Texas Congressman Henry Cuellar indicted on charges of bribery, money laundering

WASHINGTON — U.S. Rep. Henry Cuellar, a powerful South Texas Democrat, was indicted with his wife Imelda on Friday on charges of accepting almost $600,000 in bribes from Azerbaijan and a Mexican bank.

Cuellar allegedly accepted the payments from Azerbaijan’s state-run oil and gas company after they had been laundered through fake consulting contracts to shell companies owned by Imelda Cuellar, according to the indictment. In exchange, the Laredo congressman allegedly pushed U.S. policy in favor of Azerbaijan, an oil-rich former Soviet country that borders Iran and Russia on the Caspian sea. That includes adding language to defense spending legislation to prioritize ties in the countries in the region, including with Azerbaijan, and working to kill legislation prioritized by members who supported Armenian interests.

Cuellar also allegedly took money from a retail Mexican bank and influenced members of the Executive Branch to work around an anti-money laundering policy that threatened the bank’s interests, according to the indictment. Cuellar also allegedly coordinated with a subsidiary of the bank on legislation that would have been beneficial to the payday lending industry — a form of lending usually targeting low income borrowers with few alternatives that includes extremely high interest rates.

The indictment said Cuellar and his wife used the money to finance credit card payments, taxes, car payments, dining and shopping, including $12,000 on a custom gown. It also said one of the Cuellars’ adult children assisted in the creation of the sham shell companies used to launder funds. The Cuellars have two adult children: Christy and Catie.

The charges include bribery, money laundering, working on behalf of a foreign government and conspiracy. The indictment alleges Cuellar recruited family, friends and his former campaign manager to facilitate the payments. If convicted and given the maximum sentence, Cuellar could face decades in prison.

Cuellar quickly asserted his innocence in a statement Friday minutes after NBC News reported federal prosecutors’ plans for an indictment. The Cuellars appeared in a federal courthouse in Houston on Friday over the charges.

Cuellar said his actions were “consistent with the actions of many of my colleagues and in the interest of the American people.”

“I want to be clear that both my wife and I are innocent of these allegations,” Cuellar said. “Before I took any action, I proactively sought legal advice from the House Ethics Committee, who gave me more than one written opinion, along with an additional opinion from a national law firm.”

A spokesperson for the House Ethics Committee declined to comment on Friday.

FBI agents raided Cuellar’s Laredo home and office in 2022 — just weeks before his competitive primary election. His lawyer at the time asserted he was not the target of the investigation.

He ended up winning in the 2022 primary against Jessica Cisneros, a Laredo-based immigration attorney by 0.6 percentage points, and sailing to victory in the general election virtually unscathed by the police raid.

Cuellar is up for reelection again this year. He was unopposed in the primary. Two Republican challengers will face off in a May 28 runoff for the chance to challenge Cuellar in the general:Jay Furman and Lazaro Garza.

Cuellar said in his Friday statement that he will still run for reelection in November.

Ties to Azerbaijan

Cuellar is a member of the Congressional Azerbaijan Caucus and has been a fervent advocate for the country’s interests in Congress.

Cuellar traveled to Turkey and Azerbaijan on a $25,000 trip with his wife Imelda in 2013, paid for by the Turquoise Council of Americans and Eurasians. Shortly after, a Cuellar staffer went on another trip to Azerbaijan with several members, including Rep. Sheila Jackson Lee, D-Houston, that was also facilitated by the group.

After his 2013 trip, agents working on behalf of the Azerbaijani government recruited Cuellar to work with them on U.S. policy helping their country, according to the indictment.

The group that hosted Cuellar’s trip is based in Texas and was led by Kemal Oksuz, who pleaded guilty in 2018 to partaking in the coverup of the Azerbaijani’s government’s role financing the 2013 congressional trip that included Jackson Lee. Oksuz admitted to lying in disclosures to the House Ethics Committee on the source of funding for the trip, which came from the State Oil Company of the Azerbaijan Republic.

After Oksuz’s guilty plea, payments from SOCAR to the Cuellar’s paused, according to the indictment.

Oksuz also worked with Cuellar to establish a program for Texas A&M International University students to study energy issues in Baku, the capital of Azerbaijan. ExxonMobil and the Azerbaijani government were also involved in the creation of the program.

Azerbaijan is known for lavish spending on foreign lawmakers to advance its interests. The country has reportedly spent billions on treating European lawmakers in a practice derisively known as “caviar diplomacy.” The country spends about half a million dollars a year on lobbying in Washington, according to OpenSecrets.

Azerbaijan has had interest in influencing Western governments due to tense relations with its neighbors. The country had been engaged in a long-running border dispute with Armenia over Nagorno-Karabakh, an enclave made up of largely ethnic Armenians, until Azerbaijan forcibly retook control of the territory last year. The dispute had been a significant roadblock to peace in the region since the fall of the Soviet Union, with European, American and Russian governments struggling with the issues for decades.

Cuellar coordinated with Azerbaijani diplomats to eliminate legislation that would finance land mine clearing in Nagorno-Karabakh in 2017, according to the indictment, citing text messages between Cuellar and the diplomat. He also wrote to a U.S. official in 2016 accusing Armenia of being a “proxy” of Russia, urging the U.S. to push for the withdrawal of pro-Armenian forces in Nagorno-Karabakh.

The eventual take over of the region by Azerbaijan led to the rapid evacuation of thousands of ethnic Armenians over fears the Azerbaijani government would commit ethnic cleansing.

U.S. Secretary of State Antony Blinken said last year that the administration was “deeply concerned” with Azerbaijan’s aggression in the region and that “the use of force to resolve disputes is unacceptable and runs counter to efforts to create conditions for a just and dignified peace.”

Cuellar also allegedly included language to an annual defense spending bill in 2014 directing the secretaries of State and Defense to work on a “strategic framework for United States security force assistance and cooperation in the European and Eurasian regions,” including Azerbaijan. He also coordinated with an Azerbaijani diplomat on a meeting with the Defense Department to focus more U.S. defense policy on the region, according to the indictment.

“Thank you Congressman! This is good indeed,” the diplomat said in an email to Cuellar cited in the indictment.

Helping the bank

Cuellar and his wife are also accused of accepting bribes in exchange for advancing policies that would help a Mexican commercial bank’s business interests. Using a Mexican government official as an intermediary, the Cuellars allegedly received over $200,000 in bribes from the bank, according to the indictment.

Cuellar allegedly wrote to officials at the Treasury Department to set up mechanisms to help cross-border transactions crucial to the bank’s business. After federal law went into effect designed at stopping money laundering, many U.S. financial institutions pulled back partnerships with Mexican banks due to the high risk of illicit transactions.

Like with the Azerbaijani case, the arrangement involved fake consulting fees paid to a shell company operated by Imelda Cuellar, the indictment said. The Cuellars allegedly negotiated the agreement with the bank around the same time they were setting up their transactions with the Azerbaijanis.

At one point, the Cuellars used Henry Cuellar’s campaign manager and former chief of staff as an intermediary to disguise the payments, according to the indictment. The indictment does not identify the campaign manager by name, but notes the person was a resident of Buda, Texas.

Cuellar also allegedly tipped off the vice chairman of the Mexican bank of a bill that would pause the Consumer Financial Protection Bureau from making new regulations on the payday lending industry for two years. Cuellar then coordinated with a U.S.-based subsidiary of the Mexican bank on language in defense of the bill. The subsidiary was a payday lending company.

A powerful Democrat

Cuellar and his family have been political fixtures in Laredo and Webb County for decades, dating back to 1987, when Cuellar began a 14-year stint representing the area in the Texas House.

He was elected to Congress in 2004, a few years before his brother, Martin Cuellar, ousted the incumbent Webb County sheriff — a position he still holds today.Cuellar’s sister, Rosie Cuellar, previously served as Webb County tax assessor-collector. She is seeking the Democratic nomination for an open Texas House seat that covers part of Laredo and Webb County, a contest that will be decided later this month in a May 28 primary runoff.

Cuellar and his wife have been married for 32 years, he said in his statement.

“On top of being an amazing wife and mother, she’s an accomplished businesswoman with two degrees,” he said in his Friday statement. “The allegation that she is anything but qualified and hard working is both wrong and offensive. The allegations have been difficult on my family. But, with your prayers, we will overcome.”

Today, Cuellar is the fourth-longest serving Democrat in the Texas delegation and is an established fixture in the House Democratic Caucus. He is known for occasionally crossing the aisle to vote with Republicans, especially on border security. He is the only Democrat in the House who opposes abortion rights.

He is also a major proponent of the oil and gas industry, which is responsible for a large part of his district’s economy. Azerbaijan is a major oil and gas producer.

Still, he is well respected within the Democratic Caucus for his prolific fundraising and reliability on major votes that count. Democratic leadership under Speaker Nancy Pelosi supported Cuellar when Cisneros challenged him in the 2020 and 2022 primaries. Cuellar won in both primaries and the 2022 general election, despite heavy investment from Republicans to flip South Texas. He beat his 2022 Republican opponent, Cassy Garcia, by over 13 points.

After Cuellar’s 2022 win, Republicans have considered the district less competitive and are investing more heavily in the nearby Rio Grande Valley-based 15th and 34th districts.

The Republicans running to unseat him the November were quick to pounce on the Friday indictment.

Furman issued a video statement, blasting Cuellar as being part of an establishment that is “selling us to other nations.”

“They’re trading us for their deep pockets and their forever policies that are against the values of South Texas,” Furman said. “Exciting that maybe one of them will get their due.”

In a Facebook post on Friday, Garza said: “There is no place for corruption in Congress!”

The National Republican Congressional Committee also called on Cuellar to resign.

“If his colleagues truly believe in putting ‘people over politics,’ they will call on him to resign. If not – they are hypocrites whose statements about public service aren’t worth the paper they’re written on,” NRCC spokesperson Delanie Bomar said in a statement.

Some Texas Democrats have already done so for another longtime lawmaker who was recently indicted. After the Justice Department charged Sen. Bob Menendez, D-New Jersey, on several counts of corruption and bribery related to his ties to Egypt, a handful of Texas members of the Congressional Hispanic Caucus called for his resignation.

House Minority Leader Hakeem Jeffries said in a statement that Cuellar deserved a fair trial and the “presumption of innocence throughout the legal process.” Jeffries said Cuellar would forfeit his position atop the Appropriations subcommittee on Homeland Security. House Democratic rules require a committee chair to step down if they are indicted on a crime with a possible prison sentence of more than two years.