SAN ANTONIO -- It was called “Project Castle” -- a multi-million dollar deal to bring Rackspace to the vacant Windsor Park Mall. Now, two brothers are accused of looting the Castle.
Gary and Ronnie Cain are accused of defrauding the web-hosting company and, ultimately, the taxpayers, after money meant to revitalize Windcrest allegedly ended up being spent on travel, jewelry, and a "Sweet 16" party.
On MTV’s reality show "My Super Sweet 16," pampered teenagers frolic at lavish, over-the-top parties thrown for them by their wealthy parents. In an episode from 2009, a San Antonio developer named Gary Cain showers his daughter with designer shoes, her very own hip-hop concert, and a brand new Range Rover.
But the Texas Rangers claim all that opulence was paid for with money that was "fraudulently obtained." It's money the City of Windcrest was counting on to help revitalize the run-down area around Windsor Park Mall.
It all started in 2007, when Windcrest scored a big victory, convincing the rapidly-growing web hosting company Rackspace to locate its new headquarters at the mall, which had been empty for two years. There was a problem though: To make the deal work, the city needed a developer to buy up all of the separate sections of the mall and consolidate them into one property. That developer would then turn around and sell the mall to Rackspace for slightly more than the developer bought it for.
Super-dad Gary Cain wanted to be that developer. Fortunately for him, his brother Ronnie Cain happened to be the city manager of Windcrest and the former chief of police.
“Ronnie Cain had the keys to the kingdom. Mayors came and went, but Ronnie Cain was the constant, and the community relied very heavily on him," explained Adriana Biggs, Chief of the White-Collar Crimes Division at the Bexar County District Attorney’s office. "He gave Gary the keys to the kingdom. He gave him the access. They needed each other.”
Investigators claim the brothers first "misrepresented" the price Gary Cain paid for the mall, thereby inflating the price Rackspace paid him for it by more than $7 million. As part of the deal, Rackspace also agreed to pay for a new road its employees could use to get into the mall. Prosecutors claim Ronnie and Gary Cain fraudulently obtained some of that money.
The design company working on the road was named DPZ. Prosecutors say the Cain brothers purposely created a company with a similar name (DDPZ) and that Ronnie Cain, using his authority as city manager, approved a transfer of $2.8 million of Rackspace's money to the Cain brothers' company. He allegedly showed his boss, former Windcrest Mayor Jack Leonhardt, an invoice that made it look like the money was going to the legitimate contractor.
“That invoice was approved by both Ronnie Cain and the mayor of Windcrest, to be paid for work that had not been done,” said Biggs.
According to documents, Ronnie Cain also put $20,000 into the personal account of former Windcrest City Secretary Tracy Freimarck, with whom he was "carrying on a sexual relationship."
It was all eventually uncovered, and in 2010, investigators raided Gary Cain's office, seizing computers and records. The brothers were both indicted.
By then, the money was gone. Investigators claim Gary Cain spent it on jewelry, furniture, trips to the Beverly Hills Hotel, the Four Seasons in New York, a resort in Puerto Rico, and that memorable Sweet 16 party for his daughter.
“Gary Cain was living a nice life, had a beautiful home, was spending a lot of money,” Biggs told us.
As for that road the money was supposed to build, Windcrest taxpayers are now having to pay for that.
We tried to talk to former City Manager Ronnie Cain, who is out on bail awaiting trial.
Trouble Shooter Jaie Avila asked, “Can you tell us what happened to the $2.8 million? Don't the people of Windcrest deserve an explanation?”
Cain refused to answer and instead ordered Avila and his crew to get off of his property or he would call police.
His brother Gary also refused to comment as he quickly left a recent court hearing.
The brothers will likely go on trial next year on felony charges, which could land them in jail for life. The two have pleaded not-guilty. They are also being sued by Rackspace and the City of Windcrest. Both brothers have filed lawsuits against the city.
