TRI-COUNTY — Ernesto “Ernie” Villarreal Jr. pleaded guilty to nine criminal charges on Wednesday relating to schemes he conducted over several years to defraud Valentine ISD, where he previously worked as the business manager and tax assessor-collector.
Villarreal pleaded guilty to one count of theft concerning programs receiving federal funds — the district was the recipient of federal funds for various programs during his tenure — and eight counts of wire fraud. A sentencing date of February 21, 2025, has been set. He is facing 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 the U.S. Attorney’s Office (USAO).
Villarreal — who started working at Valentine ISD in 2007 — was placed on administrative leave in October of 2022 after a routine audit of the 2021-2022 school year found 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. He resigned, giving no reason, shortly after in November 2022.
He was indicted and arrested on the nine criminal charges in June 2024, then released on a $50,000 bond.
Court documents filed by the USAO on Wednesday reveal that Villarreal independently conducted several schemes to embezzle funds from Valentine ISD from around 2016 to 2022.
Villarreal utilized two school district credit cards for personal purchases amounting to $5,000, wrote checks to himself amounting to $14,000, made $22,650 worth of payments to his personal Discover card and conducted a payroll fraud scheme to steal $144,600 from the district, court documents state.
Court documents state that Villarreal authorized these transactions without the knowledge or permission of other Valentine ISD employees and “demonstrated a conscious, knowing intent to cause harm to (that is, to cheat) Valentine ISD by depriving Valentine ISD of money by means of deception.”
Villarreal utilized two ISD credit cards to steal $5,000 or more from the district for personal expenses, including upkeep to homes he owns in Corpus Christi and Del Rio, airline flights around Texas and the United States and purchases at various retailers including Home Depot, McCoy’s and Amazon. Court documents state that in doing so Villarreal knowingly violated a card holder agreement he signed in 2012.
“In signing the agreement, Villarreal agreed that, among other things, he would not under any circumstances use the ISD credit cards ‘to make personal purchases, either for others or [himself],’ and that any willful intent to use the ISD credit cards ‘for personal gain may result in disciplinary actions including termination of employment’,” court documents state.
Villarreal, from 2020 to 2022, also utilized checks from a Valentine ISD bank account to make 10 payments totaling $22,650 to personal expenses owed to Discover. In order to not arouse suspicion “for six of those ten payments Villarreal created fictitious documents pertaining to workshop programs that were not actually purchased by Valentine ISD,” court documents state.
He also leveraged his power as the district’s business manager to access payroll information for certain employees, and in doing so “knowingly devised another scheme to defraud Valentine ISD with regard to payroll,” court documents state.
Villarreal created direct deposits in employees’ names that he then sent to his own personal bank accounts by changing routing and account numbers associated with the employees accounts to that of his accounts. Payments that appeared to be sent to Valentine ISD employees for work like substitute teaching were sent via wire transaction to Villarreal’s personal accounts and were “based on fictitious work that had not actually been done.”
“In doing so, none of the employees were missing any expected payments, and therefore no red flags were immediately raised,” court documents state.
The payroll fraud scheme resulted in a total of $144,600 worth of unauthorized payments to Villarreal — $77,500 from 2020 to 2022 and another $67,000 from 2016 to 2020.
Valentine ISD administrators have been stuck in a holding pattern for the past two years as the legal process has played out, Superintendent Debbie Engle previously told The Big Bend Sentinel. The district was unable to collect on insurance money to help cover the loss in school funds without making the forensic audit public, which it was unable to do while the status of the prosecution was pending. “We are glad to see the case moving forward,” Engle said on Wednesday. “Valentine ISD is ready to put this behind us.”
Villarreal’s defense attorney, Shane O’Neal, did not respond to requests for comment on the guilty plea by press time.
The case was investigated by the Federal Bureau of Investigation, Texas Rangers and the Department of Education Office of Inspector General. It was prosecuted by U.S. attorneys John Fedock, Patricia Josefina Acosta and Scott Greenbaum. The USAO did not respond to requests for comments on the guilty plea by press time.
Villarreal served on the Marfa ISD Board of Trustees from September 2021 to February 2024, at which point he resigned after a long absence. In his role as trustee, Villarreal would not have had access to financial accounts.