FBI agents Tuesday arrested Robert E. "Bob" Jones and two other former officials of El Paso’s National Center for Employment of the Disabled on charges that include embezzlement and fraud.

The charges against the former officials of the nonprofit NCED – now known as ReadyOne Industries Inc. – are contained in a 37-count indictment handed up Oct. 9 arising from an investigation connected to the El Paso public corruption case. (Download a copy of the indictment below.)

Jones, Patrick James Woods and Ernesto Alonzo "Ernie" Lopez were arrested without incident, according to a statement from the U.S. attorney's office.

Woods has been named in a second indictment that remained sealed Tuesday.

Jones is NCED’s former president and chief executive officer, Lopez is the former plant manager and chief operating officer and Woods is a former member of NCED’s board of directors and Jones' brother-in-law.

In addition to the criminal charges, the government intends to seek the forfeiture of money or assets amounting to $59 million from Jones, $51 million from Lopez and $4 million from Woods.

Jones, Lopez and Woods were brought to their initial appearance before U.S. Magistrate Richard Mesa today wearing chains and well-worn, jailhouse blue jumpsuits along with more than 60 other defendants appearing on drug trafficking, immigrant smuggling and immigration violations.

Mesa ran through the charges, punishments and bonds of the largely Mexican defendants first, leaving Jones, Lopez and Woods for last.

He set a $500,000 bond on Jones and imposed an 11 p.m. to 6 a.m. curfew on him and ordered him not to leave El Paso County and to turn in his passport and any weapons he possesses.

Bonds on Lopez and Woods were set at $150,000 each. All three were expected to post 10 percent of their bonds as security and to be freed today.

Afterward, Jones’ lawyer Joe Spencer said he “absolutely” expects his client will be found not guilty on the charges against him.

“So far, I haven’t seen one shred of evidence or discover of what the government has.”

Woods’ lawyer Jim Darnell said his case “will probably go to trial.”

“I just flat don’t believe Mr. Woods is guilty of anything,” he said.

Lopez’s lawyer, Mary Stillinger, said, “This has been hanging over Ernie’s head for years, so it’s a good thing that he will now be able to defend himself.

“Looking on the bright side, it’s never a good thing to be indicted and arrested, but it’s a positive thing to at last pave a positive forum in which he can defend himself.”

At the center of the charges are the $690 million in federal contracts NCED had from January 2003 until March 2006 under a federal program that set aside contracts for nonprofits that employed the severely disabled.

Under contracts requiring 75 percent of the labor to be performed by severely disabled workers, NCED manufactured chemical warfare suits and uniforms for the military and document storage boxes for government agencies and cardboard products for the U.S. Postal Service.

News articles in 2005 and 2006 that raised questions about whether NCED's workforce was disabled or was made up of highly skilled garment workers led to investigations by NCED's federal oversight agency and the FBI.

From a public standpoint, the public corruption investigation that has seen nine individuals plead guilty to charges and one indicted began with the April 2006 search warrant raid by three federal agencies on NCED’s Eastside headquarters and main plant on Allen Bradley.

The U.S. attorney's office news release, distributed late Tuesday morning, stated that the defendants are accused of "embezzling millions of dollars in government program funds. The arrests stem from two separate federal grand jury indictments returned in El Paso–a thirty-seven count superseding indictment on October 9, 2008, and a five-count indictment on September 25, 2008."

The statement continues: "The charges in the superseding indictment arise from actions on the part of the defendants while they were employed by NCED. The allegations detail schemes to lie to the Committee for Purchase from the Blind and Severely Disabled, falsely claiming NCED was in compliance with the Javits -Wagner-O’Day Act (JWOD), thus entitled to receive no-bid contracts from government agencies, which contracts are set aside for not-for-profit organizations who employ blind or other severely handicapped individuals for not less than 75 percent of the man-hours of direct labor required for the production or provision of the goods or commodities required on the government contract.

"According to the indictment, NCED never employed sufficient numbers of blind or severely disabled workers to qualify for JWOD contracts. The indictment further alleges that the defendants stole or embezzled at least $5,000 from NCED, an organization that received at least $10,000 in federal government program money in each year charged and, without authorization of the NCED Board of Directors, directed the money for the use of themselves or others.

"Finally, the indictment alleges that certain defendants lied to federally insured financial institutions to obtain loans and other forms of credit to further their personal use of NCED funds.

"In the superseding indictment, Jones is charged in all thirty-seven counts including charges of conspiracy to commit theft or embezzlement of government program funds; theft or embezzlement of government program funds; conspiracy to make false statements to a federally insured financial institution to obtain credit; false statements to a federally insured financial institution to obtain credit; conspiracy to commit bank fraud; conspiracy to make false statements and defraud the United States; false statements and defrauding the United States; conspiracy to commit mail and wire fraud; mail fraud; and wire fraud.

"Lopez is charged in seventeen counts including conspiracy to make false statements and defraud the United States; false statements and defrauding the United States; conspiracy to commit mail and wire fraud; mail fraud; and wire fraud.

"Woods is charged in seven counts including conspiracy to commit theft or embezzlement of government program funds; theft or embezzlement of government program funds; conspiracy to make false statements to a federally insured financial institution to obtain credit; false statements to a federally insured financial institution to obtain credit; and conspiracy to commit bank fraud. The superseding indictment also includes a Notice of Forfeiture in which the Government requests that money and/or assets be forfeited from each of the charged defendants in the following amounts: Jones-$58,950,526.50; Lopez-$51,215,526.50; and Woods-$4,235,000.

"In the indictment returned on September 25, 2008, Jones and Woods are charged with one count each of conspiracy to make false statements to a federally insured financial institution to obtain credit, conspiracy to commit mail and wire fraud, false statements to a federally insured financial institution to obtain credit, mail fraud and wire fraud.

"According to the indictment, in 2003, Jones and Woods made false statements to a federally insured financial institution that Jones owed Woods $975,000 as a result of Woods’ construction of Jones’ home in 2001, so that the financial institution would approve and fund a $975,000 mechanic’s lien on Jones’ house, when no money was actually owed to Woods by Jones.

"This ongoing investigation is being conducted by agents of the Federal Bureau of Investigation(FBI); the Defense Criminal Investigative Service-Office of the Inspector General (DCIS-OIG); the General Services Administration-Office of the Inspector General (GSA-OIG); the United States Postal Service-Office of the Inspector General (USPS-OIG); and the Internal Revenue Service-Criminal Investigation Division(IRS-CID).

"The case is being prosecuted for the government by Assistant United States Attorneys Bill Lewis, Steve Spitzer and Debra Kanof."

Related Documents: