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Senator wrestles heirs over nine-figure Texas fortune

By   /   December 17, 2013  /   No Comments

By Jon Cassidy | Watchdog.org

LAREDO, Texas — Out behind the nursing home where Josefina Alexander Gonzalez turned 99 Saturday, there’s a dilapidated green ranch house, its porch cover still held up by rough-hewn tree trunks.

To the southeast, you see a lot of tall brush and honey mesquite, a view that hasn’t changed much since the 1940s, when her parents bought a 1,000-acre ranch outside this isolated border town.

Look in any other direction, and you’ll see new construction on her property, as developers cash in on the last large tract of open space inside of Loop 20 in north Laredo, now worth as much as $150 million.

But if you wanted to ask her what she thought of all the changes, you’d have to get past the guard in her room at Laredo Nursing and Rehabilitation Center, where she has been stashed by Carlos Zaffirini and his wife, state Sen. Judith Zaffirini.

The Zaffirinis are battling Gonzalez’s daughter and grandchildren for control of that fortune. They filed papers last month arguing that Rocio Gonzalez Guerra should forfeit her inheritance.

In two days of hearings last week, a Webb County District Court judge heard the first of dozens of motions that have piled up in three related lawsuits. This account is drawn from the records of those lawsuits.

Rocio Gonzalez Guerra and her two teenage children stand to inherit an intricate cluster of interlocking partnerships, estates and trusts established by Gonzalez and her late and childless sister, Delfina Alexander.

For all those complications, the outlines of the case are plain: Guerra and her children may be the heirs, but the businesses and their funds are controlled by the Zaffirinis and their associates.

That’s why the guard is outside Josefina Gonzalez’s room — so she can’t be served papers in a lawsuit to appoint a guardian for her, a guardian who would wreck the Zaffirinis’ plans.

The Zaffirinis already have control over Delfina Alexander’s estate and a trust she set up in her will, and they claim to have power of attorney over Josefina Gonzalez, although Gonzalez’s bank won’t let them touch her accounts, according to court records, as the papers were signed shortly before she was declared mentally incompetent.

Once she dies, they’ll have unquestioned control over her estate, unless they fare poorly in court.

A typical probate case might take anywhere from six months to a year and a half, yet Delfina Alexander’s estate is still open nearly six years after her death in January 2008, raising the question of what the executors have been doing all this time.

An accounting of assets they were required to file produces an answer: They’ve been taking money from it.

The case was a simple probate — no long-lost cousins or mysterious uncles showing up, just two properties, a couple of bank accounts, a tax refund due and her shares of the family business. Aside from a few gifts, the estate was all going to benefit Guerra, who is named 122 times in her aunt’s will, as well as Guerra’s children.

In this 2012 photo, David Arredondo (left), Sen. Judith Zaffirini (center), and Clarissa Chapa (right of Zaffirini) stand behind Josefina Alexander Gonzalez at the announcement of a scholarship she funded. The three, along with Zaffirini’s husband, Carlos, have control of much of her fortune.

Yet, after settling Alexander’s final medical bills and funeral expenses, Judith Zaffirini and her two co-executors, Clarissa Chapa and David Arredondo, didn’t write many checks. For the next three years, they barely paid anyone but themselves, in the form of hundreds of thousands of dollars in “executor fees” and occasional legal fees.

Finally, in 2011, the executors made 11 bequests totaling $139,999.97.

The executors continued to draw monthly fees of $2,500 apiece throughout 2012. The only other checks the estate wrote that year were to the IRS (to cover a liability related to paying the executors), and another to an accountant, who was paid $4,995 for tallying the executors’ fees.

In all, Zaffirini and her cohorts have managed to squeeze $422,000 out of an estate that only had $107,169 in cash and receivables at the time of Alexander’s death, according to court records.

Guerra’s attorneys argue those fees were fraudulent, illegal and grounds for the court to replace the Zaffirini crew, because state law limits executor fees to 5 percent.

In court papers, the Zaffirinis argue that Guerra has forfeited her inheritance by suing, which they claim violates a clause in Delfina Alexander’s will, drawn up by Carlos Zaffirini a few months before her death.

To understand why the Zaffirinis have kept Alexander’s estate open so long, you have to go back to 2006, when Rocio Guerra and her husband Vidal had a falling out with Josefina and Delfina. Since 2002, Vidal had been running a cluster of family-owned business partnerships dedicated to developing the 1,000-acre ranch.

A family trust, meant to benefit Rocio and her children, held a 90 percent stake in the partnerships, with the rest held by the two sisters. Rocio, at least, thought of herself as the owner of the businesses, since the trust was irrevocable.

In summer of 2006, Vidal was accused of mismanaging the businesses. He had used business assets as collateral on a home loan, he paid himself unauthorized six-figure commissions on some land sales, and the Zaffirinis say he tried to trick the sisters into signing away control of the businesses.

Whichever was the cause, Vidal resigned, and he and Rocio moved their family to San Antonio.

The Zaffirinis swooped in, according to the Guerras’ lawyers. In August 2006 and during the next several months, Josefina and Delfina signed a series of documents the Zaffirinis put in front of them — a new will, powers of attorney, amendments to the trust and the business partnerships.

POWER PLAY: State Sen. Judith Zaffirini has filed papers arguing that the heir whose money she controls should forfeit an inheritance.

Judith Zaffirini connected with Josefina in a way Rocio never did, according to depositions by Vidal and Rocio Guerra from 2007.

Vidal Guerra said his mother-in-law treated Rocio harshly.

“Her mother at times will call her, will tell her in the morning, ‘You’re fat, you’re ugly, nobody is going to love you, nobody is going to marry you,’” he said. “That went on, I don’t know, weeks, months. She was even told by her mother that she was adopted and she was picked up out at a ranch, and she was the daughter of a maid. She also compared her to the daughters of her friends and that they had diplomas and they were teachers and she was nothing.”

“She told me many times I wasn’t her daughter,” Rocio Guerra said. “She expected of me something else, to be a… a… a lawyer like Judy (Zaffirini), like, and I’m not that. I’m just a simple person.”

“Judy” Zaffirini was no stranger. Her grandmother and Josefina’s grandmother were sisters. And she was everything Rocio wasn’t — polished, well-educated and well-spoken.

Rocio, on the other hand, suffers from clinical depression and is prone to outbursts, like telling elderly women they should go ahead and die. At the time of the split, they were quarreling on nearly every visit.

It’s not hard to see why Josefina warmed to the Zaffirinis, but if she knew the things Carlos Zaffirini was saying about her grandchildren, it might have been another story.

Carlos Zaffirini represented Josefina in a lawsuit that Vidal and Rocio Guerra filed in December 2006, seeking to get some money out of the family trust. As sad as it is to sue one’s parents, the Guerras were facing hundreds of thousands of dollars in income tax liability for unpaid distributions from the trust, according to court records.

Zaffirini didn’t mount some narrow, legalistic defense. He viciously attacked the Guerras and their children, even though he was godfather to one of them.

During depositions, Carlos Zaffirini asked Vidal Guerra if he was gay, if he had ever been caught having an affair with another man and if he molested his children.

The questions had no conceivable bearing on a case about a trust fund, the Guerras’ attorney objected. Zaffirini was just bullying them.

Zaffirini asked Rocio Guerra if her son paraded around the house naked in front of others and if she allowed her daughter to play with her vibrators.

Her daughter was 9 years old at the time; her son, 10.

The Guerras lost their lawsuit on a major procedural misunderstanding, but the case spills over into the new litigation in a couple of ways.

In news stories from July reporting that two lawsuits had been filed against Judith Zaffirini, Carlos Zaffirini said the Guerras had been trying for years to “break the trust” in order to “get the money away from the trustees to squander it and do what they please.”

He said the sisters wanted to provide Rocio Guerra with “a comfortable life but not an extravagant one,” but those are terms from the will Zaffirini drew up for Delfina. They’re not in the papers for the family trust, which was set up in 1997.

In any case, the Zaffirinis don’t oversee the family trust; they’re in charge of the real estate businesses that form the assets of the trusts.

APPEARANCES: Delfina and Josefina Alexander’s old ranch is busy with new construction these days, even as Sen. Judith Zaffirini fights with the ranch’s heir for control of the property.

The question isn’t about breaking trusts — it’s about funding them. If the Zaffirnis don’t transfer any cash from the businesses to the trusts, the trusts have no money to distribute to Rocio and her children.

For example, while Delfina Alexander’s share of the family real estate business was transferred to a trust, her lawyers say “there have been no distributions from the Decedent’s Estate to the Exempt Trust, there is no known bank account in the name of the Exempt Trust, and there have been no mandatory accountings.”

In other words, show me the money.

The Alexander sisters selected Adolph E. Puig to serve as the lone trustee of the Family Trust, which held the bulk of their fortune. He wanted to distribute the profits to Rocio and her children, according to court records, but he resigned after realizing, he said, that the Zaffirinis “were going to continue to dictate all the terms of the distributions and were not willing to relinquish or allow” him any input.

The court eventually appointed Raymond DeLeon, a friend of the Guerras, to replace Puig, and he has now filed a lawsuit against the Zaffirini group, too.

Instead of transferring profits to the trust funds, where they can be distributed to the heirs, the Zaffirinis have been transferring hundreds of thousands of dollars to Delfina’s estate, which they then collect in fees, according to DeLeon.

DeLeon’s most extraordinary accusation, though, is that the Zaffirinis forged a document in order to retain control of the businesses, and his account is supported by something Carlos Zaffirini said years ago.

According to DeLeon, after he was appointed trustee, he asked for copies of all the partnership agreements for the family businesses from the Zaffirinis and was given them. As of September 2012, the Zaffirinis said they had given him all the paperwork.

DeLeon realized that according to the papers he had, he could strip the Zaffirinis of their control of the businesses, since the trust had a 90 percent stake, and only needed a 75 percent share to reorganize.

So he filed some paperwork with the secretary of state to strip their authority.

Two days later, he went to the company offices, bringing along a locksmith and a computer guy, and tried to fire the manager and change the locks, according to the Zaffirinis. The police were called, according to a filing by the Zaffirinis, and the “law office of Zaffirini and Castillo intervened and made DeLeon and his attorney aware that a 2007 Amendment had been made to the Trust that required 95 (percent) vote to change the General Partner instead of 75 (percent) as previously stated.”

DeLeon says the convenient document is a forgery.

While he now says the trust was amended in 2007, just a few years ago, Carlos Zaffirini was saying it was impossible to amend the trust.

While he was deposing Vidal Guerra, Zaffirini pulled out a copy of the trust agreement to insist it had never been amended.

“That document on page 1 of the trust says it’s an irrevocable trust,” Zaffirini asked, according to a transcript.

“Yes,” Vidal said.

“Is that correct?”

“Yes.”

“Do you know what ‘irrevocable’ means?”

“My understanding is it cannot be changed.”

“Correct,” Zaffirini says. “And so that document cannot be amended, can it?”

“No.”

Contact Jon Cassidy at jon@watchdog.org or @jpcassidy000.

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Jon Cassidy is the Texas bureau chief for Watchdog.org. He also writes a weekly column on politics for The American Spectator. He was formerly a reporter and editor for The Orange County Register in California and a reporter at The Hill in Washington, D.C. His work has been published by Fox News, Reason, The Federalist, Human Events, and other publications. He is a 2014 Robert Novak Journalism Fellow and a graduate of the University of Southern California. He and his wife Michelle live just outside Houston with their two children.