By Camilo Smith
By Craig Malisow
By Jeff Balke
By Angelica Leicht
By Jeff Balke
By Sean Pendergast
By Sean Pendergast
By Jeff Balke
A recent letter from West Capital to Muhammad rejecting the joint-venture offer asked the Nation of Islam leader to pass along "unending appreciation to City Attorney Benjamin L. Hall and Texas Rep. Ron Wilson for their assistance and direct commitment in negotiating your proposal with us." According to the sources, Hall and Wilson, who is Muhammad's attorney, told West Capital representatives on separate occasions that unless they found a way to cut Delinquent Recovery in on the contract, it would be canceled.
Hall, Wilson and Larry Miller, who oversees the collections contract as director of administration for the city's municipal courts department, deny West Capital was pressured to do business with Muhammad. Wilson refused additional comment on his role in Muhammad's business dealings, citing attorney-client privilege.
Hall and Miller argue that the joint venture was recommended as a way to improve West Capital's performance and increase revenue to the city. They contend that because the city's revenue from the contract had been dropping steadily, any proposal -- even an unsolicited one from a new company with no address, telephone or staff -- would be given consideration.
"All I know is that I want someone to collect the dollars, and that's what [West Capital] has been told," Hall says. "If it's an issue of long-standing [companies] versus new, that's not impressive. If we can get some new people who are hungry, who don't have any money and who'll say, 'I'll collect it,' short of breaking people's knuckles -- man, all we want is the money."
As far as collection jobs go, pursuing ticket scofflaws is a relatively new field. Like most cities, Houston had taken its chances on catching those who don't pay their fines by nailing them on repeat violations. But a few years ago, seeing a potentially lucrative source of revenue going to waste, the city began looking for companies interested in collecting on unpaid tickets.
In 1992, newly elected Mayor Lanier's transition team split the city's existing ticket-collection contract into two parts. The idea was that the city would realize more revenue by having one company collect tickets up to 210 days delinquent and another to collect more outstanding delinquencies.
However, the combination of a new business opportunity and new contracts (with fees ranging from 28 percent to 40 percent of some $66 million in delinquent fines) had another effect: ticket collection has become the contract-of-choice for politically connected entrepreneurs.
One such beneficiary is Municipal Collections Inc. In March 1993, Municipal Collections was awarded one of the ticket-collection contracts, though the company had no office, computer, telephone systems or accounting capability. The ink hadn't even dried on the company's articles of incorporation when it won the contract over a half-dozen established companies -- thanks to Miller's amendment to the city's original "request for proposal" that waived a requirement that the successful bidder have five years experience in the collections business. Even though Municipal Collections had used four different addresses and phone numbers since submitting its bid, Miller somehow managed to inform the company that it had won the contract.
Municipal Collections has indeed performed for the city, which has realized more than $5.5 million in revenue from the company's efforts. But at the time of its initial proposal to the city, Municipal Collections primary asset appears to have been its well-connected principals: William E. Wells, a former municipal court judge and colleague of Miller's who was convicted in 1990 for embezzlement and fraud after he converted an elderly legal client's Social Security checks to his own use; Peary Perry, a private investigator and former Lanier campaign volunteer who at one time did security work at apartment buildings and banks owned by the mayor; and Clyde Wilson, another local private investigator.
Peary and Wilson have been linked to a Channel 13 story on the eve of the 1991 mayoral runoff that raised questions about whether Lanier's opponent, Sylvester Turner, was involved in an insurance scam perpetrated by one of Turner's legal clients. Turner has sued the television station for libel. Channel 13's story, and the suggestion that it may have originated with the Lanier campaign, was something of sore spot between Lanier and the city's African-American leadership early in the mayor's tenure.
One impressive aspect of Municipal Collections' proposal was its vow to "greatly exceed" the city's affirmative action goals for minority participation in city contracts. The company listed on its proposal five minority-owned firms whose services they wanted to employ. However, none have received anything close to the amount of business promised them. Instead, at Hall's direction, Municipal Collections is obligated to pay 19 percent of its fees from collections to Bayou City Enterprises.
Hall recently admitted that the written promise to pay a share of the fees to Bayou City -- a company started by attorneys John Davis, Ray Shackelford and Walter Strickland a few weeks before Hall drafted the contract -- is "unusual."
But the city attorney has offered contradictory explanations for how that arrangement came about. In late October, he told the Press that it was a "joint-venture kind of deal" worked out by Municipal Collections and Bayou City. More recently, he suggested the city insisted on the guarantee because Municipal Collections did not submit an affirmative-action plan. When it was pointed out that the company's proposal had addressed those requirements rather handily, Hall experienced a rare loss of cool.