BREAKING NEWS: Texas Rangers find former San Marcos construction manager used city funds, labor for personal projects

Jason Pence was fired by the city Jan. 27 following allegations that he had engaged in improper practices as construction manager. (Community Impact Newspaper staff)
Jason Pence was fired by the city Jan. 27 following allegations that he had engaged in improper practices as construction manager. (Community Impact Newspaper staff)

Jason Pence was fired by the city Jan. 27 following allegations that he had engaged in improper practices as construction manager. (Community Impact Newspaper staff)

The Texas Rangers arrested former San Marcos construction manager Jason Pence after the agency found that he used thousands of public dollars for noncity construction projects he was personally compensated for, records show.

An ongoing criminal investigation by the Texas Rangers also found that as the city’s construction manager, Pence directed his subordinates on multiple occasions to complete work on noncity construction—that Pence was personally paid for—while they were on the clock for the city.

Pence, who was fired by the city Jan. 27 following allegations that he had engaged in improper practices as construction manager, was arrested Feb. 11 on charges of theft by a public servant of more than $30,000 but less than $150,000, according to his arrest warrant.

Pence has since been released on a $10,000 surety bond and could not be reached for comment.

Pence’s arrest warrant was filed based on information gathered by the Texas Rangers during the agency’s criminal investigation into Pence’s conduct as the city’s construction manager.

Texas Ranger Joseph Evans stated in the arrest warrant that interviews, text messages and city financial records show that as the city’s construction manager, Pence—on multiple occasions—directed his subordinates to do construction work on noncity projects that Pence was personally compensated for.

In an interview, a temporary employee with the city of San Marcos, Matthew Ramirez, told Evans that he and two other temporary city employees were instructed by Pence in October 2019 to manufacture fire pits for a New Braunfels business called Gruene Grove, according to the affidavit. Ramirez and the other city employees were on the clock for the city when the work was performed, Evans stated in the affidavit.

Based on city records and interviews with Chris Rue, the owner of Gruene Grove, this was not a city project, and Pence was personally compensated for it, the affidavit stated.

“Ramirez further stated he was with Pence, on city time, when the materials were purchased from McCoy's and provided text message communication with Pence and photographic documentation,” Evans stated in the affidavit.

A review of documentation provided by Ramirez and city finance records showed that Pence used taxpayer dollars to purchase material for this project, Evans stated.

Evans also stated in the affidavit that Pence provided Rue with nine mesh chairs and one folding table that were purchased for $451 with city money in 2011.

Pence used city funds for another construction project he was personally compensated for on a New Braunfels property owned by Ashley Doane, according to the affidavit.

Evans found that Pence purchased several items that were used for this project with city money, including Sherwin Williams paint, caulk, brushes and spackling, the affidavit stated. These items were purchased on the city’s account in June 2017 as well as May and November 2019.

The total for all the evidence found at the residence associated with the Sherwin Williams receipts was $644, according to the affidavit.

Evans stated that he observed text messages between Doane, the property owner, and Pence from Aug. 3, 2019, in which Pence states that he picked up “the rest of the cedar beams” for the construction of a carport and roof for Doane.

On the same day Pence sent that text message, he purchased cedar beams of the same measurements with city money, according to the affidavit.

“The cedar identified in the receipt appeared consistent with the materials I observed at the property,” Evans stated in the affidavit. “Furthermore, the receipt documents the materials were for the purpose of the City of San Marcos ‘Yard.’ According to Director of Public Safety Chase Stapp, the described lumber was not located at the "Yard.”

Pence purchased the cedar beams for $2,426.52, the document stated.

“Multiple tools and materials were observed that were consistent in make and model to items purchased by Pence utilizing City of San Marcos funds from McCoy's,” Evans stated.

During the course of the investigation, Stapp provided Evans with multiple invoices associated with heavy-gauge copper wire Pence purchased with city funds, according to the affidavit.

Evans stated Stapp told him several of the copper wire purchases did not appear to be linked to any city projects. Records show, the affidavit stated, that on at least two projects Pence claimed to have purchased the wire for, the projects were actually completed with a different wire gauge. One of the project’s contract stated that wire would be provided by an outside vendor.

Texas Department of Public Safety records show that Pence sold about 4,500 pounds of copper wire between July 2018 and February 2019, Evans stated.

“I have spoken to Willis and Josh Mitchell, owners of Roadrunner Recycling in San Marcos, who recalled the transactions with Pence,” Evans stated. “According to Josh Mitchell, the wire sold by Pence was a heavy gauge wire. Pence told Josh the wire was overage on a project. According to Josh, based on the appearance of the wire as well as the statements made by Pence, he believed the wire sold by Pence during the above described time period was new and never used.”

Pence told Evans in a Jan. 21 interview that he had gotten the wire from several demolition jobs he did but refused to provide specifics of the locations of the projects or the property owners, the affidavit stated.

Evans reviewed records associated with nine electrical jobs the city of San Marcos hired Johnny Homann of CT Electric to perform. City records and receipts show that Pence purchased $28,919 worth of copper wire from Elliot Electric Supply and associated the purchases with the jobs the city hired Homann for, the affidavit stated.

Homann told Evans that none of the wire was necessary or used for any of the nine jobs he was hired for, according to the affidavit.

“It should be noted additional examination is being conducted into multiple wire purchases and McCoy's purchases made by Pence utilizing City of San Marcos funds and associated with materials believed to be unrelated to any City of San Marcos projects,” Evans stated.

The city of San Marcos stated in a Feb. 12 news release that in addition to the ongoing criminal investigation by the Texas Rangers, the city has hired Deloitte & Touche LLP to examine any construction contracts Pence has overseen since 2015, the release stated. The company will also evaluate the city’s internal procurement process controls.

“A December news article detailed concerns and prompted other individuals to come forward with information about potential improprieties,” the release stated. “As a result, a criminal investigation was requested by the City of San Marcos and initiated by the Texas Rangers with assistance from the San Marcos Police Department Criminal Investigations Division.”

Community Impact Newspaper published a special report in December that showed, based on the review of thousands of pages of documents, while Pence was the city’s construction manager, the city bypassed the legally required competitive bidding process through the use of change orders. San Marcos officials declined to comment for this story.

That report was based on a review of 120 contracts awarded between January 2013 and February 2019 to Boerne-based construction company The Fence Lady Inc., which is owned by contractor Rebecca Dean.

The city of San Marcos awarded The Fence Lady with $3.2 million in contracts during this time, records show. But through change orders approved by the city, The Fence Lady’s earnings increased by $922,309—or 28.85%.

During this time, Pence was charged with managing the city’s construction projects, approving change orders, and monitoring and authorizing expenditures related to city construction projects, according to a job description provided by the city.

Internal emails obtained by Community Impact Newspaper showed that multiple city staff and some elected officials had expressed concern about this pattern since at least 2016.

Rebecca Ybarra, who has served as the director of the San Marcos Convention and Visitor Bureau for 21 years, told Community Impact Newspaper that she believes Pence had a “conflict of interest” when it came to his authority to administer and sign off on Dean’s construction contracts and associated change orders because of the pair’s professional and personal history.

Pence previously confirmed that he and Dean have known each other for about 15 years and worked on construction projects together in the private sector before he became a city employee in 2014. The city declined to comment on whether Pence ever disclosed his past professional relationship with Dean.

“I’ve committed to our City Council and to this community to fully investigate this situation,” San Marcos City Manager Bert Lumbreras stated in the city’s news release. “We’ve put many new controls and measures in place including an internal procurement workgroup to ensure compliance with state law and we will continue to diligently improve our operations as stewards of the City’s finances.”