Funny Business

Municipal Collections has a lucrative city contract and some interesting partners. But good luck tracking it down

Collection agencies are generally not that hard to find. Most of the time, in fact, they're hard to get away from, given that their purpose in life is to be so ubiquitous, so in your face that people who've avoided paying off debts finally succumb and put that check in the mail.

But Municipal Collections Inc., which the city of Houston has contracted with to round up in excess of $60 million worth of overdue traffic and parking tickets, doesn't fit that easy-to-locate pattern. The suite in the Southwest Freeway office building that's supposed to be its official address displays no signage. And the company isn't listed on the office building's directory.

Still, given its history, the fact that Municipal Collections has all the visibility of a Stealth Bomber might be appropriate. By the time the company had arranged with the city to track down ticket scofflaws it had already used four different addresses and phone numbers -- and this from a firm that, at least in the eyes of Harris County and the Texas Secretary of State's office, didn't even exist until three weeks before the City Council decided it was the right company to round up lost revenue.

Yet despite the company's short and peripatetic life, it managed to beat out a number of better established collection agencies for the city's business, and for a deal that has the potential to earn some $2 million annually for the lucky contractor. Nearly two years after he lost out to Municipal Collections, Terry Simonds, president of Houston-based Universal Fidelity Corp., still has questions about how the contract was let. He wonders about how, once Municipal Collections entered the competition, the rules of the game were changed. And he can't help but notice that the increase in ticket collections that was supposed to flow from the new contract has not been around 25 percent as promised, but has hovered closer to 4 percent. The difference to the city is some $4 million a year.

"This thing," Simonds says, "stunk right from the beginning."
"This thing" began in late 1992, when staff members from the Municipal Courts Administration Department met with several companies interested in submitting proposals for a newly created multi-million dollar revenue contract. The city had decided to split its ticket collection business into two parts. Previously, all late tickets had been collected by Lockheed Information Systems Corp., but now Houston officials felt that income would be increased if traffic and parking fines up to 210 days delinquent were pursued separately from fines more than 210 days overdue. Lockheed declined to bid under the new arrangement, and the older tickets, or "old warrant cases," were turned over to San Diego-based West Capital Financial Services Corp.

Still at issue, though, were the "new warrant cases," and it was those that the court staff had gathered to discuss. As the meeting began, the president of one Houston collection firm announced, "Look, if this is going to be just another good ol' boy award and we're all not playing on a level playing field, don't waste my time."

Assurances were made that everything was on the up and up, and ten proposals were submitted, a number of them from established local and national collection firms who detailed exactly how they would carry out the new contract. But when the smoke cleared, the municipal court administrators had given their nod of approval to the fledgling Municipal Collections Inc. Several things distinguished Municipal Collections' pitch from the others, not the least of which was that, at the time, the company wasn't registered in Harris County or with the secretary of state's office. In other words, it didn't officially exist. That registration wasn't filed until March 10, 1993 -- just three weeks before City Council approved the recommendation that the company be awarded the contract.

But Municipal Collections had other distinguishing characteristics as well, chief among them the connections its principals had with the city and the administration of Mayor Bob Lanier. According to Municipal Collections' proposal, the company's principals included:

* William E. Wells, a municipal courts judge from 1983 to 1988.
* Peary Perry, a Lanier campaign worker and private investigator who for years had done security work at apartment buildings and financial institutions owned by the mayor. Perry's role as a source for a Channel 13 story on an insurance scam that put a serious dent in the mayoral bid of Lanier's 1991 runoff opponent, Sylvester Turner, is an element of Turner's pending libel lawsuit against the television station.

* Clyde Wilson, the locally renowned private investigator who in 1991 identified himself as the initial source of the Channel 13 story but who, according to a court deposition by a station employee, had suggested the station contact Perry for information on the insurance scam.

According to its proposal, Municipal Collections would start up for the express purpose of pursuing new warrant cases. The proposal cited Wilson's flair for tracking down absconders, Wells' experience and expertise with municipal courts, and Perry's role as a collection company owner -- though according to Perry's resume, at the time Peary Perry & Associates had no collections experience but had only done corporate and insurance-related investigations.

The proposal also failed to note that though Wells had been a judge, in 1989 he had been indicted on 20 counts of embezzling the Social Security checks of an elderly woman for whom he had been appointed guardian. In January 1990, Wells pleaded guilty to a single count, received five-year's probation and was ordered to pay $21,000 restitution. In 1993, Wells was disbarred.

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