Federal Jury Convicts Former AAA Vice President in Workforce-Training Contract Fraud Scheme

A federal jury in San Juan found Ivonne M. Falcón Nieves, former vice president of the Puerto Rico Aqueduct and Sewer Authority (AAA), guilty on October 8 of conspiracy and honest-services wire fraud. The verdict comes more than a decade after the investigation into the scheme began, and marks the second time Falcón has faced a jury over the same conduct ¹.

Falcón's first conviction, which carried a three-year, five-month prison sentence, was overturned in August 2023 by the First Circuit Court of Appeals in Boston, which ruled she should have been tried separately from her co-defendants. The case dates back to December 2015, when investigators began looking into workforce-training contracts funded under the now-defunct federal Workforce Investment Act (WIA) ¹².

According to evidence presented over the 12-day trial, Falcón worked alongside Sally López, then head of the Labor Law Administration (ADL), to facilitate government contracts between state entities and Links Group LLC, a company tied to Anaudi Hernández, a former fundraiser for the Popular Democratic Party. Prosecutors Timothy Henwood and María Lugo Colom presented cash deposits into Falcón's and her sister Marielis Falcón's bank accounts as proceeds of alleged extortion payments made by a contractor to keep those contracts active ¹. Hernández, who already pleaded guilty and became a cooperating government witness, has not yet been sentenced. Judge Pedro A. Delgado Hernández presided over the trial, and Falcón's sentencing is set for January 15, 2027 ¹.

What this means for you

This is not a distant, abstract corruption case: it is public money — including federal funds meant to train Puerto Rican workers — that prosecutors say was diverted into disguised payments. Every rigged contract drains resources from programs meant to benefit employees, small businesses, and communities. For the average resident, the case is a reminder that corruption inside public agencies isn't just a headline problem: it directly affects how much money actually reaches the services people are supposed to receive, from the water coming out of the tap to job-training programs. It is also a sign that oversight institutions — the FBI, federal prosecutors, and even appellate courts — may take years, but they do reach outcomes, which should encourage anyone who witnesses irregularities to report them rather than assume nothing will change.

Checklist

1. If you are a contractor or public employee and someone asks you for a "commission" or cash payment in exchange for awarding or keeping a government contract, do not pay it — it is a federal crime and can be documented as extortion.
2. Before contracting with an agency, check its award history through Puerto Rico's Registro Único de Licitadores and the government's Transparency Portal.
3. Document any unusual deposit, transfer, or payment tied to a public contract; that kind of record can become key evidence if an investigation later arises.
4. If you manage or oversee federal funds (like those once channeled through the Workforce Investment Act, now WIOA), insist on separation of duties and periodic independent audits.
5. Report suspected corruption or misuse of funds to the relevant federal agency's Office of Inspector General, to Puerto Rico's Comptroller's Office, or to the FBI's tip line (tips.fbi.gov), which allows anonymous reports.
6. If you work in a public agency, familiarize yourself with the Government Ethics Law and report internally any undue pressure to favor a specific contractor.
7. Follow the public docket for the case in the U.S. District Court for the District of Puerto Rico if you want to verify the status of the sentencing or of co-defendants before doing business with the people or companies involved.

What's next

Falcón's sentencing is scheduled for January 15, 2027, when Judge Pedro A. Delgado Hernández will determine her penalty, which could take into account that this is her second conviction over the same scheme. Anaudi Hernández, the cooperating witness and central figure in the case, is still awaiting his own sentencing, so more details about the scope of the contracting scheme are likely to emerge ahead of that hearing. It also remains to be seen whether Falcón's defense will appeal this second verdict, as it did the first, which could extend the case even further. Meanwhile, the AAA — which has previously been summoned to explain aspects of this case before the federal court — faces pressure to show that its current contracting processes carry stricter controls than the ones that allowed this scheme to unfold more than a decade ago ².