Rep. Solomon Ortiz (D-Texas) has requested millions of dollars in earmarks that may have benefited a security firm he founded.
Ortiz, a member of the House Transportation and Infrastructure Committee, helped direct earmarks and federal grants worth tens of millions of dollars to the Port of Corpus Christi, the nation’s fifth largest port. Since 1997, the port – which is in Ortiz’s district -- has hired Amtex Global Services, Ortiz’s former firm, on contracts that have ranged from $900,0000 to more than $1 million annually. The company continues to pay Ortiz for the sale of his stake in it.
Ortiz sold his 55 percent ownership in the firm in late 2003 after media reports raised conflict-of-interest concerns and accusations of political retaliation against critics of Amtex Security. He noted the sale on his congressional financial disclosure forms for that year.
Yet financial disclosure reports filed by Ortiz between 2005 and 2010 show a $250,000 to $500,000 holding labeled Amtex Security, as well as $15,000 to $50,000 worth of annual “interest/capital gains.”
Ortiz’s spokesman said the congressman didn’t get a lump payment for the sale, and instead was given a note and has been receiving payments in the range of $15,000 to $50,000 each year that constitute principal and interest.
Ortiz’s spokesman said his boss would amend disclosure statements to reflect that the income received was “interest” not “interest/capital gains,” but he argued there is nothing wrong with the fact that Ortiz continues to get payments from Amtex since he is no longer involved with the firm’s operations.
“Congressman Ortiz secures community funding for projects that create jobs and economic opportunities in South Texas,” spokesman Jose Borjon said in a written statement. “The requests have no relation to his former security firm. He has had no involvement in the operation of the firm since the sale of the company in 2003.”
Ethics watchdogs, however, said Ortiz still has a financial interest in the earmarks because the federal funds help provide work and a stream of income for Amtex.
“Whether or not they can afford to make those payments to him would rest on their continued viability…then he does have a financial interest [in the earmarks],” said Meredith McGehee, policy director of the Campaign Legal Center.
Ortiz signed a series of pledges for each of the earmarks certifying that he had no financial interest in them. In 2007, House leaders required that lawmakers sign the pledges because of earmark ethics scandals on both sides of the aisle. Ethics watchdogs say violating the written pledge is not illegal because it pertains to a House rule, not a federal law.
Craig Holman of Public Citizen said Ortiz’s response -- that he sold the company -- appears to contradict the capital gains notation on his financial disclosure forms and requires further clarification to avoid conflict-of-interest accusations.
“Both answers cannot be true,” Holman said. “The fact that an accountant for Ortiz is reporting a steady stream of income from Amtex Security strongly suggests that Rep. Ortiz may be violating his pledge to avoid personally benefiting from earmarks.”
McGehee also criticized Ortiz for his disclosure forms, saying he hasn’t fully explained the sale of the firm and should produce the legal documents involved in the sale.
“I don’t understand why he was unable to produce the papers…where is the legal paperwork about the status of the sale?” she asked.
The complaints come as Ortiz faces a difficult re-election race in a challenging cycle for Democrats across the country. Ortiz has carried his district easily in his last three campaigns, but analysts rate the 14-term incumbent’s race against Republican Blake Farenthold as competitive. RealClearPolitics categorizes he race as leaning Democrat. Other earmarks have been an issue in the race, but Ortiz’s ties to Amtex have not come up in the campaign.
Ortiz reported the income from Amtex in different ways from year to year on his campaign disclosure forms.
In 2006, he sent a signed letter to the clerk of the House specifically directing her to amend his disclosure documents for 2005 to acknowledge the type of income as interest and capital gains. The statement for that time period had previously indicated $15,000 to $50,000 in “monthly payments.”
“For Amtex Security, Inc. Note – please put an X in column F for Year-End Value of Asset; and under Type of Income, please put an X in the interest column and an X in the capital gains column,” Ortiz wrote. “Thanks for recording these changes on my statement as soon as possible.”
The previous year, Ortiz reported receiving the same amount from Amtex in “quarterly payments” and the year before that he reported receiving $2,000 to $5,000 in income but did not indicate its type.
According to Ortiz’s earmark request letters, since the earmark pledge was instituted, earmarks Ortiz secured or won that have gone to entities that have hired or have contracts with Amtex include:
• A $1.148 million earmark for Corpus Christi’s Ship Channel Improvement Project for fiscal year 2009.
• A $750,000 earmark for the Port Aransas Ferry Boat Expansion in fiscal year 2008 and a $475,000 earmark in fiscal year 2009.
• A $47,000 earmark for Port Aransas police communications equipment in fiscal year 2008. The recipient is the City of Port Aransas.
Steve Ellis of Taxpayers for Common Sense said that any lawmaker in Ortiz’s position would most likely push for port-deepening projects because similar projects are occurring up and down the eastern seaboard and the gulf coast. The problem with continuing a financial relationship with Amtex while requesting the funds, Ellis said, is that he can be viewed as unduly influencing the port and other entities to continue to hire Amtex.
“Something like this can be used to leverage the port commission to contract with the ‘right’ company to provide their security,” he said.
In the last 15 years, Ortiz had taken credit for bringing more than $50 million in federal funds to the port for improvements and channel dredging. He also helped secure a $1.5 million grant that was applied to the construction of a combined conference center and cruise ship terminal, which the port commission later named after him.
Amtex has more than 200 armed security officers trained in improvised explosive device detection, anti-terrorism strategies, and the Maritime Security Act, according to the company’s website. Its work for the Port of Corpus Christi increased after the Sept. 11, 2001 terrorist attacks, in part because of federal funds.
The company has expanded to provide food and a variety of other services to the U.S. Army and other government agencies, including safety and emergency planning, storage and warehouse facilities.
Amtex has been providing security for the Port Aransas ferry since June 2005. In November 2005, Ortiz announced that the City of Port Aransas would receive a $320,000 earmark for a 28-car ferry and another $500,000 earmark to fund an additional ferryboat, as well as a $1.2 million earmark for the construction of a wetlands education center in the Port of Aransas, according to Ortiz’s press releases.
In June 2006, Ortiz announced another $750,000 earmark for the expansion of the ferry, and in 2007 he secured an additional $750,000, as well as $47,000 to purchase police communications equipment. He announced yet another grant in 2008 for more than $643,000 for the design and construction of a new ferryboat, and another $475,000 earmark for the ferry in 2009. He requested an additional $4.2 million for the ferry in the fiscal 2010 transportation appropriations bill.
In 1984, one year after entering Congress, Ortiz formed Amtex Security, Inc. with Florencio “Lencho” Rendon, his decades-long political strategist, confidante and chief of staff, according to articles of incorporation filed with the state. Ortiz served as Amtex’s president and Rendon as the vice president. Rendon’s brother, Miguel Rendon, served as the company’s manager in Corpus Christi, Texas. Lencho Rendon said he sold his stake in the firm at the same time Ortiz did and retired as Ortiz’s chief of staff in 2006.
As a former county sheriff, Ortiz has said that forming Amtex Security was a natural extension of his law enforcement background. He also acknowledged being compensated through dividends, not salary.
Between 2000 and 2003, Ortiz owned a $50,000 to $100,000 stake in Amtex, according to his financial disclosure records, and made between $15,000 to $50,000 in dividends each year.
Ortiz repeatedly has come under local scrutiny because of his relationship with the security firm.
The year before he sold the company Ortiz asked the House ethics committee for a ruling in writing about the appearance of his name on official documents related to Amtex Security. He said the ethics committee chairman back then told him that the relationship was okay because he was not involved in the daily operations and was not identifying himself as a member of Congress to promote the company.
But the media scrutiny continued about Amtex’s contracts with the Port of Corpus Christi and other district entities.
For instance, in November 2002, the port commission created its own police force and cut back on its reliance on Amtex Security, limiting the contract to more routine gate security and other tasks. That same year, the port commission considered cutting hours for security guards by 22 percent, which would result in a $300,000 reduction in payments to Amtex, according to the Corpus Christi Caller-Times.
Port Chairman Ruben Bonilla publicly expressed concern that the port commission was being pressured by Amtex’s owners to reverse the cuts, according to the Corpus Christi Caller-Times. At the time, Ortiz said he didn’t contact any commissioners regarding the cuts, but also said he supported Miguel Rendon’s decision to send a letter laden with Sept. 11 references to the port’s staff and commissioners to oppose the cuts.
Bonilla later repeatedly accused Lencho Rendon of working with other county officials, including Ortiz’s brother Oscar, a Nueces County commissioner, to try to oust him from the chairmanship, the Corpus Christi Caller-Times reported in 2003.
The Amtex contract came under additional scrutiny in 1998 when port commissioners decided to renew its contract even though Amtex was underbid by $23,000.
Ortiz ended up selling the company to former Corpus Christi, Texas Port Commissioner Kenneth Berry and another partner. Berry later sold his interest in the company in April 2004, less than six months after forming the partnership to purchase it, according to reports in the Corpus Christi Caller-Times.