On Wednesday, two former senior members in the administration of Gov. Ricardo Rosselló were arrested and charged in a scheme to defraud the federal government through the misuse of contracts. Prosecutors have said that Rosselló is not a subject of the probe. One appeared in court on Thursday and is reportedly cooperating with prosecutors, while the other pleaded not guilty, according to El Nuevo Día, Puerto Rico’s biggest newspaper.
Some Republican lawmakers reacted to the arrests on Thursday by demanding stricter oversight measures to ensure taxpayer funding is not misused, while Democrats warned that withholding critical funding would only punish innocent victims.
The arrests come at a pivotal moment in the island’s relationship with federal lawmakers, as Puerto Rico seeks to secure the release of billions in federal aid from the Trump administration and pushes Congress to approve billions in new funds to prevent drastic cuts to the Medicaid health insurance program for hundreds of thousands of people.
Puerto Rico has for months complained about the slow release of federal aid from the island after Hurricane Maria, which killed thousands of people and caused between $90 billion and $120 billion in damage, according to varying estimates.
Congress has approved $42 billion for the island’s recovery, but only $13 billion of that money has been spent, spurring Democrats and island officials to demand its more immediate release. Russ Vought, the acting director of the White House Office of Management and Budget, is spending considerable time each week on Puerto Rico’s finances and created his own team in OMB to monitor the money, according to a senior government official. Such a team does not exist for U.S. states affected by other storms.
Trump has also sought regular reports on the money going to the island, and officials at senior agencies have gotten specific requests from Vought and OMB staff about the spending. The president has asked White House officials to monitor every dollar that goes to Puerto Rico, according to the senior official, and complained about federal funding to Puerto Rico for food stamps and other items.
José Carrión, a member of Puerto Rico’s fiscal oversight board and a “Latinos for Trump” leader, said in an interview before the arrests that “the federal government should be rigorous — that’s what Congress has tasked us for on a local front.”
Republicans in Congress are also stepping up their calls for tougher oversight. At a House panel hearing on Thursday, Rep. Greg Walden (Ore.), the top Republican on the Energy and Commerce Committee, said lawmakers will need to add stricter oversight measures for a package to provide billions in Medicaid funding to the island. Because Puerto Rico is not a state, its Medicaid program is skimpier and requires Congress to periodically step in and approve additional spending.
In April, Rosselló asked House lawmakers for $15 billion to cover its Medicaid program for the next several years, noting its federal funding is set to begin drying up this September and could impact 1.5 million residents on the program.
But among those arrested by the FBI on Wednesday was Ángela Ávila-Marrero, who oversaw the Puerto Rico Health Insurance Administration, which includes oversight of Medicaid, until June. Ávila-Marrero pleaded not guilty, according to El Nuevo Día.
“Given the news out of Puerto Rico yesterday, we will also need additional program integrity measures in place,” Walden said at the House hearing. “I look forward to working with the majority to see what kind of measures we can put in place to prevent these kinds of fraudulent activities, that are alleged, from happening.”
Rep. Gus M. Bilirakis (R-Fla.), a member of the Energy and Commerce Committee, also said Thursday lawmakers should add additional funding safeguards, citing the arrests.
The Medicaid package was approved by a House subcommittee on Thursday but still faces a long road to passage, particularly through the Republican-controlled Senate. Sen. John Cornyn (R-Tex.) said there would “absolutely” need to be stricter controls for federal spending on the island going forward. Sen. Marco Rubio (R-Fla.) said in a statement he was “very concerned” by the arrests, while Sen. Rick Scott (R-Fla.) said Congress must work to ensure taxpayer funding is protected.
“We’ve sent so much money down there, and I’m not entirely surprised" by the arrests, Cornyn said. “This has been the concern all along, that they’re not particularly competent.”
But Democratic lawmakers were wary of overreacting to the arrests, with Rep. Frank Pallone Jr. (D-N.J.), chairman of the Energy and Commerce Committee, saying that he would agree to some additional oversight measures but not at the expense of people who rely on federal help.
“There is no indication Medicaid beneficiaries in Puerto Rico did anything wrong. In fact, if the allegations are true the beneficiaries are among the victims,” Pallone said.
Rep. Nydia M. Velázquez (D-N.Y.), an outspoken defender of the island, said “the health care of the people of Puerto Rico should not be compromised" over the arrests. “We will fight like hell” to make sure Republicans do not block the funding, she said.
But some acknowledged the arrests would make securing federal funding for the island more difficult. Sen. Patrick J. Leahy (D-Vt.), who is on the Appropriations Committee and has pushed for Puerto Rico funding in disaster packages, said “of course” the arrests would make it more difficult to secure federal funding for the island.
Puerto Rico’s situation is dire. The island saw about 3.9 percent of its population leave in 2018, as the number of people living on the island has fallen by 15 percent since 2008, according to a Pew Research Center report released on Monday.
About 30,000 people in Puerto Rico are still living in blue tarp tents set up after the hurricane, partially due to delays in constructing new housing, according to Federico A. de Jesús, principal of the FDJ Solutions consulting firm and former deputy director of the Puerto Rico governor’s office in Washington.
De Jesús also said communities are still struggling with damaged roads and bridges, as well as broken streetlights, while billions in Department of Housing and Urban Development funding approved by Congress have not been released. He said the island is also still awaiting $2 billion of funding, already approved by Congress, for reconstruction of its electrical grid.
“But nobody can tell us where that is,” de Jesús said.