Allegations of financial misconduct, retaliation surface in wake of Waelder city manager’s firing

WAELDER — The fallout from the controversial termination of former Waelder City Manager Paul Zepeda continues to grow, as multiple allegations have emerged surrounding financial mismanagement, obstruction of audits, and political retaliation.

Zepeda, who was removed from his position by a 3–2 council vote on June 10, 2025, has since filed formal complaints with the Texas Attorney General’s Office, citing violations of the Texas Open Meetings Act (TOMA), denial of constitutional due process, and abuse of authority by Mayor Diana Ramos Olmos.

In his complaints, Zepeda states that he was terminated in an executive session for which he was neither properly notified nor allowed to attend. He said he was denied the opportunity to request a public hearing, a right protected under TOMA and the 14th Amendment. His removal was reportedly justified by a “vote of no confidence,” which legally requires a two-thirds majority to be valid — something that was not achieved. Zepeda also contends that no ordinance authorizing his termination under strict majority grounds exists.

At the center of Zepeda’s claims is a pattern of resistance he faced when investigating Waelder’s lack of financial audits dating back to 2017. He says the city’s own finance department repeatedly submitted incomplete or outdated information to the city’s auditor. The firm ultimately declined to continue its work and recommended a forensic audit.

That recommendation, made this spring, was followed shortly with Zepeda’s placement on administrative leave. Due to the high cost of conducting a full forensic audit covering multiple years, Zepeda and Police Administrative Chief Jim Taylor chose to focus their efforts on the year that appeared most likely to reveal evidence of financial misconduct.

The audit delays have had serious consequences. Zepeda states that Waelder has already lost approximately $500,000 in potential grant funding due to missing audits and is currently at risk of losing an additional $1 million grant that is due within the next three months which would have provided money for the city’s much-needed water well repairs.

During this time, several allegations emerged from residents and city staff that certain utility customers were overcharged and that cash payments may have been mishandled or pocketed. Former Mayor Roy Tovar, prior to his death, had “banned” cash payments through the passing of an ordinance under the former administration, based on similar suspicions.

Zepeda raised concerns about the current mayor’s efforts to reintroduce cash transactions, warning that no internal controls were in place to safeguard against theft at this time. While not opposed to the use of cash, Zepeda emphasized the need for appropriate safeguards to protect the community from potential abuse.

Chief Taylor confirmed these findings and supported the need for a forensic audit. He said he has reported the issues to County Attorney Eddie Escobar, the Texas Attorney General’s Office, and other state agencies. Taylor stated that every red flag for fraud is present, according to at least one state agency, and that city officials have obstructed efforts to investigate.

In addition to financial concerns, Zepeda’s complaints detail what he describes as a hostile work environment and targeted retaliation. He filed a Fair Notice and an internal harassment complaint against Mayor Olmos before his suspension. He also disputed the legitimacy of the two reasons cited for his administrative leave: the lack of a bond requirement, which he was never informed of and which was never passed by ordinance, and his city-provided housing, which had been approved by council vote in March 2025.

The legality of the meetings that led to both his suspension and termination is also in question. The May 27 meeting at which Zepeda was suspended was canceled due to lack of quorum, yet the mayor allegedly proceeded with action while three council members remained seated and the public was present. The June 10 meeting, where he was fired, allegedly was conducted in closed session without recording, transcription, or certified agenda — a direct violation of TOMA if true.

In response to these events, Council members Peggy Blackmon and Michael Harris now have both resigned. Harris stated that the council’s actions were illegal and motivated by retaliation. He noted that with their resignations, the council no longer has the two-thirds quorum required to hold special meetings or set a tax rate. Blackmon, a long-time council member, said the events left her deeply unsettled and that stepping down was “a relief.”

During public comment at the June 10 meeting, residents expressed overwhelming support for Zepeda and frustration with the city’s leadership. Longtime business owner Doris Richter stated, “It’s a rigged deal. They didn’t want him from day one. When she was campaigning, she stood on the front steps of my store and said, ‘We don’t need him. He’s out there digging ditches with the employees when he should be in the office doing paperwork.’”

Another community member offered an emotional account of how Zepeda’s leadership changed — and possibly saved — his life. The man shared that he had been in a dark place, contemplating suicide, when he felt compelled to ask Zepeda for a job. Three days later, Zepeda called and offered him a position. The man credited that act of kindness and faith with giving him a second chance at life — something he said would not have been possible without Zepeda’s compassion and willingness to serve.

Zepeda, who holds advanced degrees in public administration, criminal justice, and business and has a background in fraud investigations with the DEA task force and City Public Service, has said he would return to his role if given the chance.

“If I helped one person or brought light to one wrongdoing, then it was worth it,” he said. “Your integrity means everything.”

As the Attorney General’s Office possibly begins its review and additional agencies monitor the developments, Waelder faces a pivotal moment. With its internal systems under scrutiny and community trust shaken, the outcome of this investigation may determine not only the city’s immediate leadership future, but its long-term reputation for transparency and accountability. The Gonzales County Attorney’s Office has declined to comment on the matter at this time. The Texas Attorney General’s Office has not yet responded to a request for comment from the Inquirer.