VALENTINE — Ernesto “Ernie” Villarreal Jr., previous Valentine ISD business manager and tax assessor-collector, was arrested on Monday for criminal charges relating to an alleged scheme in which he fraudulently misappropriated school district funds for personal expenses.
Villarreal, 42, of Marfa, was indicted by a federal grand jury on June 13 on one count of theft concerning programs receiving federal funds and eight counts of wire fraud. “Defendant engaged in multiple schemes to embezzle, steal, obtain by fraud, convert, and misapply property owned, and under the care, custody, or control of the District,” states the indictment.
If convicted, he faces up to 10 years in prison for the federal theft charge and up to 20 years in prison for each wire fraud charge, according to a press release from the U.S. Attorney’s Office.
The Federal Bureau of Investigation is investigating the case along with the Texas Rangers and the Department of Education Office of Inspector General. The FBI requested Villarreal voluntarily surrender himself upon his indictment, which he agreed to, said his attorney Shane O’Neal.
Villarreal voluntarily surrendered and was arrested at the FBI office in Alpine on Monday. On Tuesday, U.S. Magistrate Judge David Fannin denied the government’s motion to detain and granted Villarreal pretrial release if he meets a $50,000 bond. Villarreal was being held in the Presidio County Jail as of Wednesday morning.
“He voluntarily turned himself in,” O’Neal said. “He’s eager to address the government’s allegations. We were happy that the judge recognized his cooperation by finding that he should be released while we work through this case.”
Villarreal began working at Valentine ISD in 2006, according to court documents. He was placed on administrative leave in the fall of 2022 after a routine audit of the 2021-2022 school year found that a lack of oversight on the district’s finances resulted in roughly $165,000 in unauthorized transactions, plus instances of falsified documents, prompting an additional forensic audit and a criminal investigation by state and federal authorities.
Villarreal resigned shortly after on November 15, giving no reason.
According to court documents, Villarreal is alleged to have “fraudulently and improperly” used credit cards that were issued by Valentine ISD. Villarreal allegedly used the credit cards for hundreds of personal purchases, including purchases for travel, lodging, home improvements, hardware store purchases, personal cell phone bills, fuel, oil changes, convenience store purchases, university tuition payments, and various other unauthorized purchases.
Villarreal is alleged to have accessed payroll information for several employees and former employees of the district in order to create fraudulent payroll payments that he sent to his personal bank account. The indictment alleges that Villarreal would change the direct deposit information for employees and former employees and replace such information with his own bank accounts’ direct deposit information.
Valentine ISD administrators are continuing to cooperate with law enforcement but are not aware of any other district employees implicated in the investigation, Superintendent Debbie Engle said in a statement.
“The Board and administration are dedicated to being good stewards of the District’s
resources. Consequently, the District’s administration will continue to cooperate with
federal and state authorities as they continue with their investigation and prosecution of
the case,” the statement read.
Villarreal served on the Marfa ISD Board of Trustees from September 2021 to February 2024, at which time he tendered his resignation to the board after being largely absent from board meetings for the 2023-2024 school year. The Big Bend Sentinel reported that he had only attended three of 14 previous board meetings, and those three were remotely.
Editors Note: An earlier version of this story has been updated to include input from Valentine ISD Superintendent Debbie Engle.