Federal Probe Targets Texas Emergency Service District

March 04--A federal grand jury is investigating a north Harris County emergency services district that contracts with a nonprofit ambulance service which has come under intense scrutiny by government watchdogs in recent years.

Prosecutors ordered commissioners of Harris County Emergency Services District No. 11 in February to produce records related to its operations, according to a federal subpoena obtained by the Houston Chronicle.

Robert Berleth, one of the district's five elected commissioners, confirmed he had been subpoenaed and declined further comment. Fred Grundmeyer, another commissioner, also confirmed he'd been subpoenaed and said he had complied with requests to turn over documents.

"We feel like what's been said is not true," Grundmeyer said.

The subpoena did not lay out a specific subject or target of the grand jury investigation. It ordered district officials to turn over by Feb. 24 records dating to 2011 from "any and all candidates or potential candidates for any elected position/office with the ESD No. 11" including "applications declaring candidacy, declarations of campaign personnel, reports of receipts and expenditures." The subpoena also seeks records of the district's elections, meeting minutes, handouts, agendas, phone calls and emails.

Belinda Beek, the federal prosecutor whose name is listed on the subpoena, declined to discuss the document or any investigation.

"I can't say anything about a grand jury," she said.

FBI officials declined to comment about the matter.

Emergency service districts are local government agencies created by a public vote to provide fire protection or emergency medical services to specific areas. There are 27 such districts in Harris County and more than 300 across Texas. The groups levy property taxes, which they use to contract ambulance or fire service to local, often volunteer departments. The taxes are often small -- just a few cents per $100 -- but they can turn into multimillion-dollar budgets.

ESD No. 11 contracts with Cypress Creek Emergency Medical Services, a nonprofit ambulance service that has served the area since 1975.

Fiscal transparency has been at the center of a number of fights among district commissioners and the ambulance service, as two members of the district's board and other government watchdogs and consultants have sought information about Cypress Creek's finances or its payroll records.

Cypress Creek's most recently available tax records show the ambulance service had revenues of more than $20 million in 2014 and that its executive director earned more than $263,000 that year.

Subject of investigations

The organization, which has successfully weathered several state and federal investigations in recent years, has argued that because it is a nonprofit, it is not a government entity or taxing entity and does not fall under the state's records laws. An independent audit of the ambulance service in 2013 stated that the service had been probed by the Equal Employment Opportunity Commission on discrimination claims; the Wage and Hour Division on Fair Labor Standards Act claims; Texas Department of Health, Medicare and Medicaid on operational issues.

In those investigations, the service was found "nondiscriminatory, compliant, and without violations by all of these agencies," according to the audit.

The group was also the subject of a complaint by the Texas Ethics Commission, over election and financial issues, but the complaint was ultimately dismissed.

Harris County prosecutors charged Cypress Creek EMS with a criminal misdemeanor in 2014 after the group refused to fulfill a public records request for payroll and benefits records. The case is pending in Harris County district court with a hearing set for next week. Lawyers for the ambulance service also argued that producing the records would violate the group's right against self-incrimination, according to a district court filing made last fall.

Separately, the Texas Attorney General's Office has ordered Cypress Creek to turn over its records following public requests by two commissioners and a consultant, prompting the ambulance service to sue to block their release. A judge is expected to rule on that suit by the end of next week.

Election records sought

Bradley England, executive director of Cypress Creek Emergency Medical Services, acknowledged that he had also been subpoenaed by the grand jury.

"We'll have our day in court and at the end of the day, we'll be fine," he said.

England said his subpoena sought election records, campaign donations and information related to Friends of Cypress Creek EMS. That group supports the ambulance service and has a now-defunct website and a Facebook page. Materials previously on its website endorsed two commissioners and the district's past tax hike.

Since 2011, ESD No. 11 has had commissioner elections in 2012 and 2014, and an election to raise the district's tax cap in 2013.

That same year, the district's commissioners approved a 10-year contract -- worth approximately $120 million -- with Cypress Creek.

Approximately half of the ambulance service's budget comes from the district, along with Medicare and Medicaid payments, private insurance billings and money from trainings.

In 2013, the federal government reimbursed the ambulance service $1.6 million of more than $6 million in charges it had submitted to Medicare and Medicaid, according to the most recently available data.

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