Funny Business II

It seems the city's contract with Municipal Collections is a family affair

Lavonia Gill went to the Municipal Courts Administration Building almost a dozen times to pay a traffic ticket she received in 1990. But on each occasion, after standing in a long line with others who have been issued citations for everything from speeding to feeding zoo animals, Gill was unable to give the city of Houston her money. That's because the courts administration had lost its record of the ticket, even though Gill still has the crumpled citation.

"They said they have searched and searched," Gill says. "I'm standing there with it in my hand, and they're telling me they can't find it."

Recently, Gill learned that her ticket, issued to her for following too closely behind a police car, was back on the books and that she would have to pay the $300 fine. That news came as a relief, since Gill had been told there was a warrant out for her arrest while she was unsuccessfully trying to square her debt.

In an attempt to correct such inefficiencies and at the same time increase revenue to the city, Mayor Bob Lanier decided in 1992 to split the process of collecting delinquent tickets between two companies -- one to collect on "new warrant" cases delinquent for less than 210 days and a second to pursue "old warrant" cases more than 210 days overdue.

In terms of producing new income for the city, however, the two-contractor system has been, at best, a disappointment: net gain from collections for the city's 1994 fiscal year, the first in which the city split collection duties, fell short of projections by about $1.5 million. Revenue for fiscal year 1995, which ends June 30, is expected to be about $2 million below initial projections, though higher court costs imposed in 1993 by the Legislature are partly to blame.

But while taxpayers have reaped little added benefit from the revised collection method, the arrangement has paid off for friends of the Lanier administration, specifically Municipal Collections Inc., the company that won the "new-warrant" contract in March 1993 and since has been responsible for the lion's share of revenue. ("Funny Business," Houston Press, November 3, 1994.) Most recently, minority subcontractor Bayou City Enterprises was removed from the new-warrant contract after an audit by Controller George Greanias determined the firm had collected more than $400,000 in fees while another company did the work. Bayou City, which is owned by three politically connected lawyers, had been given an unprecedented guarantee to receive 19 percent of the fees generated from the city's contract with Municipal Collections in a deal worked out by then-city attorney Benjamin Hall and Dave Walden, Lanier's co-chief of staff.

Now, the Press has learned that the city's contract with Municipal Collections is something of a family affair. The firm's collection manager is Verna Fletcher, sister to the wife of Larry Miller, the chief clerk and director of the city's Municipal Courts Administration Department. Miller directed the process that led to the awarding of Municipal Collections' contract. He is responsible for administering the contract -- which includes approving invoices -- that has paid his sister-in-law's employer almost $3 million since June 1993.

Miller also does the hiring for the municipal courts department, and on February 2, 1993 -- while he and the city legal department were negotiating the contract with Municipal Collections -- he put Verna Fletcher's husband, Ken Fletcher, on the city payroll as an assistant municipal courts manager.

Miller says there's nothing in the law that would have prevented him from hiring Ken Fletcher and that he "cleared it with all parties," including Lanier's office and the city's personnel division. "He is not related to me by blood," Miller says, "so that clears the ordinance."

Miller insists that no conflict of interest "that I'm aware of" has resulted from his sister-in-law and the wife of one of his employees working for a contractor doing city business through his depart-ment. He describes Verna Fletcher as "good friends" with William E. Wells, one of the original principals in Municipal Collections. Miller, who's worked for the city for 27 years, is also acquainted with Wells, a municipal court judge from 1981-88. (Wells reportedly relinquished his share of Municipal Collections prior to a story in the Press revealing that he had pled guilty in 1990 to embezzlement and theft of a woman's Social Security checks.)

Miller says Wells hired Verna Fletcher to manage collection activities for the city contract "before I even knew it. I don't think I probably would have gone along with that, but it was a done deal and hell, I'm not going to tell the guy who he could hire and who he couldn't. I told him that it didn't look particularly good and I certainly didn't want anyone thinking it was a put-up deal."

Maybe it wasn't, but the selection committee under Miller's supervision appears to have manipulated the city's "request-for-proposal" process to Municipal Collections' advantage. Municipal Collections was one of ten companies that responded to the city call for proposals in late 1992, even though it was so new it hadn't registered to do business in Texas or Harris County. But Municipal Collections insisted its "local ownership [and] expertise" made it the best candidate.

That local ownership had some intriguing connections to Lanier. In addition to Wells, two of the other original principals in Municipal Collections were private investigators Peary Perry and Clyde Wilson. Wilson has identified himself as the source for a Channel 13 story that raised questions about whether Lanier's 1991 runoff opponent, Sylvester Turner, was involved in an insurance scam. Lawyers for Turner, who is suing Channel 13, have suggested that Perry was the ultimate source for the story.

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