- Walter and Eduardo Pierluisi, Puerto Rico Governor Pedro Pierluisi’s cousins, plead guilty to stealing $3.7 million from HUD federal assistance programs.
- The brothers used American Management & Administration Corporation positions to create a fraudulent scheme, evading conflict of interest prohibitions.
- Both defendants face up to 10 years in prison, with sentencing scheduled for July 11 at 9:30 a.m. (13:30 GMT).
SAN JUAN – Brothers Walter and Eduardo Pierluisi, cousins of Puerto Rico Gov. Pedro Pierluisi, pleaded guilty Thursday to stealing $3.7 million in federal funds, which they could each serve up to 10 years in prison.
Walter Pierluisi pleaded guilty before Judge Camille Revé Vivé at the Federal Court in Hato Rey (San Juan) for stealing funds from the U.S. Department of Housing and Urban Development (HUD) to administer public housing under his company, American Management & Administration Corporation.
According to court documents, the defendants acknowledged stealing $3.7 million from HUD federal assistance programs from 2014 to August 2022 for their use and that of others, as detailed in a press release by the U.S. Attorney’s Office in Puerto Rico.
Given the fiduciary responsibility to administer millions of dollars in HUD funds and manage over 5,000 housing units in 12 municipalities in Puerto Rico, American Management & Administration Corporation was prohibited from dealing with any other company affiliated with it.
Walter Pierluisi was president, and Eduardo oversaw repairs and maintenance work at the public housing units when they carried out the fraud scheme.
Both admitted in their indictments that despite fiduciary duties, the brothers used their executive positions in the company to design a fraudulent scheme to evade the prohibition.
As part of the scheme, they illegally transferred funds from federal assistance programs to corporations and subcontractors they controlled to enrich themselves.
The defendants also admitted that they submitted false certifications to HUD, ensuring no conflict of interest existed between their firm and the companies contracted to provide services to operate, violating federal law.
The further indictment details that Walter contracted with FiveStar Pest Control, Inc. (FiveStar) and CoolBreeze Air Conditioning, Inc. (CoolBreeze) to provide services to the public housing facilities his company managed.
He then produced multiple payments to FiveStar and CoolBreeze to be passed through to Docu-Wharehouse, Pier Property, and XY Enterprises, which he subcontracted, controlled, and managed.
Under this scheme, Walter illegally obtained approximately $2,035,498 in HUD funds for operating expenses at the public housing projects.
Eduardo, on the other hand, admitted that he obtained $363,202 in HUD funds as operating expenses for the public housing projects that the company managed.
Both will be sentenced on July 11 at 9:30 a.m. (13:30 GMT).
On October 20, the FBI, the federal Housing Department, and the U.S. Inspector General’s Office raided the headquarters of American Management and the Pierluisi Isern Law Office in San Juan, both owned by Walter Pierluisi.
Authorities also raided Eduardo’s residence.
A month after the raid, the Public Housing Administration canceled the contracts of American Management, which since 1995 had been managing public housing in 34 municipalities.