Jan. 9 (Bloomberg) -- A California bond underwriter was charged with plying school officials in San Diego County with meals and sports tickets worth thousands of dollars to steer business to his employers.
Gary Allen Cabello, 54, wooed elected board members and superintendents of the Sweetwater Union High School District and Southwestern Community College District with campaign contributions in addition to the meals and tickets, according to a five-count indictment by a grand jury in state court.
San Diego County prosecutors charged 14 other people, most of them school officials, in what they described as a “widening public corruption case” involving three school districts and a community college district.
“We go where the evidence takes us and in this case it took us into a much larger, more tangled web of corruption than we originally uncovered,” San Diego County District Attorney Bonnie Dumanis said in a statement.
Cabello pleaded not guilty in San Diego County Superior Court Jan. 7 to charges including conspiracy and bribery. He worked for two firms during the period outlined in the indictment, now-defunct Alta Vista Financial Inc. and Cabrera Capital Markets LLC, based in Chicago.
Cabello, who denies wrongdoing, has been on leave from Cabrera since search warrants were served at his home in May, his lawyer, Heather Boxeth, said by phone from San Diego. She said that as a broker licensed by the Financial Industry Regulatory Authority, Cabello is held to higher standards than school-board members and superintendents.
“Mr. Cabello is in a completely different situation,” Boxeth said. “ He’s not an employee or a school-board member. He’s part of a highly regulated industry. He’s not in a position to have been involved in a conspiracy or bribery or unauthorized gifts.”
“He has nothing to hide,” the lawyer said. “He’s done nothing wrong.”
Cabello has been licensed by Finra, the securities industry’s self-regulatory body, since 1993, its records show. He was allowed to resign from Alta Vista Financial in Carlsbad, California, in 2010, after submitting expense reports not justified by documentation, according to records on Finra’s website.
J. Jeffrey Kinsell, president of Alta Vista Financial until it went defunct at the end of 2011, said regular audits of the firm’s finances showed nothing amiss with Cabello.
“We’ve done everything appropriately,” Kinsell said in a phone interview. “Everything was audited. We didn’t find anything that would rise to the level” of the criminal allegations.
Robert Aguilar, chief operating officer of Cabrera Capital Markets, didn’t respond to two phone messages and an e-mail seeking comment on Cabello’s activities at the firm.
Alta Vista Financial and UBS Investment Bank AG underwrote $180 million in bonds issued by the Sweetwater Union High School District in 2008, according to an official statement. The bonds had a conventional structure, unlike capital appreciation bonds elsewhere in San Diego County that carry interest payments as much as 10 times the principal.
Cabello gave Sweeter’s then-superintendent and board members baseball tickets, drinks, cigars, meals, dancing and other entertainment in exchange for “favorable treatment,”according to the indictment. None of the school officials reimbursed him for the expenses, according to the indictment.
Alta Vista Financial and Piper Jaffray & Co. underwrote $89.8 million in Build America Bonds and $10.2 million in general-obligation bonds issued by the Southwestern Community College District in 2009, according to an official statement.
Cabello treated representatives of the college to a $1,111 steak dinner in 2008, among other things, to help win business for his firm, according to the indictment.
From 2007 to 2012, Cabello and school officials agreed to use bribes so he could continue doing business with the school district, according to the indictment.
“As such,” the school officials “created a ‘pay-for-play’ environment,” according to the indictment.
Boxeth said the meals were never part of any attempted quid pro quo with school officials.
“The South Bay of San Diego is very small and Latino,” she said. “People help each other out. There’s nothing illegal about that.”
The case is People v. Cabello, SCD235445, California Superior Court, San Diego County (San Diego).