By Chris Lane
By Jeff Balke
By Aaron Reiss
By Angelica Leicht
By Dianna Wray
By Aaron Reiss
By Camilo Smith
By Craig Malisow
Duddlesten said last week that Torres once introduced him to the potential investors, although, he added, "I [didn't] know who they were, and I still don't." He characterized the meetings as informal and "premature," given that nothing could be guaranteed until he had the development contract with the city in hand. (In a subsequent interview, however, the developer recalled that Torres arranged two meetings with the men at Duddlesten's home. The name "Correa" rang a faint bell, Duddlesten said, but he didn't recall the name "Carlos Montero.")
By mid-January, the tide seemed to be running in favor of Duddlesten. In addition to his expected support from minority Council members, Duddlesten had announced a firm commitment from the Hilton Corporation to operate his hotel and chip in $10 million in equity. With the Council vote looming, competitor JMB made a last-ditch attempt to turn the tide by hiring Hispanic lobbyists Marc Campos and Al Luna. Their first order of business was to point out that Torres' investors were not from Houston. Indeed, Torres admitted that he was representing a group whose primary operations were based in Miami and Los Angeles. That was news to Duddlesten, who said he had assumed Torres' investors were local, and that, in fact, he would only entertain investment from Houston entrepreneurs. The developer maintains that is still true today.
Not long after Reyes first contacted Maldonado, the councilman arranged a meeting at the Hyatt between her and the two Cayman Group investors. There, Correa and Montero "retained" Maldonado to represent them for $1,500 in cash. Ultimately, she received a total of $7,500 from the two bogus businessmen.
"She was to give them a heads-up on who was on Council and who stood where [on the hotel bids]," says DeGuerin. "And, of course, they promised her that she would be their representative in Houston forever. She just became involved in the whole pie-in-the-sky thing. There was word on the street that these guys were drug dealers or something like that -- that otherwise, two Hispanic guys wouldn't have that kind of money to invest. She was appalled by that kind of stereotypical talk. She was angered by that and wanted councilmembers to see that these guys were legitimate."
Maldonado, says DeGuerin, even offered to introduce the pair to Lanier, but they weren't interested. Instead, says the attorney, they wanted to deal with specific Hispanic and African-American councilmembers -- primarily Castillo, Fraga, Peavy, Michael Yarbrough, Jew Don Boney and Gracie Saenz. They asked for introductions and suggested making campaign contributions to the councilmembers. DeGuerin says Maldonado told Montero and Correa that contributions weren't necessary because those councilmembers already backed Duddlesten. But Correa and Montero persisted, DeGuerin says, and finally Maldonado agreed.
According to councilmembers' campaign finance reports, a "Carlos Montero" had already been a generous donor, giving $1,000 to Fraga's Council campaign fund on November 1; $500 to Peavy's account on the same day; and two $1,000 contributions to Castillo on November 4 and December 15. Peavy and Fraga have said they will return those donations. It is unclear whether the councilmembers even knew Montero at the time.
In the weeks leading to the Council vote on January 31, Maldonado arranged for some councilmembers to meet Montero and Correa, usually at the Cayman Group's offices in a condo on Bering Drive near the Galleria. DeGuerin says at least four members of Council -- Saenz, Yarbrough, Fraga and Castillo -- went to the Bering offices in January.
Other meetings were in more sociable settings. Maldonado and Saenz met Correa and Montero for drinks at Damian's Cucina Italiana on Smith Street south of downtown. At one point, DeGuerin says, Maldonado and Correa left the bar while Saenz -- who has said she didn't take any money from the Cayman Group -- remained with Montero to discuss the councilwoman's political future. A woman in a separate party at the restaurant that night says that she noticed a gun beneath the jacket of one member of the Cayman Group as she was being introduced to him.
At none of those meetings in December and January, says DeGuerin, did Maldonado see the Cayman investors offer or give money to any councilmember. But the attorney says Montero and Correa told Maldonado that they had given $2,000 to Fraga and Michael Yarbrough.
Fraga has acknowledged meeting with Maldonado and "a couple of fellows, either Hispanic or Hispanic-looking" on February 1, the day after Council voted unanimously -- with two abstentions -- to go with the Duddlesten project. Fraga says he had met the men once before, at an introductory breakfast arranged by Maldonado "to get more familiar with their part of the project."
"They looked like, to me, to be investors," the councilman says. "My God, I never suspected they were anything else."
Fraga says the men each gave him $1,000 in cash, ostensibly as a contribution to the councilman's congressional campaign against incumbent Gene Green. Fraga claims he was unaware that federal campaign finance law prohibits cash contributions of more than $100, and he gave the money to his wife, who was acting as his assistant campaign treasurer. "I think she went to the bank the next day" to deposit it in his campaign account, he adds.