Russells plead no contest to lesser misdemeanor misapplication offense

A Gonzales couple accused of misappropriating money that belonged to the Gonzales EMS have pleaded no contest to a lesser-included offense and have made $7,000 restitution to the agency, their attorney told the Gonzales Inquirer.

As a result of a plea deal reached with the Texas Attorney General’s Office (OAG), Jim and Carla Russell were convicted of a Class A misdemeanor of misapplication of funds of $750 or more but less than $2,500 and were given one day of jail time with time served counted, defense attorney Robert Bland said.

“They were adamant that they did not take anything that they did not work for, but in this one case, it was just a gray area,” Bland said. “Could the state have proved it at trial? Possibly. Could they not have? Possibly. It’s always tough with juries and I always tell my clients a jury trial is 50-50 because you never know what a jury is going to do. Could we have gone in and put forth an argument in this case? Yes, but again, who knows what 12 people sitting there are going to come up with?”

The case was prosecuted by Assistant Attorney General James Haugh after the Gonzales County Attorney’s Office recused itself from the case and brought in the OAG to take over. Efforts to reach Haugh for comment through the OAG press office were unsuccessful.

The couple could have faced up to as much as 20 years in prison and a $10,000 fine had they been found guilty of the most serious charge levied against them — theft of funds of an aggregate value of $30,000 or more but less than $150,000 by a public servant, which is a second-degree felony.

A grand jury originally alleged in November 2019 that between January 2011 and June 2018, the Russells had misapplied EMS funds for their own benefit by depositing money meant for the EMS and CPR classes into their own personal bank accounts, overpaying themselves or other employees for unworked hours, being paid by other entities while simultaneously being paid by the EMS and mishandling donations to the EMS.

Jim Russell had been employed as the EMS director, while Carla Russell was a billing and collections clerk who also worked as a paramedic and a supervisor. They were both initially arrested on June 4, 2018 after a lengthy investigation by the Gonzales Police Department.

Jim Russell had been placed on administrative leave without pay in January 2018 while the investigation was under way; he was fired by the board on June 26, 2018. Carla Russell was asked to resign following her arrest, which she did.

The Texas Attorney General’s office found, however, after taking over the case that the only charges they felt confident would stick at trial involved the money deposited into the Russells’ bank accounts for the CPR classes they taught on behalf of the EMS, Bland said.

“The question was, ‘Was this money that the EMS service should have received versus the Russells themselves, who are actually teaching the class?’” Bland said. “That is kind of a gray area. There was some stuff in the bid specifications that made it a gray area as to what did it mean, and who could have received the funds for that. That is where the AG’s office really saw that there could be any kind of criminal liability.

“It was just really about who should have received those funds. Should that have been the EMS board? Should that have been the individuals who are performing the services? There is a deal in that bid specification that says the EMS service is to provide these classes to the public, but it doesn't explain how they're gonna provide it or who is defined as the public? Is it these individual companies that are requesting classes?

“I believe the AG’s Office did a really good job in coming in and reviewing the case, looking at it with what was neutral eyes, and putting some work into it to see if they could make sure these numbers were correct,” Bland added.

Bland noted at that time there were two separate entities involved — a governmental entity, the Gonzales County Emergency Services District No. 1, contracted through bids with the Gonzales EMS, a 501(c)(3) private nonprofit, formerly known as the Gonzales Volunteer Ambulance Corps, to provide EMS services in Gonzales. Today, ESD1 runs and oversees all operations of the Gonzales EMS after the latter was absorbed into the former in a merger.

The $7,000 restitution check was written to ESD1 as they now control all Gonzales EMS assets, Bland said.

He said the Russells answered to the Gonzales EMS Board during their employment and not the ESD, which meant they were not considered public servants.

“The EMS did not provide all the funding for the EMS. The EMS, as a 501(c)(3), was able to get grants and they received donations,” Bland said. “They also did their own billing, and they would do transports, so they would get billed for that, so they had their other sources of funds.

“And that was another kind of issue as to whether this was public funds? Was it not public funds? That kind of dealt with are they public servants or not? It really didn't pan out to them being public servants, because they did not work for the ESD.”

Bland said the investigation by the OAG found no evidence of overpayments to the Russells or anyone else and he said the Gonzales EMS board, who oversaw the Russells, had allowed them to earn extra money by working on standby at the rodeo or other events and getting paid for their time.

He said that was how they made up for Jim Russell not receiving a raise in his $64,000 executive director salary or both Jim and Carla Russell working supervisory shifts or on ambulances as paramedics without any additional pay.

“The board allowed Jim and Carla both to do extra work, provide extra services to make up for that lack of pay raises, and that comes in to some of the allegations that were made about that they were working as a supervisor, working for the EMS and also doing standby at the rodeo and stuff,” Bland said. “The board said, ‘Hey, that's how they make extra money to compensate for us not giving them raises. They're working and we're okay with that.’

“There were things in the company's operating procedures that said they could have gotten paid extra for working those shifts (on an ambulance or as supervisor). They didn't do that. They were trying to help the service as best they could, because the EMS service was always close to being short funded.”

Bland said all donations to the EMS were accounted for after a review by the OAG.

“Either the donations were spent to purchase tools, purchase items, or the money was there to be used for matching grants,” Bland said. “Once the AG’s Office looked at that, they didn't think that there was anything out of out of the ordinary with these donations, nothing where the Russells had benefited themselves in any way.”

Bland said the allegations made against the Russells didn’t come from any internal investigation or finding of wrongdoing by the EMS Board, but instead came from former EMS employees who provided documents to law enforcement “who just kind of took it and ran with it.”

“These people never went and directed their thoughts to the board,” Bland said. “I think that would have cleared up a lot of this, had they gone to the board and said, ‘Hey, this is what we feel that's going on. What does the board feel?’ The board didn't get a chance to investigate these claims before law enforcement just started digging into them. And they dug and they dug and dug and dug and dug.

“I think it was a poor investigation. It seems like law enforcement almost was like, ‘Well, how can we prove these allegations?’ and they believed these allegations as wholehearted facts instead of doing a neutral investigation. And I think a lot of that stemmed from law enforcement did not know how EMS ran their operations.

“What law enforcement saw looking from the outside in as … so-called double dipping … turned out it wasn't because the board's like, ‘We're okay with that. That's how we allow them to make extra money, so we're not having to pay them a raise. We're letting them earn their money.’ And then there's some things in some of the reports where there were law enforcement seems to be comparing apples to oranges.

“I don't think the investigation from law enforcement was very good,” Bland said. “I think it was a little overzealous and just maybe not going about it the right direction. I think had the EMS board been approached about this, I think that's something they probably could have handled internally saying either ‘We’re good with this’ or ‘We’re not good with this and let's try to remedy the situation.’”

Bland said his clients have left the medical field and plan to “continue working the jobs they are doing now and go on about their lives” now the issue has been resolved and restitution has been made.

“Misdemeanors don't carry near the stigmatization that a felony does or the legal impediments,” Bland said. “There's a lot of stuff that a felony will prevent you from doing and a lot of jobs don't like that felony on there. With a misdemeanor conviction, they should be able to put this behind them and go on with their lives.”