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Theft, money laundering allegations sparked raid at Woodfill law office

November 14, 2018

Former Harris County Republican Party Chairman Jared Woodfill is being investigated on theft and money laundering allegations, accused of misappropriating funds of at least two of his law firm’s clients, according to an affidavit by the Harris County District Attorney’s office.

Authorities on Monday seized 127 boxes of files, six computers and disk drives from the Houston high-rise office of the Woodfill Law Firm at Three Riverway, according to the returned search warrant filed in Harris County district court on Tuesday.

In his affidavit for the search warrant, which also targeted computer logins, passwords, memory devices, and telephones owned by Woodfill or the law firm, fraud examiner Bryan Vaclavik indicated authorities were seeking evidence used to commit felony offenses of misapplication of fiduciary property, theft and money laundering.

No charges have been filed against anyone in connection with the ongoing investigation. The Harris County District Attorney’s office declined comment on the investigation.

Investigators seized financial records, legal files, documents and correspondence on Monday related to two divorce cases handled by the firm, the search warrant documents show.

The ongoing investigation has nothing to do with Woodfill’s party activities, his attorney Jimmy Ardoin told the Houston Chronicle Tuesday.

Woodfill was chairman of the county Republican Party for 12 years, before losing the post in 2014.

Ardoin said his client had no advance notice of the search and had no details about the allegations beyond the content of the search warrant.

Ardoin said he had been in contact with the district attorney’s office about its review of finances in a divorce case for three to four months and was dismayed that Woodfill was not allowed to provide information voluntarily.

“We believe there’s an accusation of misappropriation of client funds,” Ardoin said. “We have yet to get confirmation of what it is.”

The search warrant indicates the district attorney’s investigation began in February 2017, after Woodfill’s former client, Amy Holsworth Castillo, alleged that Woodfill’s firm misused funds from her divorce case. Castillo filed for divorce from her husband Juan Castillo in 2012 and hired Woodfill in December 2013, court records show.

Juan Castillo later had the divorce case moved to bankruptcy court in Texas’ Southern District in part, he claimed, because of excessive legal fees. Woodfill’s firm filed a motion accusing Juan Castillo of filing his bankruptcy case to skirt payments to his estranged wife, federal court records show.

At one point, Amy Holsworth Castillo’s trust account had less than $650 in it, according to a fact-finding ruling in 2016, in which U.S. Bankruptcy Court Judge Jeff Bohm outlined a year’s worth of transactions and “discrepancies” between bank statements and ledgers for the trust. Based on those records, Bohm concluded that Woodfill’s firm had “taken funds from the (trust) account that have not yet been earned and, thus, several thousands of dollars have been unaccounted for.”

He put the amount of unaccounted funds or overpayments to Woodfill’s firm at more than $140,000.

Woodfill’s firm disputed the findings and planned to appeal Bohm’s finding, court records show.

Both Castillos later filed separate complaints against Woodfill with the State Bar of Texas. In September, the bar publicly reprimanded Woodfill and ordered him to pay $3,490 in attorneys’ fees and direct expenses.

“Woodfill had direct supervisory authority over members of his firm who violated the disciplinary rules during the representation in a divorce,” the State Bar of Texas wrote, “and Woodfill failed to take reasonable action.”

The district attorney’s office also cited a second complaint in the search warrant involving Woodfill’s representation of a woman named Teresa Ribelin Cook, who hired the law firm in June 2013 to represent her in a divorce. The search warrant alleges Woodfill “had used more than $45,000 of Ribelin Cook’s retainer for purposes not related to her case.”

The warrant also cites an interview with a man identified as Woodfill’s controller, Kenneth Kennedy, who is quoted claiming that Woodfill often moved money around between client accounts and his own bank accounts.

Richard Orlando Rodriguez, whose ex-wife also used Woodfill as her divorce attorney, has separately accused Woodfill of taking at least $300,000 from a trust account in a divorce case, according to a March 2017 complaint he filed with the Houston Police Department. That complaint is not mentioned in the search warrant.

robert.downen@chron.com

lise.olsen@chron.com

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