico City and in Matamoros.
"If you're looking at is as we do, in the U.S. a lot of stuff comes out at the top that nobody talks about at the lower levels," Cowan said.
Hinojosa and Besteiro, the port director, traveled to San Antonio on Tuesday to tout their proposals at the U.S.-Mexico Binational Bridges and Border Crossings Group.
Hinojosa and other Cameron County officials have come out against the port bridge, saying it could hurt a rail relocation plan that involves building an international rail bridge west of Brownsville and Matamoros.
Hinojosa favors a bridge that loops around the west side of the city, alleviating traffic backups attributed to population growth and the North American Free Trade Agreement.
Arturo Salgado, vice consul for the Mexican consulate in Matamoros, said "diplomatic notes" between the two countries were a significant development for the port bridge after years of talk.
"Of course there is a deal; otherwise they wouldn't exchange diplomatic notes," he said.
But he said the project would be a lengthy process, likely involving more Mexican local and federal agencies.
http://www.myplainview.com/article_d8531f94-6d11-5d53-aa43-57ac35c119e2.html
Why was ex Congressman Solomon Ortiz desperately pushing this 21 million dollar bridge to nowhere??? Solomon Ortiz threw a ceremony to celebrate the "binational agreement" on the port bridge and not a single Mexican official showed up! Because the Mexican officals AND Cameron county officials were all against it!! Can you smell the $$$$$$$$$$ yet
ReplyDeleteBy EMMA PEREZ-TREVIΓO
and ANGELES NEGRETE
The Brownsville Herald
Mexican, county officials say no deal reached in port bridge
Contrary: U.S. Rep. Solomon Ortiz, port officials announced Friday that an agreement had been made.
BROWNSVILLE, March 30, 2004 — Mexican and county officials on Monday said no deal has been reached to build a rail and truck bridge linking the Port of Brownsville with Matamoros.
U.S. Rep. Solomon Ortiz, D-Corpus Christi, and port officials on Friday announced an agreement had been made with Mexican officials and held a ceremony at the port on Saturday to mark the occasion.
Humberto Acosta Garza, Matamoros’ Urban Development Director, said Monday that his city was not on board.
“At the local level, the City of Matamoros hasn’t approved any project related to the port,” Garza said.
“We are not against the project,” he said. “But for us here in Matamoros, at this moment, the construction of the bridge is not an option.”
Cameron County leaders have come out against the port bridge, fearing it would negatively impact the West Rail Relocation Plan that calls for construction of an international rail bridge west of Brownsville and Matamoros. The plan is a joint city and county effort.
“Obviously, the port’s bridge would affect the West rail bridge, because Mexico never approves two bridge projects at one time in the same area,” County Judge Gilberto Hinojosa said.
“What needs to be made clear is that Mexico has the final word (about location),” Hinojosa said.
Sepulveda said that both Matamoros and the state of Tamaulipas support the West Rail bridge (not Ortiz' port bridge) that would remove rail lines to west of the cities, eliminating several rail crossing points and associated hazards.
“I am just as surprised (at the announcement) as anyone else that knows the process,” said county Transportation Director Pete Sepulveda.
“A lot of work is involved and to make an announcement like that, you have to have your ducks in a row.”
Port Director Raul Besteiro was traveling to San Antonio and not available for comment Monday.
Besteiro’s assistant Donna Eymard pointed to a March 24 letter to Besteiro from Enrique Escorza, the coordinator of the Mexican delegation for the binational group.
Ortiz said the exchange of diplomatic notes (in September 2003) is the significant development that led to Saturday’s announcement.
“My understanding is that the prior administration (in Matamoros) was not too supportive, but it was my understanding that his present administration is very supportive of the port,” he said.
“But I guess they’ve been working this deal from the top down instead of down up.
“For this to work, we need to have everyone on board. As far as I know everything is on go.”
Arturo Salgado, vice-consul for the Mexican Consulate in McAllen, said the exchange of diplomatic notes does not mean Mexico has approved a project.
“The diplomatic notes only reflect the good will by Mexico and United States to work together for the development of the project,” Salgado said.
No Mexican officials were present at Saturday’s announcement.
“I don’t know if local people invited the mayor of Matamoros or not, but this was supposed to be done at the local level,” Ortiz said Monday.
According to project engineers, the first phase of the port’s project would include a rail bridge and cost Mexico $40 million and the United States $18 million. Funding has not been secured and a tax rate increase has not been ruled out.
full article http://old.brownsvilleherald.com/ts_comments.php?id=58545_0_10_0_C
What about Eddie "El Sucio" he was in the middle of this mess. Now you can blame Raul Besterio, he's gone, can't defend himself. I went to school with him. Texas A&I, he would not stoop low for anyone.
ReplyDeleteThre were still some rabbit out of the hat, when it was well known that the companies kept transfering $$$$$$ from place to place.
ReplyDeleteBTW (By the way) was one of the Consultants Senator Lucio?
Questions:
ReplyDelete1. Where is the Bridge to nowhere?
or
2. Can you Show me the MONEY????????
Lucio, Masson, Salivating Ortiz, let out a sigh of relief when Mr. Bestiero passed. He would have exposed all those crooks and now they want to put the blame on him. You are all a bunch of crooks and would all be in jail if he were still slive.
ReplyDeleteI guess you missed the part where I said I wasn't there when all of this money was spent on the bridge project. I wasn't a commissioner with the port at the time. And regarding Mr. Besteiro, he had already passed away when I became commissioner. Second, I didn't make the comment regarding Mr. Besteiro. Two former commissioners signed sworn statements saying Mr. Besteiro knew where the money was going. Whether he knew or not, I do not know. Please get your facts straight!
Delete"Basically, what that means is that the money is forfeited to the State to be used for law enforcement purposes. The Port Police didn’t have an agreement regarding forfeitures with the DA’s office therefore we would get none of the $1 million. The statute does not provide for a return seized and forfeited property to victims. That is an area of the law that needs revision. "
ReplyDeleteBiggest crock of shit I ever did see. The statement from the DA's office at the time referred to that money DIRECTLY as illegal billing for services not delivered. Masso, you know that. Every attorney in town knows that.
Perhaps you should read the definition of "contraband." Illegal billing for services sounds like "theft" or "fraud". Under the definition of "contraband" any proceeds (U.S. Currency) from the commission of a felony under chapter 31 and 32 of the Texas Penal Code is "contraband." Chapter 31 Theft and Chapter 32 Fraud. If it is "contraband" then it can be forfeited under chapter 59.
DeleteIf it was admitted as money collected in violation of the contract (as it was found to be), it could have been simply returned to the entity that was falsely billed for services not delivered. Instead it was treated as 'free money on the table' and was allowed to be slid into the DA's office. AND as a forfeiture, no one else could put in a claim on the money. I am not saying it wasn't a slick trick, it was, and therein lies the problem. The source of those funds was the Port:Period. It was not supposed to be in Danenbaum's hands:Proven. This is not about the finer points of the law, it is about justice. When those two concepts are at odds, the law is being read incorrectly or being stretched out of recognition. I know that lawyers are forced to believe that a camel can pass through the eye of a needle at least three times a day, but please! The fact that almost everyone was involved never makes it ok. What would you say if a cop ran down the mugger that stole your wallet, returned the wallet to you AFTER removing the money for the police department's use, and insisted that no further prosecution of the mugger was possible because the matter was now closed? THAT is what happened.
DeleteI agree with you on this. The Port had an interest in the $1 million. If we had received some kind of notice that they had seized this $1 million and intended it to be forfeited to the state, the Port could have filed an intervention on the case and tried to recover the money as an innocent owner or an interested party. Problem was we never knew until after the fact.
Delete"Under the definition of "contraband" any proceeds (U.S. Currency) from the commission of a felony under chapter 31 and 32 of the Texas Penal Code is "contraband." Chapter 31 Theft and Chapter 32 Fraud."
DeleteIf this is the statutory authority under which the money was forfeited, then why, prey tell, were there never any underlying felony charges or complaint filed...anywhere to establish said basis for criminal forfeiture.
And why, did not the Port EVER simply make a simple public demand of the DA to return the money and had he agreed, file a friendly suit to establish prior claim?
The forfeiture of the money was filed under chapter 59 of the code of criminal procedure. The forfeitures under this chapter are handled under the rules of civil procedure. No felony or criminal charges are needed to go forward with a forfeiture case. It is a separate case from any criminal case. As a matter of fact, you can not use a forfeiture case to try to settle a criminal case and vice-versa. It is unethical to use one to get an advantage on the other. That is why the DA has separate asset forfeiture division which is under the civil division.
DeleteThe DA made it very clear that he could not return any of the money. At the time, he also mentioned that they had leads on other monies and that once we had signed an agreement between the DA and the Port that we would be getting those monies back.
What about the Board member who phoned up Dannenbaum and told him words to the effect of "I am your friend, I want to help you"? If someone from my business called up someone I was in a dispute with and offered to help them, I would not think they they were working in the best interest of my business. To me it sounds a whole lot like a solicitation. I would love to get Masso's comments on this.
ReplyDeleteMescalero
To the owner of this blog. Can you get mr. Peter Zavaleta to comment on mr masso role in the bridge fiasco?
ReplyDeleteI guess that this is how business is done, no one needs inside information because everyone is on the inside now.
ReplyDeleteThis case is yet another reason that the citizens of this community should end taxation by BND. If they had to spend their own money....not rely on tax dollars....then this "boondoggle" would likely not have taken place. There is more bullshit coming from the Port than any feed lot in Texas.
ReplyDeleteMasso, now that your are cornered you admit to theft and fraud. Were you and your corrupt so called "dream team" not going to commit fraud and theft-by building and illegal bridge? Were you not going try to build the east railway illegally? Engineering company of Brown and Root, doubtful that it would have gone along with your corrupt plan. Now, Dannenbaum, different story. Just look at the present news. In my opinion you settled because like Rene said before, "Got caught with my pants down to my knees". From the looks of it, he wasn't going to be the only one. Lucio was going to let those ridiculous golf socks go all the way up to his neck. These clowns need to go.
ReplyDelete