This article has been updated to include a comment from the Santa Clara Fairgrounds Management Corporation, sent on Aug. 23, eight days after the announcement of charges filed in connection with an alleged kickback scheme.
The Santa Clara County District Attorney’s Office has charged the director of events and marketing of the county fairgrounds with extorting kickbacks from a security company.
Prosecutors allege that Obdulia Banuelos-Esparza of San Jose solicited, accepted and kept for herself up to thousands of dollars each month from the owner of 4 Diamond Security, a Bay Area security firm, in exchange for her recommendation to her employer, the Santa Clara County Fairgrounds Management Corporation, that the security company continue to be retained.
Prosecutors said that after paying the monthly bribes for more than a year, the company refused further payoffs and its contract with FMC was not renewed.
The 41-year-old defendant was expected to self-surrender on the warrant at which time the date will be set for her arraignment on felony charges of bribery and extortion in the Hall of Justice in San Jose. If convicted, she faces a maximum sentence of four years in the county jail.
Salene Duarte, interim co-executive director and fair manager, said Obdulia Banuelos-Esparza resigned three months ago. Duarte released a brief statement more than a week after the announcement of the charges.
“The fairgrounds are where our community goes for fairs, festivals, and fun,” Rosen said in a statement. “Not felonies.”
The Santa Clara County Fairgrounds Management Corporation is an independent non-profit that contracts with Santa Clara county government to manage the fairgrounds. Its contracts with the county to manage the fairgrounds are approved and reviewed by county officials. Contracts that FMC makes with its contractors are not approved or reviewed by county officials, according to prosecutors.
Employees of the fairground management firm are not county employees.
Here is the statement released by Duarte on Aug. 23:
“We received news that the Santa Clara County District Attorney’s Office is pursuing criminal charges against former employee Obdulia Banuelos-Esparza related to an alleged kickback scheme. There is no place for this type of behavior at the Fairgrounds, and the Santa Clara County Fairgrounds Management Corporation has cooperated and will continue to cooperate with the District Attorney’s investigation in any way we can.
“Ms. Banuelos-Esparza resigned from her position at the Fairgrounds Management Corporation several months ago, effective May 14, 2024. We are dedicated to upholding the proud traditions of the Santa Clara County Fairgrounds and ensuring that it remains a place where families can create happy memories for years to come. Given the ongoing criminal investigation and prosecution of that former employee, we have no further comments at this time."
Copies of the current County-FMC Agreement, are available online here and here.
Prosecutors said that no charges were filed against the security company because it is the alleged victim of the extortion scheme.
The district attorney’s investigation began in September 2023 when the DA’s Office received a referral from the county counsel’s Whistleblower Program of a citizen’s complaint alleging various types of wrongdoing, including the kickback scheme.
The investigation, according to prosecutors, showed that Banuelos-Esparza asked the owner of the security company to pay her a percentage of the money the company would be receiving under its contract with fairground management nonprofits.
The owner of 4 Diamond Security initially refused, Banuelos-Esparza accused the company’s guards of sleeping on the job and warned that the contract was in jeopardy. She offered to intervene on the company’s behalf in exchange for the payments. She threatened that the company’s contract would be terminated if the payments were not made.
“Pressured by the economic uncertainties at the height of the COVID Pandemic in the summer of 2020,” the security firm started paying Banuelos-Esparza monthly cash payments calculated at $1 per guard-hour worked, according to prosecutors. The payments started out at around $2,500 per month, but eventually grew to nearly $4,000 per month.
