Homeland Security Investigations serves Sullivan City with grand jury subpoena

SULLIVAN CITY, TEXAS ( ValleyCentral ) — Homeland Security Investigations served Sullivan City with a federal grand jury subpoena on Friday.

Two agents — one carrying a Starbucks cup, the other with a portfolio tucked under his arm — showed up at City Hall minutes after 10 a.m. Friday.

“We’re just dropping off the paperwork,” an agent told city officials, adding that Sullivan City didn’t need to produce the documents that day.

What the agents want from Sullivan City remains unclear.

Homeland Security Investigations , which is part of the U.S. Department of Homeland Security, confirmed that agents visited City Hall as part of an ongoing investigation but didn’t release any details.

Asked if the agents served Sullivan City with a grand jury subpoena, City Attorney Frank Garza said he couldn’t comment.

“At this point, I can’t confirm or deny,” Garza said.

The subpoena may be part of a federal investigation focused on illegal gambling in Hidalgo County.

As part of the investigation, federal agents executed search warrants at Edcouch City Hall and Elsa City Hall in October.

The Association

In 2022 and 2023, a group called the Texas Game Room Owners Association approached Edcouch, Elsa and Sullivan City.

Officials in other parts of Texas, including Willacy County and Laredo , had started regulating game rooms. Attorney Robert R. Flores of McAllen, who created the association, suggested they follow suit.

The regulations, though, risked creating the perception that local governments had authorized gambling.

While slot machines are legal in Texas, state law prohibits them from rewarding players with cash.

Winners may only receive “prizes, toys, or novelties, or a representation of value redeemable for those items, that have a wholesale value available from a single play of the game or device of not more than 10 times the amount charged to play the game or device once or $5, whichever is less,” according to the Texas Penal Code .

Some game rooms simply ignore the law and pay cash prizes.

Others attempt to skirt the law by requiring winners to participate in a game of skill. After completing the game of skill, the winners receive silver pellets they can trade for cash.

The work-around didn’t impress Hidalgo County District Attorney Toribio “Terry” Palacios or Hidalgo County Sheriff J.E. “Eddie” Guerra.

“No matter how you try to hide the payment, it’s still being paid,” Guerra said. “It’s not legal.”

Flores remained undeterred. After months of research, he believed game rooms could operate legally.

As part of his push, Flores asked Mike Robledo, a well-known political consultant, to serve on the association’s informal advisory board. Flores said that Robledo introduced him to Alma Salinas, the mayor of Sullivan City.

“He had strong ties over toward Sullivan,” Flores said.

Robledo had also worked on the sheriff’s re-election campaign.

“That had nothing to do with it, really,” Flores said.

Guerra said he never discussed the association with Robledo.

Flores also convinced former Hidalgo County District Attorney Ricardo Rodriguez to serve as local counsel for the association.

“Whatever questions they had, whatever they needed, I was there,” Rodriguez said.

According to Flores, he initially planned for Rodriguez to represent game room owners and employees if they had problems with law enforcement. Flores said he would handle any civil forfeiture cases and Rodriguez would represent people on criminal charges.

Rodriguez said that’s not what happened.

“My purpose was representing the group. That’s it,” Rodriguez said. “I never had a discussion about: ‘If somebody gets arrested’ or anything like that. No. Never.”

Rodriguez, a former judge who served as Hidalgo County’s top prosecutor from 2015 to 2022, also had connections at the courthouse.

His uncle, Terry Palacios, became the district attorney in January 2023.

Rodriguez said he never received the impression the association brought him onboard in an attempt to influence Palacios.

“If there was any mention of that at all, I would not have participated at all,” Rodriguez said.

Sullivan City

Eager to cash in, Edcouch and Elsa started regulating game rooms. Within months, however, they dumped Flores and partnered with a rival group, the Greater Texas Gaming Coalition.

Sullivan City stuck with Flores and started accepting game room applications in May 2023.

In just two days, Sullivan City collected $250,000 in application fees, according to documents released under the Texas Public Information Act.

One of the applicants, Rodolfo Muñoz of Laredo, also purchased a building from the mayor’s husband, Oscar “Coach” Salinas.

The building, a drive-thru convenience store called Herradores Stop & Go, is located on a half-acre lot near the intersection of Robin Street and El Faro Road.

In 2023, the Hidalgo County Appraisal District valued the property at nearly $167,000.

Luar Investment Enterprises LLC, a company that Muñoz controls, agreed to pay at least $234,000 for the property, according to a deed filed with the Hidalgo County Clerk’s Office.

Muñoz said he didn’t know Oscar “Coach” Salinas was the mayor’s husband.

“I went through a broker, through a title company,” Muñoz said. “I didn’t really meet him.”

Muñoz planned to open a game room called Rio Royale.

It never got off the ground. After the Sheriff’s Office started raiding game rooms, Muñoz abandoned the idea.

“It was a gamble that I took, getting into it,” Muñoz said. “But I defaulted on that property.”

Flores, who reviewed the paperwork for Rio Royale, said that Muñoz didn’t handle the deal himself.

A law firm represented Muñoz, according to emails Flores provided to CBS 4 News.

Flores said he reviewed the deal as part of the application process for Rio Royale.

“The scan of the contract is curved, and the Seller signing will be Oscar Salinas, not his wife,” Flores wrote to the law firm on July 24, 2023, according to an email he provided to CBS 4 News. “Please make that Seller signature edit and resend to me in presentable format. I will then forward it to the attorney of Oscar Salinas for signature by the Seller.”

Alma Salinas didn’t respond to a request for comment. Oscar “Coach” Salinas couldn’t be reached for comment.

In Laredo, game rooms operate legally, Muñoz said, and he viewed the Rio Grande Valley as a legitimate business opportunity.

“I like to do everything by the book,” Muñoz said, adding that he didn’t operate illegal or underground game rooms.

Other applicants in Sullivan City included Robledo, the political consultant who served on the association’s informal advisory board.

In May 2023, he submitted an application to open a game room called the Lucky Lounge, according to documents released under the Public Information Act. The application listed serial numbers for nearly 200 machines.

Flores, who reviewed the Lucky Lounge paperwork, said Robledo submitted the application to hold a spot for someone else.

Robledo confirmed that he applied for a permit but declined to comment on the Lucky Lounge, which never opened.

The Raids

In August 2023, three game rooms in Sullivan City had received permits, according to documents released under the Public Information Act. How many actually opened for business remains unclear.

They shut down that September, when the Sheriff’s Office raided a game room on the west side of Sullivan City.

Federal agents, meanwhile, executed search warrants at Edcouch City Hall and Elsa City Hall in October.

Agents executed another warrant in February, when they searched Palacios Garza & Thompson, a law firm in Edinburg. One of the firm’s partners, Ricardo “Ricky” Palacios, had played a key role in the Greater Texas Gaming Coalition.

Flores continued working with Sullivan City until April 19, when he decided to suspend operations.

“Currently there are hundreds of underground game rooms operating in the region,” Flores wrote in a letter to Sullivan City. “Some of these establishments appear to operate with impunity, as some have been in existence for years, thus making a viable legal gaming organization anywhere in the area simply impossible without the support of local law enforcement, which we clearly do not have.”

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