By Jon Cassidy | Watchdog.org
LAREDO, Texas – In court testimony last week, state Sen. Judith Zaffirini rejected the idea that she has any selfish financial motives for wanting to administer a $150-million estate, or in contesting lawsuit after lawsuit to keep control.
Everything she has done in this affair, she said, has been to protect her second cousin once removed, Rocio Gonzalez Guerra, from her husband Vidal Guerra, whom she portrayed as a homosexual embezzler whose two-decade marriage is really a con to get the family fortune.
The testimony was part of a two-day hearing on some of the initial motions filed in three related lawsuits over control of a 1,000-acre property, once a ranch, that is now “where the best growth in the city is taking place,” according to Alfonso Cuellar, a local accountant who does the taxes for the family business.
Guerra and her two teenage children stand to inherit almost all of the property, which is held in an intricate cluster of interlocking partnerships, estates and trusts, which were established by Guerra’s aunt, Delfina Alexander, and her mother, Josefina Alexander Gonzalez.
Most of those entities are controlled by Zaffirini, her husband, attorney Carlos Zaffirini, and their associates.
The Zaffirinis took control of the Alexander sisters’ affairs by getting them to sign 17 different documents — powers of attorney, new wills, etc. — late in life, “most of them after Delfina had a stroke,” according to Thomas Bassler, an attorney for Guerra.
Zaffirini, on the other hand, testified about her family’s close ties to the Alexander sisters, about children’s birthday parties attended and about all the godfather and godmother relations between the families.
But Zaffirini had little to support her accusation of “embezzler,” other than a six-year-old deposition of Vidal Guerra, in which he admits to misconduct while running the Alexander sisters’ real estate business. He had listed business assets as collateral on a home loan and paid himself unauthorized commissions on some land sales.
Zaffirini’s support for the accusation of homosexuality was an allegation of 20-year-old rumors.
“People told us he was only interested in (Rocio) for the money, that he would seek to gain control of the companies,” Zaffirini said. “They told us he could not possibly be interested in her because he was gay. They gave us the names of his boyfriends,” which Zaffirini did not share with the court.
Those alleged rumors notwithstanding, the Guerras have two teenage children together and remain married.
In 2006, when Vidal’s misdeeds were discovered, he resigned and moved his family to San Antonio.
“It wasn’t until 2006, when Vidal took Rocio away, that I stepped in to fill the role a daughter should,” Zaffirini said.
In Zaffirini’s telling, Rocio Guerra needs to be protected from her husband because she is weak to the point of disability, so weak that she isn’t capable of filing a lawsuit, or even reading an email.
Yet she had no good answer for a question that Guerra’s attorney Jeffrey Knebel kept returning to: “So one of the ways you’re trying to protect her is by filing to disinherit her?”
The Zaffirinis have filed papers arguing that Guerra — and her two children, one of them being the Zaffirinis’ own goddaughter — should forfeit her inheritance from her Aunt Delfina because Guerra has sued them.
It’s an unusual position: Zaffirini and her associates are managing an estate and several trusts set up for the benefit of Guerra and her children, they owe a fiduciary duty to Guerra and her children, yet they are openly trying to cut off Guerra’s claims to the property.
Zaffirini’s answer was that Delfina’s bequest was just 5 percent of the total estate Guerra stands to inherit — she hasn’t challenged the other 95 percent.
A probate attorney named Chris Heinrichs, serving as an expert witness for the Zaffirinis, told the court that the $420,000 in executor fees that Zaffirini and two associates had charged to administer Delfina’s $1.7 million estate were just a fraction of what a professional trustee would have charged.
Texas law limits executor fees to 5 percent, but Heinrichs was basing his calculation on the total value of the land the Zaffirini group is managing through several related real estate businesses.
Serving as a trustee is a thankless job, one that’s liable to get you sued, Heinrichs said. If one of his clients asked him whether to accept a position as a trustee, his advice would be simple: “Run.”
The Zaffirinis, though, haven’t run. Instead, they had nearly a dozen lawyers in a Laredo courtroom last week arguing for their right to stay.
They may even be forging documents to maintain that control, according to Bassler.
A trustee friendly to the Guerras has already accused Carlos Zaffirini in court papers of forging a document to maintain control of the businesses. At a hearing Thursday, Bassler accused the Zaffirinis’ side of introducing an altered agreement into evidence.
Bassler produced a signed partnership document identical nearly identical to one the Zaffirinis submitted last month: the one difference was a paragraph in the Zaffirinis’ version absolving them of all liability for fraud, intentional misconduct and gross negligence.
During two days of testimony, it became clear why that might be a concern for the Zaffirinis.
They haven’t been adhering closely either to the partnership agreements or to Delfina Alexander’s will, which they’re executing. For example, a charitable foundation that was supposed to get hundreds of thousands of dollars through Alexander’s will is still waiting, six years after death.
The real issue, though, is the partnerships haven’t been paying profit distributions to the partners.
The Zaffirini crew has paid itself hundreds of thousands of dollars, while maintaining that there are no profits to distribute to Guerra.
Zaffirini slipped up during her testimony, though, saying that the businesses had been profitable in 2012. Bassler asked her why, then, it had reported a loss of $668,000 for the year.
“That’s on paper,” Zaffirini said.
Guerra is entitled to at least 90 percent of the profit distributions. Her attorneys say the Zaffirini group has been cooking the books, misclassifying profit distributions to avoid paying Guerra her share.
After Guerra sued for her share, the business went back and amended three years of tax returns, turning the distributions it had reported into “guaranteed payments,” to which Guerra had no claim.
That contradicted the company’s own records, testified Cuellar, the accountant hired by the Zaffirinis.
“The internal records indicate they were distributions,” he testified. “Some of the checks were marked ‘distributions.’”
Also, “in QuickBooks, some of the checks were classified as distributions,” he said.
Knebel took another approach to demonstrating that Zaffirini isn’t always forthcoming in her financial reporting, pulling out copies of the personal financial statements she files every year as a senator and asking her to show where she’s reported the $140,000 in executor fees she’s made off the Alexander estate.
Just like the $30,000 worth of free Longhorns’ football tickets she gets every year, the executor fees aren’t listed on the forms.
Judge Jesus “Chuy” Garza didn’t see any relevance. The Texas Ethics Commission might, though.
Contact Jon Cassidy at firstname.lastname@example.org or @jpcassidy000.