Grand jury: Cardenas dealerships failed to report big cash sales

Cardenas AUTOPLEX Inc. and Cardenas Enterprises Inc. are charged with failing to report cash transactions from three auto sales at their Harlingen dealerships.

Lawyers representing the auto dealers entered a not guilty plea in federal court Thursday on each of three counts rendered by a federal grand jury.

The Cardenas operations are accused of violating government regulations aimed at combating money laundering and other illicit activities by failing to report sales in excess of $10,000 for a Mercedes Benz, Toyota Camry and BMW in 2003 and 2005.

No individuals were named in the indictment.

The Herald contacted Cardenas AUTOPLEX Inc. and Cardenas Enterprises Inc. President Renato “Rene” G. Cardenas for comment on the indictment, but he was not available. A family member provided the Herald with the name of the corporations’ lawyer.

“It’s merely a record keeping issue,” said Houston-based attorney Robert Eric Reed, who represents the corporations.

“We believe it’s unfortunate that the government sought to enforce this matter through criminal charges, but that’s what happened and we’re addressing the issue,” Reed said.

Federal law requires businesses that receive large cash payments in their trade to file currency trans-action reports with the Financial Crimes Enforcement Network (FinCEN).

The three-count federal indictment handed down by the U.S. District Court for the Southern District of Texas on June 5 alleges the corporations knowingly and willfully evaded the reporting requirements in the transactions totaling more than $30,000 combined.

If the charges are proved true, the corporations could be fined up to $500,000, federal court documents show.

The Cardenas Web site, www.cardenasautogroup.com, shows that the corporations were formed in 1992 after Cardenas bought the assets of Valley Magic Motors.

The dealerships, located on Loop 499 in Harlingen, represent six of the top automotive manufacturers: Mercedes-Benz, Oldsmobile, Cadillac, Mazda, Toyota and BMW, according to the site. It also points out that a satellite location for pre-owned cars was opened in San Benito in September 1994.

“This family has been a strong corporate citizen in the Rio Grande Valley for decades,” Reed said in further response to the indictment and of the Cardenas family’s extensive business holdings in South Texas.

“They employ nearly 150 employees. In terms of the nature of these charges, this company has ex-pended tremendous resources and training to ensure full compliance with the law and that is what they are committed to do,” Reed said.

“Every member of that family is tirelessly dedicated to improving the community,” Reed said. “They are involved in public service, community service, church service. They’ve all been very active in the health, welfare and education of this community.”

The Cardenas family includes the corporations’ President Renato G. “Rene,” son of Renato E. and Mary Rose Cardenas, a former Southmost College board trustee, Reba Cardenas-McNair, who manages the family’s real estate development company and who also, is a philanthropist and wife of former city com-missioner Harry McNair Jr., and Ricky Cardenas, who heads a construction company. The Cardenas organization is a Hispanic Fortune 500 company, the Web site also notes.

Earlier this year, San Antonio’s Billy Joe “Red” McCombs announced an agreement to partner with Cardenas’ AUTOPLEX and took over its management, the Valley Morning Star reported. Cardenas and McCombs formed a new corporation in December 2006 called McCombs-Cardenas Inc. Rene Cardenas is listed as a director.

The three violations alleged in this indictment pre-date the McCombs partnership agreement.

U.S. Magistrate John William Black set a June 28 deadline to file motions in this case. Black is the third judge connected to the case.

A day after the indictment was handed down, U.S. District Judge Hilda Tagle recused herself from the case, and reassigned it to U.S. District Judge Andrew S. Hanen. It is not known why Tagle’s removed herself from hearing this case.

A hearing is scheduled for July 31. A final pretrial conference is scheduled Aug. 7 and jury selection is set for Aug. 9. The trial is expected to last about a week.

Three counts filed against Cardenas corporations:

- Count 1 alleges that on or about Sept. 12, 2003, Cardenas AUTOPLEX Inc. failed to file the required report for a transaction in excess of $10,000, also known as the IRS form 8830, with the sale of a 2003 Mercedes Benz E55.
- Count 2 alleges that Cardenas Enterprise Inc. failed to file the form on or about Feb. 10, 2005, on the sale of a 2005 Toyota Camry.
- Count 3 alleges that Cardenas Enterprises Inc. failed to file the IRS form with the sale of a 2002 BMW 745i on or about March 24, 2005.

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