Travis County tax employees charged in fraud tied to vehicle titles


Highlights

Audit revealing ‘irregularities that were alarming’ at tax offices sparked investigation.

Authorities say they have seized computer hard drives, cellphones, documents and $72,000 in cash.

Fraud involving Travis County tax office employees resulted in an undisclosed loss of state revenue, state investigators said Monday as they began to disclose findings that resulted in seven arrests.

The scope of the multiagency investigation is still unclear. Most of the theft detailed in each arrest affidavit totaled only in the hundreds of dollars.

At a news conference Monday, officials said they couldn’t divulge many details — including how much money might be unaccounted for or how long the scheme had been going on — because the investigation is still open.

“We will continue to be vigilant and focused and look at other offices,” said Texas Department of Public Safety Regional Commander Freeman Martin. “If there’s others going on, we’ll catch them.”

Officials were first tipped off to a potential problem with the Precinct 1 and Precinct 2 tax offices after the Travis County auditor revealed “irregularities that were alarming” in an audit, Martin said.

The investigation was launched in March 2018 by special agents within the department’s criminal investigations division, who began reviewing videotapes from the offices.

The following people were arrested as a result of the investigation and booked into the Travis County jail:

  • Shell Kenneth Prieto-Reese, 43, charged with engaging in organized crime.
  • Cathy Lynn Wilson, 57, charged with engaging in organized crime.
  • Susie Alvarez Araujo, 43, charged with forgery.
  • Steven Hernandez, 35, charged with forgery.
  • Hipolita Tiquet De Dios, 41, charged with bribery.
  • Cecil Leary, Jr., 61, charged with engaging in organized crime.
  • Eulalio Hernandez, 72, charged with forgery.

Prieto-Reese, Wilson, Araujo and Steven Hernandez are all county tax specialists. Wilson and Prieto-Reese had been with the county since 1995 and 2008, respectively, and the other two were hired in 2015, according to county records.

As of April 2017, Wilson’s salary was listed as $44,098, Prieto-Reese’s and Araujo’s salaries were $37,950 and Hernandezes was $37,024, according to the Texas Tribune Government Salaries Explorer. All four have been placed on administrative leave, county officials said.

Investigators believe Tiquet De Dios and Eulalio Hernandez are “runners,” people who charge individuals to wait in line at tax offices for them, Martin said.

Unlike the private businesses that are authorized by the county to process title transfers and given remote access to the state’s computer system for automobile titles and registrations, runners don’t process title transfers themselves. They also aren’t subject to state-mandated caps on the extra fees that they can charge.

Four search warrants were conducted and resulted in the seizure of computer hard drives, cellphones, many documents and $72,000 in cash, Martin said.

One of the main schemes uncovered through arrest affidavits involved undervaluing vehicles to lower state tax payments. According to an arrest affidavit, investigators saw Tiquet De Dios leave Prieto-Reese $20 under his gas cap, which they believe was a bribe.

Tax specialists are supposed to use the “standard presumptive value” or the value of a vehicle according to authorized car value guidebooks, to calculate the amount of tax someone owes on the purchase.

According to an affidavit, however, investigators found that county employees Araujo, Prieto-Reese and Wilson were incorrectly entering values lower than what the required check showed.

According to an affidavit, a DPS special agent saw Wilson and Prieto-Reese “coordinate to steal cash and coins from each of their respective cash drawers.” Wilson’s husband, Leary, helped transport the money, the affidavit said.

The agent saw Prieto-Reese discreetly hiding money from his cash drawer under the tray in the drawer and in a cabinet to the right of his workstation on seven occasions in March, the affidavit said.

The amount Prieto-Reese stole during that period totaled $900, and the amount Wilson stole during similar dates in March totaled $822, according to the affidavit.

The two also were seen stealing rolls of quarters when no one else was around, the affidavit said. Wilson was seen hiding rolls of quarters in a filing cabinet next to her desk and “methodically taking notes, whiting out and balancing” her cash drawer on a scratch piece of paper at the end of the workday.

The two, as well as Leary, Wilson’s husband, also were seen stealing $49 in coins on April 24, a day when the office was closed to the public.

Investigators reviewed more tape from early May and saw that Prieto-Reese was still committing theft, the affidavit said. Special agents followed him from the Precinct 1 tax office to his house and to Wells Fargo on his lunch break.

An arrest affidavit for Eulalio Hernandez shows that he is accused of giving false information and forging a signature on title paperwork that originated with a truck sale by a woman identified in the report as a Department of Motor Vehicles employee.

In a written statement, Travis County Tax Assessor-Collector Bruce Elfant thanked investigating agencies “for their part in rooting out a problem that has plagued the Motor Vehicle Division of the Travis County tax office.”

Elfant closed the county’s satellite tax offices Friday to allow for the investigation to continue, but the main tax office at 5501 Airport Blvd. is still open. Elfant said in a statement that he will brief the Commissioners Court on Tuesday about contingency plans and next steps.

“The Texas Department of Motor Vehicles tolerates fraud of no kind,” said Whitney Brewster, that agency’s executive director. “The TxDMV takes reports of fraud waste and abuse very seriously. It is critically important to maintain the public’s trust while conducting business on behalf of the state. “

Brewster praised the move by the Legislature last session to approve staff and funding to create a Compliance and Investigations Division, which she said played an “integral role” in investigating this case.



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