2010

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0137

r·-!L.ED ,W~TR!CT CLERK [,tXI'-\~{ CD. TEXAS

DocUii"tJR I 3 A II) "J r

THE $TATE OF TEXAS

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COUNTY OF BEXAR

COURT~EfUJY

BY tJlM_0j

AFFIDAVIT FOR SEARCH WARRANT

{Article 18.02(10), Texas Code of Criminal Procedure}

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BEFORE ME, THE UNDERSIGNED AUTHORITY, PERSONALLY APPEARED THE AFFIANT HEREIN, A PEACE OFFICER UNDER THE LAWS OF TEXAS. WHO, BEING DULY SWORN, ON OATH MADE THE FOLLOWING STATEMENTS:

My name is Robert (Wayne) Matthews. I am a peace officer under the laws of the State of Texas, and I am a commissioned peace officer certified by the Texas Commission on Law Enforcement Officer Standards and Education ("TCLEOSEJI). I have been a licensed and commissioned peace officer for more than Sixteen years and I am currently employed as a Texas Ranger with the Texas Department of Public Safety. Your Affiant, through his experience and training, has investigated cases of financial crimes including but not limited to cases of fraud, bribery, money laundering, and securing the execution of a document by deception.

A. There Is in BEXAR County, Texas, a suspected place and premises described and located as follows: 242 West Sunset, Suite 101, San Antonio, Bexar County, Texas. Said suspected place, is a two-story office building, constructed of a material similar to stucco. There is a parking area in front of the building and rear of the building. There is a rock wall in front of the entrance. There is a gated entryway into the front of the structure, which appears to be wrought iron. In addition to the foregoing description, the suspected location also includes all other buildings, structures. places and vehicles on said premises and within the curtilage, which are found to be under the control of the suspected party named below and in, on, or around which said suspected party may reasonably deposit or secrete property which is the objecj: of the search requested herein.

B. Said suspected places are in the charge of and controlled by the following named

suspected party(s) to wit:

Gary Cain, OOB: 06106/1956, TX DL# 00995674

Forestt Ronald Cain (hereinafter "Ronnie cain"), DOB 01127/50, TX DL# 05754769

C. Your affiant has reason to believe and does believe that the above named suspected parties have committed multiple felony offenses against the Penal Laws of the State of Texas, including, but not limited to, the offenses of Securing Execution of a Document by Deception. Theft, Misapplication of Fiduciary Property, Money Laundering. and numerous violations of the Texas Penal Code, and that property I documents and the property listed below can be found at the location described in paragraph A above.

D. Affiant has probable cause for said belief by reason of the following facts and circumstances. The Texas Rangers and the Bexar County District Attorney's Office are conducting an ongoing criminal investigation into the activities of several individuals

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associ,ated with the Windsor Park Mall redevelopment, to include Gary Cain and Ronnie Cain. In 2006, the City of Windcrest, through the Windcrest Economic Development Corporation, a Texas 48 Corporation, sought to redevelop Windsor Park Mall and revitalize the land between Walzem and Eisenhauer Roads. The City of Windcrest as well as the land between Walzem and Eisenhauer Roads is located in Bexar County, Texas. In the fall of 2006 Ronnie Gain, then Windcrest City Manager, presented his brother, Gary Cain, to Windcrest city officials as a potential developer and financier of a plan to purchase Windsor Park Mall and redevelop it. In 2007, Rackspace Managed Hosting, a web hosting company, (hereinafter referred to as "RackSpaCe"), agreed to buy the mall through a lease-purchase agreement. As part of the agreement between the City of Windcrest, Rackspace and Gary Cain, a five million dollar ($5,000,000) escrow account was established and funded by Rackspace for the payment of specified expenditures. It was subsequently learned that 2.8 million dollars was transferred from the escrow account under suspicious circumstances leading to the initiation of this investigation. Gary and Ronnie Cain's actions, as well as actions taken by them in their capacity as managers or principals of several companies, are being investigated. These companies include: DDPZ Planning and Architecture, Urban Revitalization Real Estate Group, Windcrest Economic Development Company, and RHY A Development Partners, etc. The facts contained within this affidavit are based on your Affianfs belief obtained after his personal investigation into the suspected parties' involvement in the above listed offenses. This investigation has included: an extensive review of related documents and bank records, witnesses' sworn statements, personal . interviews conducted with former and present members of the City CounCil for the City of Windcrest, personal interviews with board members associated with the City of Windcrest Economic Development Corporation, personal interviews with other numerous credible witnesses whose information has been verified through other means where possible, information obtained from other investigators and prosecutors who have been investigating the case, and an ongoing review of both official minutes from the City of Windcrest City Council meetings as well as documents that continue to be obtained from the City of Windcrest.

. E. Affianfs investigation at this point has yielded, among other facts, the following information which serves as the basis for affianfs probable cause:

1. In late 2006, the Windsor Pari< Mall property had been without a tenant for nearly two

years. At the time, the mall was subdivided and owned by three different IndMduals and/or companies. Witnesses interviewed expressed that the properties needed to

. be combined before a tenant could be located.

2. The City of Windcrest started the Windcrest Economic Development Corporation

(hereinafter 'Windcrest WEDC"), a Texas 48 Corporation, in 1998. The purpose of the Windcrest WEDC is to foster business development in the City of Wind crest. According to sworn statements provided by past and current Windcrest WEDC board members, the Windcrest WEOC is set up as a separate entity from the City of Windcrest. For all practical purposes, however, the Windcrest City Council and the City Manager control all of the Windcrest WEDC's actions and expenditures. The Windcrest WEDC's budget and general plan of action must be voted on and approved by the Windcrest City Council. The position of General Director of the Windcrest WEDC is considered a department head and as such that'individual reports directly to Ronnie Cain. Ronnie Cain as Windcrest City Manager is the

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ultimate supervisor of all Windcrest WEDC's employees including its Executive Director, Ray watson.

3. According to his sworn statement, from the time he began working for the City of

Windcrest on June 1, 2006, Windcrest WEDC Executive Director Ray Watson began looking for a tenant to fill the vacancy at Windsor ParI< Mall. Ray Watson and Ronnie Cain began meeting with the owners of the mall parcels to see if the city could acquire title to the entire mall.

4. Watson further states that in the fall of 2006, he and Ronnie Cain learned that

Nationwide Insurance was looking to move into the San Antonio area. Ray Watson and Ronnie Cain met with the owners of the mall, and asked the owners to donate their equity in their portion of the mall to the City of Windcrest in exchange for a tax deduction. The City of Windcrest would then offer the mall to Nationwide at a competitive price with additional tax incentives. Ray Watson and Ronnie Cain presented their plan to Graham Weston, owner of the former "Montgomery Wards" location within Windsor Park Mall, and Chairman of Rackspace. This presentation was made in the hope that Weston would agree to donate his equity or sell the land to Windcrest or to a developer working in conjunction with the city. After Ray Watson and Ronnie Cain made their presentation detailing their plan to bring Nationwide to Windsor Park Mall, Graham Weston asked if the City of Windcrest would offer the same incentives to Rackspace. Weston inf,ormed Ray Watson and Ronnie Cain that Rackspace was considering a new corporate campus and would be interested in moving to the Windsor Park Mall location.

5. According to Ray Watson's sworn statement, in late 2006, Ronnie Cain, introduced his

brother. Gary Cain, to the Windcrest City Council as a potential developer. At the time Ronnie Cain brought his brother to the city, Ronnie Cain claimed he had no affiliation with any of Gary Cain's companies. Gary Cain represented to the City Council that his development group could provide the financing for·the purchase of the mall properties and enable the city to acquire all four parcels that make up Windsor Park Mall. Rick Bruns, current Windcrest City Mayor and former member of the Windcrest WEDC, in his sworn statement says that in late 2006 the City of Windcrest agreed to work with Gary Cain's company towards the goal of acquiring the mall.

6. According to Secretary of State records, in December 2006, Gary Cain created the

Windcrest Economic Development Company, LLC. The name Gary cain chose for the Windcrest Economic Development Company, LLC (hereinafter referred to as "Gary Cain's WEDC") was confUSingly similar to the name that the City of Windcrest had previously given to its Windcrest Economic Development Corporation. Gary Cain registered Gary Cain's WEOC in Texas and used it to purchase, and subsequently conSOlidate, the Windsor Park Mall parcels. According to Ray Watson's sworn statement, Gary Cain's WEOC conSisted of three partners, Gary Cain, Michael White, and Jeremy Hebert

7. Gary Cain's WEOC is only one of many companies or business entities I that this

Affiant found that Gary Cain registered with a name similar to another 'legitimate company doing business with the City of Windcrest. It is Affianfs belief that Gary 3

Cain's intent in so naming his companies was to confuse individuals as to the true identity of the company thereby allowing him to further his fraudulent scheme. Witnesses interviewed as part of this investigation have expressed confusion over the similar names Gary Cain chose for his companies. For example, several of them disclosed to this affiant that they were not aware that Gary Cain created a company with the name of DDPZ that is so similar to the name of a legitimate business known as DPZ that was hired by the City of Windcrest to perform services related to the Windsor Park Mall redevelopment. After reviewing the invoice from DDPZ. they disclosed that the utilization of this name by Gary Cain caused them to inadvertently disburse funds to Gary Cain's DDPZ. rather than to the legitimate and intended recipient, DPZ.

8. Rick Bruns, in his sworn statement, says that as negotiations between the City Of

Windcrest and Gary Cain evolved, there was an understanding by the Windcrest WEDC that financing for the purchase of the mall parcels was to be provided by Gary Cain's WEDC. Gary Cain's WEOC would fund the purchases of the parcels and title to the land would be held by the Windcrest WEOC for tax abatement purposes.

9. In April 2007, Rackspace hired Randy Smith and tasked him with locating new

corporate headquarters for the company. In May 2007, negotiations between the City of Windcrest and RackSpace intensified as both parties entered into discussions to explore the possibility of Rackspace mOving its headquarters into the former Windsor Park Mall location. According to Smith the task of relocating Hackspacs's headquarters to Windsor Park Mall became known as "Project Castle."

10. In February of 2007, Ronnie cain directed Betsy Mills, Municipal Finance Officer for the City of Windcrest, to open a new bank account entitled "City of WindcrestProject Castle". In her sworn statement, Betsy Mills says that Ronnie Gain informed her and other city employees that the City of Windcrest-Project Castle bank account was funded by Gary Cain. The purpose of the account. as Ronnie Cain explained to Mills, was to pay for and isolate expenses incurred by the developer. A review of U"le account records shows that contrary to Ronnie Cain's representation to Mills, the City of Windcrest·Project Castle account was opened with a City of Windcrest check in the amount of $68.000 signed by Ronnie Cain. According to Mills' statement the auditor instructed city employees that the city should not continue to handle a bank account funded by Gary cain in order to avoid potential problems. Affiant has reviewed an email from City Manager Ronnie Cain to Betsy Mills dated May 28, 2007. I n the email, Ronnie Cain instructs Betsy Mills to tum over the City of Windcrest- Project Castle checkbook_ bank statements, and all related documents in her possession to him. The email shows that Ronnie Cain informs Betsy Mills the Municipal Rnance Office would "no longer handle any processes on this project."

He further instructs Mills that "it will all be handled by the investment group:

11. According to records for the City of Windcrest-Project Castle account, in November 2007 Ronnie Cain wrote a $10,000 check payable to IBe Bank. This check was used by Ronnie Cain to open a bank account under the name Urban Revitalization Real Estate Group-Project Castle (hereinafter "Ronnie Cain's Urban account"). Secretary of State records reflect that Urban Revitalization Real Estate Group is a

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company started by Gary Cain in April of 2007.

12. Bank records obtained for Ronnie Cain's Urban account list Ronnie Cain and Bahar

Perry, Gary Cain's alleged wife, as co-signatories on the account. Ronnie Cain's Urban account was found to share a billing address with the bank account of Gary Cain's company DDPZ, located at 24165IH 10 West, Ste.217126, San Antonio, Texas, 78257.

13. A review of bank records for Ronnie Cain's Urban account shows that starting in December of 2007 through October of 2009, over $140,000.00 worth of checks made payable to the City of Windcrest, endorsed by Ronnie Gain, were deposited into this account. Additionally, over $200,000 worth of checks drawn on City of Windcrest accounts and made payable to Project Castle were depoSited into Ronnie

, Cain's Urban account. The records for Ronnie cain's Urban account also show that during this time period Ronnie Cain transferred over $50,000 dollars out of this account into other bank accounts bearing his name and used the funds for his personal benefit (i.e. groceries, veterinarian services, dry cleaning). During the same time period, over $20,000 was transferred from Ronnie Cain's Urban account and deposited into Tracy Friemarck's personal bank account. Tracy Freimark is Windcrest City Secretary and has signatory power on Windcrest bank accounts. During this investigation Affiant learned from wtblesses, and has since confirmed, that Ronnie Cain and Tracy Freimark were carrying on a sexual relationship during the time money was transferred by Ronnie Cain into her personal account.

14. Additionally, a review of records of Ronnie Cain's Urban account shows that from

December, 2007 through December, 2009 numerous checks in amounts ranging from $200 to $400 were made payable to the City of Windcrest. In her statement, Betsy Mills, MuniCipal Officer for the City of Windcrest, indicates that Ronnie Cain made a practice of writing checks from the Ronnie Cain Urban account to the City and subsequently removing cash from the register. This was a practice that resulted in the effective laundering of money through the City of Windcrest.

15. A review of the records for the City of Windcresfs ban k account entiUed Windcrest Economic Development Corporation, reveals a check in the amount of $300,000 made payable to Gary Cain and signed by Ronnie Cain on July 17, 2007. Affiant also obtained a promiSSOry note dated the same day, July 17, 2007, obligating the City of Windcrest and the Wlndcrest WEDC to a $300,000 loan to Gary Cain! Powerhouse Management, LLC, another entity controlled by Gary Cain. Paula Miles, former President of the Windcrest WEDe, in her sworn statement, says she had no knowledge Of a $300,000 loan to Gary Cain, nor was the board informed that Gary Cain had even applied for such a loan. Paula Miles further explains that any loans or grants made to local business by the Windcrest WEDC were on average less than $5,000 dollars and had to be approved by the Board. AdditiOnal witnesses state that historically these loans were included in the books of the Windcrsst WEDC for accounting purposes. From these interviews with former and current Windcrest WEDC board members, it is clear that the $300,000 loan made to Gary Cain Ronnie Cain was made without Windcrest WEDC Board approval.

16. During the period of time when the unauthorized loan was made, the City of Wlndcrest 5

was still negotiating details of a potential move by Rackspace into the Windsor Park Mall location. According to Ray Watson's swom statement, the City of Windcrest worked with other governmental entities in order to reach an agreement and formulate an incentive structure to encourage RackSpace to acquire the Windsor Park Mall location. Documents obtained from Windcrest City Council members indicate that on August 2, 2007, Rackspace signed the Master Economic Incentive Agreement (hereinafter "MEIA") in conjunction with the City of Windcrest, the City of San Antonio, Bexar County. Gary Cain for Gary Cain's weoc as well as other local and state governmental entities. The purpose of the MEIA is to memorialize, and make a part of one document, the economic incentives being provided by the included parties to the final agreement.

17. Sworn statements obtained from former and current members of the Windcrest city Council, the Windcrest WEDC Board, city officials, and Rackspace employees, reveal that the general agreement between the Windcrest WEDe, Gary Cain's WEDe, and Rackspace was the following: Gary Cain's weoc would provide the money to the City of Windcrest to buy the mall; the mall would then be sold to Rackspace for the amount that Gary Cain's weoc paid to purchase the mall, plus actual associated fees. Additionally, the MEIA required Rackspace to place five million dollars ($5,OOO,OOO.OO) in an escrow account with the City of Windcrest. According to the MEIA, this escrow fund was specifically designated for land development directly south of the Windsor Park Mall property, on land referred to as the Eisenhauer Development Tract.

18. In his statement, Ray Watson says he was not asked to attend the closings for the individual mall properties. Instead, Ronnie Cain opted to attend the closings as the representative of the Windcrest WEDC. A review of deed records and clOSing documents related to the purchase of the mall properties show that in January and February 2007, Ronnie Cain signed the deeds for the tracts on behalf of the Windcrest WEDC. Additionally, the deeds of trust list Gary Cain's WEDC as both the Beneficiary and the Note Payee as well as clearly listing in bold type the purchase price paid for each tract. Based on these deed records it is clear that both Ronnie and Gary Cain had knowledge of the actual cost of the mall tracts at the time of the real estate closings.

19. According to Ray Watson's swom statement, pursuant to the MEIA, Rackspace required a certification of costs from the City of Windcrest in order to verify the actual purchase price (or "cost") paid for the mall property. A review of emails obtained by affiant, shows that in the days leading up to the closing, Rackspace repeatedly requested this information from both the City of Windcrest and Gary Cain. A review of documents provided by the City of Windcrest reveals two documents entitled "Cost Certification." One document was the "Cost Certification" tha~ Gary Cain's WEDC presented to the City of Windcrest sworn to by Gary Cain. This .. Cost Certification" document discloses the dollar amount Gary Cain's WEDC claims it paid for the various mall tracts. The second document was the "Cost Certification- that the City of Windcrest in tum presented to Rackspac~. The Windcrest WEDC's"Cost Certification" mirrors that submitted to them 'by Gary Cain.

20. Rick Bruns and Ray Watson, in their sworn statements say that the Windcrest WEDC

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relied exclusively on Gary Cain's representations when preparing its own ''Cost Certification". These witnesses state that they were never presented with any documents establishing the actual purchase prices paid by Gary Cain for each tract. Ray Watson states that Gary Cain's justification for failing to provide supporting documents was that he was bound by confidentiality agreements he had entered into with the sellers and therefore could not disclose the actual documents. According to witnesses, in lieu of supporting documents, in July 2007, Gary Cain made a presentation to the Windcrest City Council purportedly showing the amounts his company paid for the different tracts that made up the mall. Rick Bruns, in his sworn statement, says that Ronnie Cain was present at this meeting. Bruns further elaborates that both the City Council and the Windcrest WEDC relied on Gary Cain's representations and simply verified that tfle amounts listed as purchase prices for each tract mathematically added up to "the total cost figure provided by Gary Cain.

21. Your affiant compared the "Cost Certification" provided by Gary Cain to the City of Windcrest with the actual deed records. Such comparison shows that Gary Cain misrepresented the prices paid for three out of the four tracts. The cost Gary Cain presented was inflated by more than seven million dollars ($7,000,000.00) over the actual price paid. A further review shows that the only tract with the correct price reported is the "Montgomery Wards· parcel, owned by Rackspace Chainnan Graham Weston. Ronnie Cain and Gary Cain could not have represented an inflated sales price on that particular parcel because Graham Weston was well aware of the price paid to him for his portion of the mall. Any attempt to do so would have alerted Weston and Rackspace that the prices paid for the other parcels had been fraudulently inflated in the cost certifications. Ronnie Cain had actual knowledge of the amounts paid for the properties and signed the purchase documents on behalf of the Windcrest WEDC. But, Ronnie Cain stood silent at the meeting referred to above as his brother misrepresented the sales prices of the properties to Windcrest city officials. Therefore, your affiant has reason to believe and does believe that Ronnie Cain did conspire with, and aid and abet Gary Cain in perpetrating a fraud aga1nst the City of Windcrest, the Windcrest'WEOC, and Rackspace.

22. Records obtained by Affiant from the City of Windcrest show that money from the sale 01 the mall property was wired directly to Gary Cain's WEOC and disbursed to its various partners. These records also show that Gary Cain personally received $1.6 million dollars ($1,600,000) from the sale of the Windsor Park Mall location as a result of his fraudulent cost certification.

23. As previouSly mentioned, pursuant to the MEIA, Rackspace gave the City of Windcrest five million dollars ($5,000,000) to be held in an escrow account. According to this agreement, these funds were exclusively earmarked for the development 01 the land south of the mall. The MEIA states that this money can be paid out only for infrastructure work actually completed on the property south of the mall, for the development of "Racker Road," a proposed thoroughfare which would ease congestion for the City and be utilized by Rackspace employees, and for land planning by the finn Duany Plater-Zybrek & CompallY (hereinafter "CPZ"). [

24. According to Ray Watson's swom statement, DPZ is a legitimate international 7

planning and development company based in Miami, Florida. OPZ completed design work for the area south of Windsor Park Mall as permitted in the MEIA. According to witnesses' sworn statements, in late 2007, DPZ presented a series of presentations known as charettes in the City of Wind crest to reveal their proposed concept for a community called RHYA to be located on the Eisenhauer Development Tract.

25. Secretary of State Records show that on February 25, 2008 Gary Cain created a company called DDPZ Planning and Development (hereinafter "DDPZ"). An invoice for two million, eight hundred thousand dollars ($2.8 million) on ODPZ letterhead, dated March 1, 2008, was presented to the Ctly Of Windcrest for payment. The DDPZ letterhead represents that DOPZ has three offices, one at 241651H 10 West. Suite 217125, San Antonio, Texas, which your affiant has verified is actually a UPS Store where Gary and Ronnie Cain's entities receive mail, and two other addresses, one in Miami and another in Austin. The Miami address listed on the invoice is the address for the OPZ. In an email obtained by Affiant, Andres Duany, a partner in DPZ, claims his company has no affiliation with DDPZ and any use of DPZ's address on the invoice was unauthorized. The address listed as DDPZ's Austin address, is the actual address for Doucet and Associates, a legitimate engineering firm that completed work on the mall property.

26. Emails reviewed by affiant show that Ronnie Cain, a local Attorney, and Gary Cain worked together to refine the wording on the $2.8 million invoice before Gary Cain presented it for payment

27. Records obtained by Affiant from the City of Windcrest show that the $5 million being held in escrow by the city was placed in a Texas Municipal League bank account Betsy Mills, Municipal Finance Officer for Windcrest, in her sworn statement, says that in 2008, when Gary Cain submitted the DDPZ invoice for payment, only three individuals had signatory authority on this account: Ronnie Gain, Windcrest Mayor Jack Leonhardt, and her. Bank records show that on April 7, 2008, Ronnie cain transferred $2.8 million out of the escrow account and into the City of Windcrest General Operating Account. City of Windcrest records show that on April 11, 2008, Ronnie Cain placed his initials on a document approving the transfer of $2.8million into an IBe Bank account entitled "DDPZ". In his interview Jack Leonhardt states that Ronnie Cain presented him the invoice and told him it should be honored. Leonhardt stated he volunteered to sign off on a memo approving the payment in order to avoid the appearance of impropriety. At the time, the money was dispersed no work had actually been completed on the BRacker Road" as required by the MEIA

28. Ban~ records indicate that on April 11. 2008, a $2.8 million payment was received in the DDPZ account referenced. above. This account has a mailing address of as 24165IH10 West, Suite 217125, San Antonio, Texas. Gary Cain and sanar Perry are the only signers on the OOPZ bank account. A review of OOPZ bank documents shows that this account was opened on March 28, 2008, with a $100,000.00 check signed by Ronnie Cain and drawn on Ronnie Cain's Urban account.

29. Affiant's review of DDPZ's bank records reveals that the premises to be: searched, 242 W. Sunset, SUite 101, San Antonio, Texas were purchased on May 30,2008, with a

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portion of the $2.8 million. According to records from the Bexar County Appraisal District. the property was later transferred to Lyn Family III Limited Partnership. a company listing Ronnie Cain as its manager.

30. Records obtained from Doucet and Associates as well as DPZ, the companies that actually completed the work on the Windsor Park Mall redevelopment project listed on Gary Cain's DDPZ invoice, reveal that their actual bills barely rose to the one million dollar mark. In a sworn statement, Michael White, Gary Cain·s business partner in Gary Cain's WEDC, states he paid DPZ's invoice. Michael White further alleges that Gary Cain has yet to reimburse him for nearly $500,000 in payments to DPZ. It should be noted that Michael White is not implicated in the criminal acts alleged herein and, at this time. is viewed as a possible victim of crime.

31. In an email to Jeremy Hebert, obtained by Affiant, dated August 26, 2008, Ronnie Cain clearly misrepresents the amount held in the escrow account to Michael White and Jeremy Heber, Gary Cain's partners. In the email Ronnie Cain fails to disclose the $2.8 million payment he had approved to his brother in April of 2008. Instead, in an apparent effort to conceal his fraud, Ronnie Cain provides Jeremy Hebert a fictitious total of five million one hundred thirty two thousand three hundred forty dollars and fifty eight cents ($5,132,340.58).

32. Analysis of DDPZ's bank records indicate that Gary Gain used the fraudulently obtained funds to purchase jewelry, furniture, and take lavish trips to the Four Seasons in New York, the Beverly Hills Hotel in Beverly Hills, and the Conquistador Resort in Puerto Rico. In October 2009, Gary Cain·s daughter appeared on MNs Super Sweet 16, a show documenting the lives of teenagers who usually have wealthy parents that throw lavish coming-of-age celebrations. By the end of 2009, IBC Bank records indicate that the DDPZ account had been completely depleted to a negative balance of -$5.43.

'.33. In her sworn statement, Windcrest City Councilwoman Mary Hatch says:that in early 2009. Rackspace and Windcrest City Officials began negotiations to determIne what would be done about "Racker Road," which the city was obligated to build under the MEIA with the escrowed $5 million. On or about February 2009, Ronnie cain asked Mary Hatch to accompany him to a meeting at Rackspace. Enroute to the meeting, Ronnie cain explained to Hatch that individuals at Rackspace were upset that $2.8 million had been paid out of the escrow account. Ronnie Cain told Hatch that he had advised Mayor Leonhardt against paying the DDPZ lnvolce. Betsy Mills, in her sworn statement says that Ronnie Cain called her recently and tried to remind her Mayor Jack Leonhardt had approved the $2.8 million dollar payment. Mills states that she knew Ronnie Cain was misstating what had occurred and she was certain Ronnie Cain had approved the payment. Mills vividly recalls Ronnie Cain giving her specific orders to follow that included wiring instructions and a strict deadline for the time by which the funds needed be tranSferred.

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34. In their Sworn statements, Rick Bruns, Garlene Bach, and Ray Watson, say that in the

spring of 2009, Gary Cain threatened to draw the city into looming litigation with Rackspace. In their swom statements, Windcrest WEDC Board members and Windcrest City Council members state they were urged to make a deal with Gary

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Cain to avoid the burden of the lawsuit. According to Mary Hatch's statement, Gary Cain also threatened to let the land south of the mall lay fallow, thereby preventing any potential redevelopment. These Witnesses say they were led to b~lieve that authorizing such an agreement would help the city get rid of Gary Cain and allow another developer to work with the City.

35. Rick Bruns' sworn statement indicates that in April or May 2009, the Windcrest City Council was asked to approve, in principle, a settlement agreement with Gary Cain. Although no formal agreement was ever presented to the Council, members interviewed by the Affiant stated they authorized the idea of entering into a settlement agreement because they believed the city would get rid of Gary Cain. According to Rick Bruns, in late August 2009, he was attempting to put together a settlement agreement that would resolve all of the city's issues with Gary Cain and Rackspace. In his sworn statement, Rick Bruns says Ronnie Cain did not inform him or the City Council that a series of agreements between the City and Gary Cain had already been signed.

36. The Affiant reviewed three agreements signed in August 2009 by Gary Cain and Ronnie Cain. The first agreement is titled, "Development Agreement among the City of Windcrest, Texas and Urban Revitalization Real Estate Group, LLC." This document obligates the City of Windcrest to immediately pay Gary Gain $300,000. Bank records show the money was paid to Gary Cain, on September 8 and 9, 2009 with tWo Windcrest WEDC checks totaling $300,000 payable to Urban Revitalization Real Estate Group. The agreement also called for the City of Windcrest to place $200,000 in an IBC Bank account for Gary Cain to use as collateral for future loans. The agreement calls for another $500.000.00 payment to be made to Gary Cain from an account titled "Project Fund.·

37. A review of the second agreement titled. "Release· By and Between The'City of Windcrest Texas, and Windcrest Economic Development Corporation; a Texas Type 8 Corporation and Windcrest Economic Development Company, a TeXas Limited' liabIlity Company and Urban Revitalization Real Estate Group, LLC, a Texas Umited Uability Company and Gary L. Cain, Individually." The release agreement appears to have two purposes. The first is to -release and forever discharge" any'and all claims any named party might have against another named party for breach of the Grant Agreement, Development Agreement, or the MEIA. The second purpose is to release Urban Revitalization Real Estate Group and Gary Cain from any and all obligations that may have applied under the MEIA.

38. The third agreement is titled "Development Agreement among the City of Windcrest, Texas and RHYA Development Partners, LLC (hereinafter "RHYA,,), a Texas Umlted Liability Company and Windcrest Economic Development Corporation, a Texas Type B Corporation." The agreement lists Gary Cain as the manager for RHY A. The agreement obligates the City of Windcrest to a development agreement for the land south of the mall with the new Gary Cain Company, RHYA Development Partners LLC, and obligates RHYA to the terms of the MEIA.

39. Generally, a review of the three agreements reveals that: (1) Gary Cain is entitled to settlement monies from the City of Windcrest, (2) Gary Cain is released from any 10

brother agreeing to pay Gary Cain a one million dollar ($1,000,000) structured settlement and reinstate him as the developer, even though Ronnie Cain was well aware that the Windcrest City Council wished to wash their hands of Gary Cain and tenninate the relationship.

40. According to em ails obtained by Affiant, in September of 2009, Mayor Rick Bruns attempted to stall the settlement payments to Gary Cain until the matter could be reconsidered by the Windcrest City Council. Mayor Bruns, via email. asked Ronnie Cain for copies of the signed,agreements. When it became clear the documents were not gOing to be released by Ronnie Cain, Mayor Bruns threatened to file an open records request Mayor Bruns later received copies of the first and second agreements but was never given a copy of the agreement between the city of Windcrest and Gary Cain that reinstated him as the developer for the land south of the mall. .'. . ','

41. Affiant's interviews with council member Mary Hatch, and Windcrest WEDC Ray Watson confirm that neither the Wind crest City Council nor the Windcrest WEpC were ever told by Ronnie Cain that he had Signed yet another developer agreement with Gary Cain.

42. Affiant's review of bank records associated wtth the fraudulently obtained funds listed above has revealed numerous other entities owned by, or associated with, Gary Cain, Ronnie Cain, and Bahar Perry that are in receipt of the alleged fraudulently obtained funds. On April 16, 2008, five days after obtaining the $2.8 million wire transfer from the City of Wind crest, Gary Cain wired $425,000 to Lyn Family Entertainment, an entity bank records indicate is controlled by another Gary Cain entity, Lyn Family II limited ~artnership.

43., Afflant's review of DDPZ bank records indicate that beginning on DecembElr 30, 2008 . and continuing through July 7,2009, Gary Cain transferred over $100,000 to an account be~ring the na~e of another of his entities, Me Ranch Fumitl:lfe.

44. Affiant's review of OOPZ bank records also indicates transfers of funds during 2009 between OOPZ and Lyn Family III Limited Partnership. Bank records for lyn Family III Limited Partnership reveal the initial registered agent as Lyn Family III Management, LLC. A review of Texas Secretary of state records reveals that Lyn Family Management, LlC is a company that lists uRafael Sosino, attorney in fact for Forestt Ronald Cain, as manager.- Lyn Family III Limited Partnership is the entity currently listed by the Bexar County Appraisal District as the owner of the premises to be searched at 242 West Sunset, Suite 101, San Antonio, Texas.

45. Affiant's review of Secretary of State filings, bank records, title documents, and other commercial documents, reveals numerous other entities controlled in part or owned by the party(les) that have benefited from the illegally obtained funds. Those entities controlled by the party(les) include but is not limited to: Urban Revitalization Real Estate Group, Urban Revitalization Real Estate Group-.Project Castle, DDPZ, Rhya . Development Partners, Windcrest Revitalization Partners I & II, Windcrest Economic Development Company, Lyn Family Entertainment, Lyn Family II Limited Partnership. Lyn Family III Limited Partnership, lyn Family III Management. LLC.

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Development Company, Lyn Family Entertainment, Lyn Family II Umited Partnership, Lyn Family III Umited Partnership, Lyn Family III Management, LLC.

F. Based on his training and experience your Affiant knows that individuals. business entities, and organizations conducting business must maintain and keep records of their financial transactions. The maintenance of such records is necessary for accounting,iauditing, and for tracking profits and losses. likewise, based on training and experience, your Affiant knows that those engaged in financial crimes keep and maintain records of their financial activity. Some of these records and documents are created to perpetuate their crimes. Other records and documents are created as a result of their financial activity, such as bank statements, cancelled checks, invoices, and receipts. Because financial crimes are complex schemes, from his training and experience, your Affiant knows that in order to maintain the scheme, these records and documents must be maintained and stored for future reference. Based on training and experience your Affiant also knows that,it is common practice for these records to be maintained at more than one location. Those engaged in financial crimes maintain records and documents at their home as well as their places of business. Your Affianfs experience, training. as well as knowledge have shown that some records and documents are. at times, transported between home and office.

G. Based on training and experience in the investigation of fraud and white collar crime, Affiant believes that records and documents relevant to this investigation and pertaiAing to Urban Revitalization Real Estate Group, DDPZ, and other entities owned by Gary Cain and profiting from his criminal enterprises are to be located at 242 West Sunset, Suite 101, San Antonio, Bexar County, Texas.

1. After a diligent search, Affiant has not found any addresses other than the one provided to this court for the Urban Revitalization Real Estate Group. Affiant has v,erified within the past 24 hours that the address the Bexar County Appraisal District has for the Urban Revitalization Real Estate Group continues to be Gary Cain's address of 242 West Sunset, Suite 101, San Antonio. This address has, bean ,confirmed as the address for the said Urban Revitalization Real Estate Group by my review of title records which show the building was purchased with illegitimate funds by ODPZ and transferred to a company owned by Ronnie Cain. Additionally, Mary Hatch gave a voluntary statement in which she stated that she met With Gary Cain at the location in early 2009. Rnally, a visual inspection of the building revealed that Urban Revitalization Real Estate is listed as atenanl

2. Your Affiant therefore seeks a warrant to search for and seize evidence of felony criminal activity and contraband believed to be located at 242 West Sunset, Suite 101, San Antonio, Bexar County, Texas, under the control of Gary Cain and Ronnie Cain.

H. Your Affiant knows that computer hardware, software, documentation, passwords.

Instruction manuals, and data security devices may be important to a criminal investigation in many ways, Including, but not limited to (1) the objects themselves may be instrumentalities, fruits, or evidence of crime, and/or (2) the objects may have been used to collect and store information about crimes in the form of electronic data. Article 18.02, Texas Code of Criminal Procedure, permits the State to search and seize implements or instruments used in the commission of a crime, and property or items, except the personal

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writings by the accused, constituting evidence of an offense or constituting evidence tending to show that a particular person committed an offense. Based upon Affiant's knowledge, training and experience and consultations with law enforcement personnel whom are computer investigative specialists, your Affiant knows that searching computerized information for evidence or instrumentalities of crime commonly require agents to seize most or all of a computer system's input/output peripheral devices, related software, data/memory storage devices, documentation, and data security devices, including passwords so that a qualified computer expert can accurately retrieve the system's data in a laboratory or other controneo environment.

I. Based upon my training and experience in conducting investigations of individuals involved in illegal activity, including the laundering of proceeds of illegal white collar crime, or the exchange of money for the purpose of committing financial crimes, Securing Execution of a Document by Deception, Theft, Misapplication of Fiduciary Property, Money Laundering, and based upon the training and experience of other investigators involved in this investigation, I know:

1. Those engaged in the aforementioned criminal activity commonly accumulate and maintain "fronr businesses, real property and other assets as a result of their involvement in alleged illegal activities detailed herein.

2. That such offenders commonly maintain and operate a "front" business for the purpose of disguising the true nature and source of the illegal proceeds of such crime.

3. That such offenders commonly secure the assistance and services of relatives, co-conspirators, close friends, and busmess entities in conducting their illegal ventures and in concealing or otherwise handling their illegal acts and any proceeds from such acts in such a manner that is designed to prevent the detection and seizure of the proceeds or other evidence by law enforcement agencies.

, 4. That such offenders commonly maintain inside their residences and businesses they own or control, documents and records which are evidence of the organization's modus operandi, and of the true location, nature and source of illegal proceeds of such crimes, and the involvement of individuals in those crimes.

5. That among the documents and records which are commonly maintained inside residences and businesses owned or controlled by persons involved in such crimes, or in laundering the proceeds of such crimes, are documents and records as set forth in paragraph K of this affidavit.

6. Individuals involved in such crimes and in laundering the proceeds Of such crimes commonly maintain inside their residences and businesses they own or control records as set out in paragraph K of this affidavit.

7. Based on my training and experience and the training, I know that the type of records sought are maintained over the course of years and are not routinely disposed of as they are necessary for conducting personal as well as business transactions. Also, your Affiant knows that potential criminal defendants when made aware of a criminal investigation may destroy or secret the documentary evidence of their crimes.

J. Based on training and experience in the investigation of fraud and white collar crime, your 13

Affiant believes that the offenses described herein are document intensive and said documents must be stored electronically or as hard copies. Your Affiant, based on training and experience believes that to carry out this type of offense requires the obtaining and retention of records so that the financial crime may be accomplished and the scheme maintained. Your Affiant therefore has reason to believe and does believe that evidence of crime may be found at the residence and/or office space described in Paragraph A.

K The following property constitutes fruits and proceeds of criminal activity, evidence, or may lead to evidence that the offenses fisted above and described in Paragraph C above, were committed and that said suspected parties committed the felony offenses of Misapplication of Fiduciary Property, Theft, Securing the Execution of a Document by Deception, Money Laundering, and numerous other violations of the Texas Penal Code. It is the belief of Affiant that said suspected parties have possession of and are concealing at said suspected places the following property:

1. Any and all evidence and documents, including but not limited to all invoices,

contracts, letters of understanding, accounts, work orders, purchase orders, vouchers, transactions for profit/not for proftt, billing statements. tax records, estimates, remuneration paid in currency or in~kind, financial ledgers, receipts. business budgets, tax retums for Urban Revitalization Real Estate Group, Urban Revitalization Real Estate Group~Project Castle, DDPZ, Rhya Development Partners, Windcrest Revitalization Partners I & II, Windcrest Economic Development Company, Lyn Family Entertainment, Lyn Family II Limited Partnership, Lyn Family III Limited Partnership, Lyn Family III Management, LLC. and variations thereof;

2. Any docurnants that provide names, addresses, phone numbers, and any other

identifying information for all past and present directors, officers, board members, or employees of Urban Revitalization Real Estate Group, Urban Revitalization Real Estate Group-Project Castle, DDPZ. Rhya Development Partners, Windcrest Revitalization Partners I & II, Windcrest Economic Development Company, Lyn Family Entertainment, Lyn Family II Umited Partnership, Lyn Family III Umited Partnership, Lyn Family III Management, LLC. and variations thereof;

3. Any articles of personal property tending to establish the identity of the person(s) in

control and/or ownership of the premises located at 242 West Sunset, Suite 101, San Antonia, Bexar County, Texas, including rent receipts, cancelled mail, and utility bills;

4. Financial records including but not limited to assorted accounts receivables, billing

records, money orders, bank bags, receipts, moneys, credit/debit card processing machines including but not limited to, the contents stored within the machines; credit card receipts, books, ledgers. notebooks, daily receipts, records, and bank records;

5. Financial documents for Gary Cain, Ronnie cain. aanar Perry, Tracy Freimarck,

Urban Revitalization Real Estate Group, Urban Revitalization Real Estate,Group-Project Castle, DDPZ, Rhya Development Partners, Windcrest Revitalization Partners I & II, Windcrest Economic Development Company, Lyn Family Entertainment, Lyn Family II Limited Partnership, Lyn Family III Limited Partnership. Lyn Family III Management, LLC variations thereof, or any individual/group/entity associated with any of the aforementioned groups, DBA's, articles of incorporation including any and all by-laws or amendments for any of the aforementioned groups, tax id numbers and bank records which includes but is not limited to monthly statements, applications (including any documents presented to open the account), signature cards, copies of account holders' identification presented to the bank, deposit slips (front & back), items of deposit (front &

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back), checks (front & back), withdrawal slips, money orders, cashier's checks, and any correspondence with any bank;

6. Any correspondence involving Gary Cain, Ronnie Cain, Bahar Perry, Tracy Freimarck,

Urban Revitalization Real Estate Group, Urban Revitalization Real Estate Group-Project Castle, DDPZ, Rhya Development Partners, Windcrest Revitalization ,Partners I & II, Windcrest Economic Development Company, Lyn Family Entertainment, Lyn Family" Limited Partnership, Lyn Family III Umited Partnership. Lyn Family III Management, LLC, variations thereof, and/or any entity and any individual associated with the aforementioned people/entities, any official or unofficial meeting minutes and any records/documents/contracts for any and all expenses incurred by Gary Cain, Ronnie Cain, Bahar Perry. Tracy Freimarck, Urban Revitalization Real Estate Group, Urban Revitalization Real Estate Group-Project Castle, DDPZ, Rhya Development Partners, Windcrest Revitalization Partners I & II, Windcrest Economic Development Company, Lyn Family Entertainment, Lyn Family II Limited Partnership, Lyn Family III Umted Partnership, Lyn Family'" Management, LLC, variations thereof, and any group or entity associated with any of the aforementioned groups for any legal services, accounting services, investment services, or financial advice;

7. Employment records including but not limited to employment applications, employment

contracts, and payroll; income tax information, any and all tax records, telephone message books and records, messages, and recordings; fax records including logs of faxes sent and received;

8. Articles of Incorporation, Rules and Regulations, and/or other documents used to

organize or create the fOllowing business entities (along with any other business entities found to be associated with the criminal offenses specified in Paragraph C above):

Urban Revitalization Real Estate Group, Urban'Revitalization Real Estate Group-Project Castle, DDPZ, Rhya Development Partners, Windcrest Revitalization Partners I & II, Windcrest Economic Development Company, Lyn Family Entertainment, Lyn Family II Umited Partnership, Lyn Family III Umted Partnership, Lyn Family III Management, LLC, as well as to any other alleged business of Gary Cain, Ronnie Cain, Bahar Perry, Tracy Freimarck, Urban Revitalization· Real ,Estate Group, Urban Revitalization Real Estate Group-Project Castle, ODPZ, Rhya: .Developrnent Partners, Windcrest Revitalization Partners I & II, Windcrest Economic Development Company, Lyn Family Entertainment, Lyn Family II Umited Partnership, Lyn Family III Limted PartnerShip, Lyn Family III Management, LLC and variations thereof; business related correspondence; records maintained and used as police counter intelligence as well as electronic devices maintained and used for police counter intelligence purposes; records of and bills for advertisements and telephone service equipment; and telephone bills for local and long distance service, any and all records of accounts with banks and other financial institutions; records of transactions made with cashiers checks, money orders, business checks, personal checks or wire transfers; infonnation on bank safety deposit boxes, keys to bank safety deposit boxes, United States currency; precious metals; contents of all safes; contents of anything that is capable of being locked or secured, including but not limited to file cabinets, drawers, cabinets, trunks, briefcases and vending machines;

9. Telephone instruments, cellular telephones, telephone answering machines and electronic storage media contained therein, caller identification devices; telephone calling cards and codes; credit card receipts and vouchers, credit' card imprinters; records of and bills for electronic paging equipment, audiO and digital pagers and all numbers and electronic messages and numbers received by the pagers for ten days following the execution of this search warrant;

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10. Cameras, video cameras, video cassette recorders, and copying equipment that are capable of taking pictures, recording images or reproducing original images, including related hardware, including but not limited to any film and/or undeveloped film and all images stored in the form Of film negatives, tapes, video cassettes and other media which is capable of storing photographed or recorded images;

11. Computers and computer-related equipment and materials, including 'but not limited to:

a. Computer Hardware - Computer hardware consists of all equipment, which can collect, analyze, create, display, convert, store, conceal, or transmit electronic, magnetic, optical, or similar computer impulses or data. Hardware includes (but is not limited to) any data-processing devices (such as central processing units, memory typewriters, and self-contained IClaptop" or "notebook" computers); internal and peripheral storage devices (such as fixed disks, external hard disks, floppy disk drives and diskettes, tape drives and tapes, optical storage devices, transistor-like binary devices, zip drives, thumb or flash drives, memory cards/sticks and other memory storage devices); peripheral input/output (such as keyboards, printers, scanners, plotters, video display monitors, and optical readers); and related communications devices (such as modems, cables and connections. recording equipment, RAM or ROM units, acoustic couplers, automatic dialers, speed dialers, programmable telephone dialing or signaling devices, mechanisms, or parts that can be used to restrict access to computer hardware (such as physical keys and locks);

b. Computer Software - Computer software is digital information, which can be interpreted by a computer and any of its related components to direct the way they work. Software is stored in electroniC, magnetic, optical or other digital form. It commonly inCludes programs to run operating systems, applications (such as wordprocessing, graphics, or spreadsheet programs). utilities, compilers, interpreters, and communication programs;

. c. Computer Documentation - Computer-related documentation consists of written, recorded, printed, or electronically stored material, which explains or illustrates how to configure or use computer hardware .. software, or other related items, Passwords and Data Security information however stored or maintained - comp~r passwords and other data security devices are designed to restrict access to or hide computer software, documentation, or data. Data security devices may consist <;>f hardware, software, or other programming code. A password (a string of alphanumeric characters) usually operates as a sort of digital key to "unlock" particular data security devices. Data security hardware may include encryption devIces, chips, and circuit boards. Data security software or digital code may include programming code that creates i1esf' keys or lihot" keys, which perform certain pre-set security functions when touched. Data security software or code may also encrypt. compress, hide, or "booby-trap" protected data to make it inaccessible or unusable, as well as reverse the process to restore it. Any and all electronic devices which are capable of analyzing, creating, displaying, converting, or transmitting electronically to a computer, computer components, computer peripherals, word processing eqUipment, modems, monitors, printers. plotters, encryption circuit boards, optical scanners, external hard drives, and other computer related electronic devices. Any and all instructions or programs stored in the form of electronic or magnetic media. which are capable of being interpreted by a computer, or related components. The systems. application software, utility programs, compilers, interpreters and any other programs or software used to communicate with computer hardware or peripherals

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either directly or indirectly via phone lines, radio, or other means or transmission;

12. Lawful currency of the United States of America. Cash proceeds, Checks;

13. Real and personal property believed to be fruits and proceeds of criminal activity or acquired using the proceeds of criminal activity. Motor vehicles used to facilitate the offense herein described or acquired as fruits and proceeds of criminal activity.

14. Any and all safes and locking storage boxes which may contain any of the aforementioned items, and Affiant further seeks to search in any other locations at the suspected place where items listed above may be hidden. including behind or inside walls, in the ceiling tile or other ceiling fixture or structure, or under the floor boards, tiles, rugs, or other floor structure.

Said property constitutes evidence that the offenses described below occurred and that the suspected parties committed the offenses. Said property may also constitute contraband. Contraband, as defined in Chapter 59 of the Texas Code of Criminal Procedure, includes but is not limited to property of any nature, including real, personal, tangible or intangible that was acquired with proceeds gained from the commission of the felonies.

Pursuant to Chapters 18,47, and 59 of the Texas Code of Criminal Procedure, your Affiant requests the issuance of a search and seizure warrant to search for and seize the property listed above. Therefore, your Affiant respectfully requests the issuance of a warrant to search the residence and/or office building identified in Paragraph At and to seize the evidence described above pursuant to Chapters 18,47, and 59 of the Texas Code of Criminal Procedure to prevent the consequences of theft, return the property to the true owner of same, for evidence of criminal activity, or to seize and forfeit said property and as otherwise authorized by

law. .

Affiant further requests pursuant to the provisions of Article 18.10 of the Texas Code of Criminal Procedure, for authority to remove such seized property from this coLlnty, if such removal is necessary for the safekeeping of such seized property, for forensic testing and analysis, or as otherwise authorized in the Texas Code of Criminal Procedure.

,

WHEReFOR! PREMISES CONSIDERED, Affiant requests that a warrant be issued authorizing any Peace officer of the State of Texas to search 242 west Sun_ Suitll101, San Antonio, Bexar County, Texas with the authority to search for, seize and take custody of the evidence or contraband enumerated above that may be located therein.

~ tJ"<,,, ~tuik~

Texas Ranger Badge #= '0 US

SW~N TQ, :NO SUBSCRIBEQ ~EFO ME BY SAID AFFIANT ON THIS THE I ~ fL

DAY OF i" 1.,2010 at I 0 I ~. /J

/ U ~~~ .. -" - ( : _/

.(._._ ....

District Judge

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