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Former Kennedy Ridge Water Supply President's Assets, Accounts Frozen
Former Kennedy Ridge Water Supply President's Assets, Accounts Frozen | Kennedy Ridge, Steve Ayala Cantu, Steve Cantu, Humberta de Jesus Montes,

Texas Business reports:  The Texas Attorney General’s office obtained a temporary restraining order and asset freeze that will help secure the Kennedy Ridge Water Supply Corporation’s financial resources—which were depleted after its former executive and others diverted the supply corporation’s funds into fraudulent accounts under their control.

Last week the attorney general’s office charged former Kennedy Ridge president Steve Ayala Cantu, his wife Humberta de Jesus Montes, and his sister, Vicenta Ayala Casanova, with multiple legal violations associated with their scheme to defraud Kennedy Ridge customers.

According to state investigators, the asset freeze includes a Cedar Park home and two Kennedy Ridge residences that the defendants improperly acquired in part with Kennedy Ridge funds. Under the court’s order, the defendants are prohibited from selling or transferring their stake in the residences. The court order also freezes the defendants’ bank accounts, through which passed tens of thousands of dollars at one time or another, according to bank records.

As Kennedy Ridge’s president, Cantu was responsible for purchasing wholesale water for the businesses and residents in the supply corporation’s service area in northeast Travis County. Their wholesale supplier was the Hornsby Bend water utility. According to state investigators, the defendants allegedly established fraudulent bank accounts under fictitious names that were very similar to the wholesaler’s name, such as “Horsby Bend Land Care” and “Kennedy Ridge Water Sewer Service.”

The defendants allegedly used their fake business accounts to obscure the fact that they were diverting customers’ payments from Kennedy Ridge and into accounts the defendants controlled—but that did not actually belong to Kennedy Ridge.

In February 2010, Kennedy Ridge defaulted on its payment to Hornsby Bend, the wholesale water supplier. Initially, it appeared that the default was caused by financial mismanagement or clerical errors. However, an investigation by the Attorney General’s Office revealed that the defendants used their fraudulent accounts to improperly divert Kennedy Ridge funds for the defendants’ personal financial gain. Thus, Kennedy Ridge customers were both financially defrauded and occasionally deprived of suitable drinking water.

The state’s enforcement action charges the defendants with violating the Deceptive Trade Practices Act. It also seeks refunds for Kennedy Ridge customers who suffered financially from the defendants’ unlawful scheme.