A federal magistrate judge has ordered a civil lawsuit against San Antonio attorney Edward Valdespino be sent to arbitration. A Florida company is seeking the return of $5 million from the lawyer.
Josie Norris/San Antonio Express-News
A Florida company sued San Antonio attorney Edward Valdespino for the return of $5 million it gave to him to hold in escrow.
Courtesy photo
Three months after San Antonio attorney Edward Valdespino failed to comply with a judge’s order to turn over $5 million he previously said was in his lawyer trust account, a federal magistrate judge raised questions about “what on earth is going on” with the money.
U.S. Magistrate Judge Richard Farrer nevertheless ruled that the dispute between Valdespino and a Florida company, which says the attorney was supposed to return the money he held in escrow for it, must be resolved through private arbitration under the terms of an agreement the parties signed.
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“There’s concerns here. There’s equitable concerns here,” Farrer said from the bench Friday. “There’s concerns and curiosity about what on earth is going on here. But it’s an incomplete record at this stage. And that will all be hashed out in arbitration.”
The ruling sidelines for now Boca Raton, Fla.-based I.C. Deposits Development Inc.’s effort to have Valdespino held in contempt and jailed until he produces the $5 million. Farrer said he would stay the company’s federal lawsuit and dismiss the remaining pending motions as moot without prejudice, meaning some of the issues could return to court later.
READ MORE: Florida company asks judge to jail San Antonio lawyer over missing $5M
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Farrer emphasized that sending the dispute to arbitration does not necessarily end questions surrounding a Bexar County judge’s May 11 order requiring Valdespino to deposit the $5 million into the court registry.
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“I’m not immune to the significant concern and even outrage that I’m detecting from plaintiffs,” the judge said. “We need to figure out what all is going on here. That’s going to happen in the arbitration.”
If events unfolded as I.C. Deposits alleges, Farrer added, “there will be a reckoning.”
Valdespino did not attend the hearing. His attorneys appeared on his behalf.
After the hearing, his lawyer, Jason Davis, declined to answer a reporter’s question about why Valdespino has not returned the $5 million.
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‘I think they’re gone’
Attorney Kelli Cubeta, who represents I.C. Deposits, offered her own explanation during the hearing.
“It defies logic … why in the world wouldn’t he just pay these funds,” she told Farrer. “Why? Because I think they’re gone. I think he has lied to the court repeatedly. And there’s got to be consequence for this. Thus far, he has been able to avoid any consequence.”
Cubeta argued the arbitration provision should not be enforced because the escrow agreement was a fraudulent instrument used to induce her client to turn over the $5 million. Farrer concluded those challenges should be decided by the arbitrator rather than the court.
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I.C. Deposits sued Valdespino in April after a private investment transaction involving $5 million the company had placed with him as an escrow agent failed to close.
RELATED: San Antonio attorney faces suits alleging misuse of trust accounts tied to promises of big returns
The company alleges it transferred the money into Valdespino’s IOLTA account in September 2025 after being told the transaction would generate about $50 million in returns. Under the escrow agreement, the $5 million was to be returned if the deal was not completed. An IOLTA account is a lawyer trust account used to hold client or escrow funds.
In an April court filing, Valdespino acknowledged that more than $5 million was in his IOLTA account and that $5 million had been sent to him by I.C. Deposits. A state judge later issued a May 11 temporary injunction requiring him to deposit the money into the Bexar County court registry by 11 a.m. May 14.
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The same day he was required to turn over the money, Valdespino shifted the lawsuit from state to federal court.
Other allegations
The I.C. Deposits case is not the only time Valdespino has faced allegations over money he was supposed to hold in escrow.
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In May, Buffalo, N.Y., couple Kevin and Holly Wyse sued Valdespino and his former law firm, Naman Howell, alleging they were persuaded to wire $1 million into his IOLTA account after being promised their money would grow to $10 million within 45 days.
The Wyses allege their lawsuit is at least the fourth in which parties have sued seeking the return of money transferred to Valdespino, describing the cases as a recurring pattern. Valdespino has said he “vehemently” denies the allegations against him. Naman Howell was later dismissed from the case and cut ties with Valdespino.
U.S. District Judge Xavier Rodriguez denied the Wyses’ request for a temporary restraining order, finding they had not shown Valdespino was likely to dissipate their money or that monetary damages would be inadequate.
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The other two cases are: A since-settled lawsuit filed by a New Jersey man who alleged Valdespino failed to return $100,000 and a 2021 lawsuit by a Mexican company over more than $1.6 million it alleged the attorney was supposed to hold in escrow for the purchase of COVID-19 masks. The Mexican company dismissed its lawsuit in 2022.