Mrs. Santos is the lt. governor’s sister.
Another defendant, former Commonwealth Utilities Corp. Executive Director Anthony C. Guerrero, entered into a plea agreement on Friday.
During yesterday’s hearing in federal court, designated Federal Judge David A. Wiseman granted the motion of U.S. Attorney Eric O’Malley to set bail at $50,000 each for the temporary release of Villagomez, Mr. Santos and his wife.
The three are prohibited from leaving the CNMI without court permission and were ordered not to contact potential witnesses.
Wiseman set their trial for Oct. 6 at 9 a.m. Guerrero’s sentencing was set for Nov. 12.
Villagomez served as CUC executive director from April 1994 to Jan. 2002.
James Santos owned Islas Micronesia Sales, while Joaquina V. Santos owned Blue Pacific, a company engaged in general retail merchandising where James Santos was an authorized agent.
Guerrero was CUC executive director from Sept. 6, 2006 to May 4, 2008. He was nominated by Villagomez, a former CUC executive director, in his capacity as acting governor.
The 12-page indictment stated that beginning Feb. 2, 1998, Villagomez and James Santos initiated a scheme where Villagomez, in his capacity as the then-CUC executive director, agreed to purchase a product called “Rhydlyme” from Islas Micronesia, providing a benefit of $286,125 to James Santos.
The cost associated with the agreement was approximately $68,570.
On Aug. 2007, Villagomez, James Santos, Joaquina Santos and Guerrero caused CUC operations to enter into a new contract to purchase Rydlyme from Blue Pacific again.
The transaction called for a payment of $120,000 to Blue Pacific, while the cost associated with the agreement was $36,676.
The indictment stated that of the 8,000 gallons of Rydlyme purchased in 1998-2000, 175 gallons were unused while 1,485 gallons were stored on Rota.
CUC made another purchase of 3,000 gallons in 2007.
The indictment stated that CUC used only 350 gallons of the Rydlyme purchased in 2007.
The four defendants were charged with wire fraud for transmitting a wire transaction in the amount of $36,676 to Aurora, Illinois on Sept. 28, 2007.
In a press conference yesterday, U.S. Attorney for Guam and the NMI Leonardo M. Rapadas said James Santos began requesting quotes from the manufacturers of Rydlyme more than a month before any request was generated within CUC.
Mr. Santos also ordered and paid $30,676 for several thousand gallons of Rydlyme more than a month before the contract was executed by CUC, Rapadas said.
The transaction, he added, entailed “a mark-up of approximately 400 percent over cost.”
Conspiracy charges carry a maximum prison term of five years and a fine of up to $250,000.
Wire fraud carries a sentence of up to five years and a fine of up to $250,000 while theft concerning federal funds carries a maximum prison term of 10 years and a fine of up to $250,000.
The case, which was referred to the Federal Bureau of Investigation by the Office of the Public Auditor, is being handled by O’Malley and First Assistant U.S. Attorney Jeffrey J. Strand.
