SAN ANTONIO, Texas — What began as an investigation into suspected military graft ended Thursday when a former high-ranking contracting official at a local Army base and her husband were sentenced to federal prison for tax crimes.
Velma I. “Bebe” Salinas-Nix and Kenneth Nix, both 58, admitted they didn't report income or gifts from consulting work Nix did that left them owing more than $153,000 in taxes.
U.S. District Judge Orlando Garcia gave Nix 30 months in prison and one year of federal supervision and his wife 20 months in prison and three years of supervision. The judge also fined both $10,000 and ordered restitution.
For three years, the IRS and Justice and Defense departments investigated the couple as the Pentagon grappled with embarrassing details that its contracting processes were ripe with graft and fraud.
Salinas-Nix was the second in command at the Army Contracting Agency-Americas at Joint Base San Antonio-Fort Sam Houston, where she handled contracts in Latin America and the Caribbean from 2003 until October 2009.
Nix jumped back and forth between private contracting and government jobs and by 2008 was deputy chief of staff with the U.S. Army Mission and Installation Command at Fort Sam. In between, he worked for Vistas Construction of Chicago.
“I think this sends a clear message that if you are put in a position of trust by the government, that you need to honor that position and you need to conduct your affairs accordingly, including your tax affairs,” said special agent Mike Lemoine, a spokesman for the IRS' Criminal Investigation division.
In October 2009, agents raided the couple's $1.5 million home in Boerne for evidence to back up their suspicion that Salinas-Nix was feeding Nix or Vistas inside information and that the pair was taking gifts and kickbacks to rig contracts.
However, the two were indicted in June 2011 on lesser tax and ethics charges. As part of a plea deal, both pleaded guilty to filing or subscribing to a false tax return. Salinas-Nix also pleaded guilty to the false statement in ethics forms for not disclosing items of value she received from a contractor.
The couple admitted they hid income Nix received from Vistas Construction of Chicago, which received $1.3 million in military contracts. Nix was paid at least $500,000 from Vistas, including in cash, blank money orders, checks, home improvements, paid housing and parking for Nix's residence in Chicago, plumbing supplies and other personal items.
Salinas-Nix received from Vistas a Rolex watch, a pearl bracelet, a paid trip to Panama, custom architecture drawings, a $5,000 Home Depot gift card and other items, and she used some of the money to put in an extravagant driveway with mosaic tiles.
At their sentencing hearing, the couple's lawyers sought probation and claimed the Justice Department overstated what happened.
Nix tried to take most of the blame for the couple's crimes.
“I made some colossal mistakes. This is at the top of the list,” Nix said. “Not only did I not tell the IRS, but I failed to inform my wife and this has caused her extreme pain.”
He said he didn't want to jeopardize what he had been making by disclosing the income later.
“At the time, we had secret clearances. She had top-secret clearance,” Nix said. “If I went back to change (the tax forms), we would have lost our clearances and she would have lost her career and her pension. I had a choice at the time, and I made the wrong choice.”
Salinas-Nix also expressed remorse.
“I profusely rue the day when I was faced with a decision (in this). I made a poor decision,” she said.