Roots of the Sting

Interestingly, the feds apparently weren't interested in the behavior of councilmembers during that initial investigation, which seemed to center around Hall, Perry and Larry Miller, the municipal courts director. It seems safe to say that the FBI had changed its tack late last fall, when the convention center hotel project began to dominate the City Hall agenda.

In December, then-councilman Ben Reyes introduced Carlos Montero and Marcos Correa, undercover FBI operatives posing as the Cayman Group, to Maldonado, who is a consultant for minority businesses. Maldonado then met with several minority councilmembers, and, on behalf of the Cayman Group, offered them cash payments in exchange for their support of two clauses the investors wanted added to the city's final contract with Duddlesten. In a twist straight out of Bayou City Enterprises' unprecedented contractual arrangement, the contract language assured a portion of hotel revenues for the Cayman Group.

Reyes, who was sharing an office with Montero and Correa after he left Council in January, introduced the "investors" to at least one other person, Austin state Representative Dawnna Dukes.

Dukes has acknowledged to the Chronicle that she met Montero and Correa this year. Dukes also owns a minority consulting business, and the two men told her they were interested in investing in projects in Austin and San Antonio.

Dukes said Montero and Correa told her they had already negotiated an investment in the Houston hotel project. The lawmaker says she ended her association with Montero and Correa in late February, after she asked them to sign an agreement that her work on their behalf would not violate any laws.

Dukes' association with the Cayman Group, however brief, suggests that perhaps the FBI's operation may be wider in scope than the Duddlesten hotel project. Indeed, the feds also may have been interested in at least one other high-dollar contract in Houston.

Last week, two councilmembers told the Press that during their questioning by the FBI on the morning of May 9, agents asked about something called "Mirage." At least one councilman took that as a reference to Mirage Resorts Inc., the Las Vegas gambling-palace outfit that was partners two years ago with Lanier friend Charles Hurwitz's Maxxam Corporation in a since-shelved proposal to build a downtown casino-hotel.

Councilman Robb Todd says that when the FBI mentioned "Mirage" to him he asked, "Why? Are you trying to tie this into the casino deal?"

The agents, Todd says, replied that Mirage was "just a name" they had heard mentioned.

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