Coffee with Betti and the FBI

Lightning strikes the ReBates Hotel; death toll unknown

The alternative, the feds told her, was jail.
Maldonado admitted she had lied about giving Fraga the money in the car and accompanied agents back to her office to retrieve the envelope. After she was returned to FBI headquarters, Maldonado said she was confused and needed to talk to someone. Stern gave her a phone number and said she could speak with Mike Attanasio of the Justice Department's public integrity division in Washington.

Last week, when the Press called the number Stern had given Maldonado, a woman answered with the greeting, "Command post." Attanasio was put on the line but refused to discuss the operation.

During the agents' discussion with Maldonado, they also offered to put her up at a hotel. For the next three nights, Maldonado stayed at the Galleria Guest Quarters on the government's tab. It was there, DeGuerin believes, that agents attached an electronic tracking device to Maldonado's Explorer, which she belatedly discovered on the vehicle's undercarriage last weekend.

On Friday, May 3, Maldonado reluctantly agreed to cooperate. According to DeGuerin, she was told that her next target was former councilman Ben Reyes. The sting had brought Maldonado full circle: it was Reyes who had introduced Maldonado to the Cayman Group.

DeGuerin says Reyes first contacted Maldonado about working for the Cayman Group early last December. "He told her, 'I'm hooking up with this company, and I want you involved,' " says the lawyer. (Reyes has been unavailable for comment, but his lawyer, Mike Ramsey, has said that the former councilman was the initial target of the sting.)

Reyes, who was serving the final month of his 16 years on Council, told Maldonado that Montero and Correa wanted to invest up to $20 million in the hotel and favored Duddlesten's plan because it called for a substantial equity contribution by minorities.

Both men were said to come from well-to-do, aristocratic families. One supposedly was from Chile and had a thick Chilean accent.

"They had all the trappings to look like they had access to that kind of money," says DeGuerin.

At that point, Council was considering Duddlesten's proposal and a competing one from JMB/Urban Development. The prize was the right to build and operate a hotel next to the convention center with rebates of state and local taxes worth up to $70 million, and the lobbying was intense. Duddlesten's pitch was orchestrated by Austin consultant Bill Miller. JMB was represented by Vinson & Elkins lawyer Joe B. Allen, who, like Duddlesten, is a close friend of Mayor Bob Lanier. It was widely believed that the Lanier administration -- and Lanier himself -- favored the JMB plan, which called for the hotel to be operated by a nonprofit corporation under the aegis of the city.

But from the early days of the competition, Duddlesten had held an edge with Hispanics, and Reyes, an ex-officio member of the city's selection advisory committee on the hotel bids, was a prime backer of the developer's project. At one point, Reyes -- in whose district the new hotel would be built -- tried to arrange a lunch meeting between the Cayman Group investors and Councilman Judson Robinson III, another ex-officio member of the selection panel and chairman of the Council's visitors and tourism committee.

Among the many unanswered questions about the sting is the origin and nature of lawyer Isaias Torres' association with the Cayman Group. Maldonado and others say Torres held himself out as the Cayman Group's lawyer and spokesman. Torres has declined comment, but there is little doubt that his offer to Duddlesten of an equity contribution from Hispanics was one of the factors that eventually helped the developer win Council approval of his hotel project.

Between last July, when the city's selection committee conducted a side-by-side examination of the Duddlesten and JMB proposals, and mid-October, when Council received the first detailed presentations, Duddlesten's proposal changed significantly with regard to minority participation.

In July, Duddlesten told the selection committee he would ensure that minority contractors received 30 percent of the hotel's construction contracts and 30 to 40 percent of the professional service contracts. His financing plan called for $18 million in equity from private investors. Duddlesten said that the hotel operator -- at that point, either Hilton or Marriott -- would contribute $10 million of the total, and he would round up the other $8 million.

Duddlesten held out the "opportunity for a minority equity participation," but he offered no specifics on that subject back in July. In fact, it's unlikely Duddlesten had any potential minority investors lined up at that time. If he had, he would have mentioned them.

By early fall, the situation had changed. On October 2, just two weeks before the Council hearing where project presentations were made, Duddlesten received an unsolicited letter from Torres, who announced that he was acting as the "agent" with the authority to "enter into contracts and negotiate financial terms" on behalf of something called the Latin American Enterprise Group (apparently the name then being used by what later came to be known as the Cayman Group). In his letter, Torres told Duddlesten that the Hispanic investors were interested in making an $8 million contribution to his project -- a figure, it so happens, that would allow the developer to meet his $18 million equity projection.

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