Numerous schemes to defraud City, County, State and Federal taxpayers centered on the abilities of corrupt co-
conspirators inside the City of San Antonio TX to secretly, illegally gain access to millions of dollars a year behind the
backs of City Council, auditors, grantors, taxpayers, law enforcement, etc. The “Telephone Variable Billing Account”
created by the Finance Department's Administrative Directive 6.12 in 1982 was a perfect path to hundreds of millions
of dollars. The internal building account entirely controlled by the IT Department for over thirty years was clandestinely
and illegally used to pilfer tens of millions of dollars from telecom budgets of every city department and every grant
awarded the City of San Antonio, Texas since 1982 containing a telecom line item . Criminals on our public payroll
have conspired for years to conceal the ongoing RICO-like criminal conspiracy . The local media refuses to expose
the criminal activity so as to protect the guilty and keep the money flowing. Ongoing efforts to defraud our Judicial System,
“cook” the books , defraud municipal bond investors, defraud Financial Institutions, defraud bond-rating organizations and
cover up the criminal activity will be documented on other pages within this site.
In 1982 , AD 6.12 created a procedure and a billing account- the “variable” - to facilitate the payment of monthly Centrex
telephone bills ( 207 #s) and the reimbursement from city departments for their fair share of the cost - nothing more.
Prior to 1982 each City Department received a separate bill for Centrex telephone service using the 207 prefix . A
problem arose where bills were not being paid on time so the City’s Finance Dept. published an Administrative
Directive creating a process and protocol where-as the IT Department would pay the monthly Centrex Telephone
bill for the entire block of 207 numbers and charge back each Department for their fair share of the cost. This is a
legal, acceptable practice much like the practice apartment management uses to pay one water bill and then charge
each dweller for their fair share of the cost.
Corrupt officials/employees operated outside of the law as if there were no annual budgets, Administrative
Directives, City Charter provisions, City ordinances, State Local Government Codes, State Uniform Grant management
Regulations, Federal OMB regulations, State/Federal penal Codes, etc. They ignored City Administrative Directives
(especially AD 6.12) and every other law, rule, guideline, etc. regulating the expenditure of grant and public funds. IT
managers including Jose Medina, Mike Mitchell , Diana Gonzalez , Victor Perez and their accomplices altered
invoices, caused to be created false and fraudulent statements in the books and records of the City, concealed
the true and accurate disposition of department and grant resources and used funding set aside by city ordinance and
state/federal grants as they wished , not for their intended purposes and via many illegal schemes to fill their own
pockets and bank accounts of friends. They misused, misappropriated, embezzled, etc. funding set aside by law
for telecommunications / 911 support. They violated open-bidding regulations as they never followed the law and
requested the funding via city council approval/ordinances but simply purchased goods and services and dumped the
bill into the telecommunications “variable” account to be paid with telephone funds from city and grant phone
budgets. They stole money from every city department/program including Police, Fire, SAPD, Library, Aviation,
Health, WIC, Public Works, Community Initiatives, Housing and Community Development, Parks, etc. and every grant
awarded each of these departments that contained provisions for telephone support.
Official transfer requests for the Finance Dept. to move funds from department and grant telephone budgets to the
Information technology Services Department - ITSD were routinely, clandestinely and illegally inflated until the
telephone “variable” account swelled to an annual cost to grantors and taxpayers of over $5.2 MILLION . If a grant or
department had a telecom budget it was drained of funding via fraudulent monthly bills for decades. The illegal
manipulation of this monthly telephone billing account commonly referred to as “the Variable” provided corrupt city
employees with the funds to use as they wished as if they were given a blank check to run the IT department or any
other scheme they could envision. The process established by AD 6.12 if properly followed would leave no funds in any
account as the Centrex invoice payments would equal the funding recovered from each department- the “paid” and
“collected” transactions should cancel each other out! Instead, once the monthly Centrex phone bills
were paid the remainder of the money in the “slush fund” was theirs to spend, in private, with no approval on
whatever they wished no questions asked while the illegal expenditures were fraudulently described in audits, billing
statements, etc. as Telephone Centrex costs when in fact the funding was used for whatever the IT Managers and
their cronies wished to use the money for.
This accounting fraud blossomed into SEC - Municipal Bond Fraud and State / Federal Grant fraud over the years when
fraudulent financial statements concealing the fraud / theft of tens of millions of dollars were submitted to banks, bond
underwriters and bond investors along with official statements containing known false information. The
funding never ran out, had no limits set via city ordinance and varied according to how greedy the criminals were in
any given month ( hence the name “variable”). Corrupt IT Managers ran the Information Technology -
Communications Department like a private fiefdom or family-owned business rather than as a publicly funded
municipal division of the City of San Antonio. They bolstered their workplace performances and handed out
“favors” to “friends” across the city. They received accolades, “Employee of the Year” awards and promotions / raises
based on their accomplishments , their tremendous ability to run their Departments on a shoe -string budget and
other super human feats made possible by tens of millions of pilfered dollars. With one phone call tens
of thousands of dollars would be delivered - no questions asked - with no Council review, Finance Department
scrutiny or City Manager approval or taxpayer overview. Tens of thousands of dollars at a time were transferred to IT Manager
Jose Medina and City "books" would show a "credit" on the variable account where future charges would be stopped for a time
period until the "credit" was gone. Medina, his IT co-managers and their “friends” inside and outside of the City / County operated “under the radar” for decades with no accountability or overview by City Council, auditors, regulators, grantors,
taxpayers, etc.
Municipal Integrity intake statements and documents submitted in 2005 prove that public/grant funds set aside
by law for communications / 911 support were illegally used for other than their intended purposes and in many
instances to pay for illegal contracts, “padded invoices”, illegal purchases and similar illegal expenses. Their illegal
“slush fund” created as is described by an internal city document a “means for ITSD (City’s Information Technology
Services Department) to balance its own books internally”. The “slush fund” was used to “tap a bottomless pit of
money” totaling in the “millions of dollars”. The “internal contract billing process is compromised” to the extent that
departments were “billed for an untold amount of goods and services from which their department received no
benefit”. State/Federal grants administered by every city department were billed for goods and services from which
they received no benefit as well due to the fact that this illegal scheme plundered city department telephone
budgets and grant telephone budgets alike. Billing/Contract employees Robert Valdez, Aida Anguiano and Barbara
Moore knew that the funding was not being used for its intended purpose but conspired with Medina, Mitchell,
Valdez , Gonzalez and their “friends” to hide the fraud and submitted fraudulent reports/audits/requests for years.
City of San Antonio TX Municipal Integrity Manager Virginia Quinn collected reams of information and documented a series of interviews with City employees showing the systematic plundering of City, County, State and Federal coffers since 1982. Instead of calling the Texas Rangers or the FBI she suddenly conspired to conceal the criminal activity, closed the investigation in mid-stream, denied access to reports and documentation and published a fraudulent report and other correspondence stating that she found nothing. In a City email of November 2005 to Budget Director Peter Zanoni, IT Director Hugh Miller and CIO Michael Armstrong she again stated that she found no wrongdoing BUT went on to describe how the "variable" had been used since 1982 to secretly access to funds while City Departments were billed for bogus " untold amounts of goods and services" " for the past twenty-five years". Quinn goes on to say that " no laws or written rules were violated in the administration of the telephone variable because there never were any"....a LIE. She ,other officials, Budget Manager Peter Zanoni, IT Director Hugh Miller, CIO Richard Varn, IT Manager Diana Gonzalez, City Attorney Michael Bernard, SAPD Chief William McManus, City Manger Sheryl Sculley, numerous attorneys, at least two Judges, at least two District Attorneys and others conspired to conceal the existence of City Administrative Directive 6.12 and other documentation showing that there are laws, rules, regulations and protocols regulating the use of the "variable" and regulating the expenditure of public funds.
The law, the City Charter, the Local Government Code, etc. state that purchases made without Council approval, open
bidding, etc. are illegal and that payment is unenforceable. The laws state that the contracts are void. The law states
that payments of the illegal bills are the sole responsibility of the criminals illegally spending our tax dollars and not the
responsibility of taxpayers or grantors. The tens of millions of dollars illegally spent over three decades by law is the
responsibility of the criminals who illegally spent our money and their accomplices/co-conspirators who help
hide the crimes. Taxpayers by law are not required to pay for the illegal purchases made with no Council approval,
competitive bidding and public review. This is the law!
Administrative Directive 6.12 was published in 1982
creating a protocol for paying Centrex (207 #s) phone bills and for billing each City Department and/or associated grant for their fair share......NOTHING MORE
page two - AD 6.12 the telephone variable account
This simple diagram provides an overview of the process described in AD 6.12 concerning the use of the internal billing account - the variable . City officials / employees were provided with a protocol to pay the monthly Centrex ( 207 #s) telephone bill and to bill back each department their fair share of the cost depending on the number of phones in each Department. ...NOTHING MORE
This simple diagram shows the ILLEGAL manipulation of the internal telephone billing account - the variable. ( outlined in red at the bottom of the image) Corrupt Officials and employees secretly siphoned tens of millions of dollars from City, County, State and Federal budgets and used the money for whatever they wanted and in many instances to line their own pockets and the bank accounts of friends in violation of the law.