The Insider

Flushed Out
It seems that the convention center hotel wasn't the only big-bucks city project that set dollar signs dancing in the eyes of Ben Reyes, the central figure in the FBI's sting of councilmembers. In fact, the public disclosure of the feds' investigation may have inadvertently derailed a deal whose potential payoff would have made the alleged illegal cash payments to councilmembers seem paltry by comparison.

The Insider has learned that a week before news of the FBI probe broke, then-port commissioner Betti Maldonado was preparing to sign a lucrative marketing pact to recruit minority contractors for the Greater Houston Wastewater Program, the $1.5 billion upgrade of the city's sewer system that's being run by California-based Montgomery-Watson and Houston's Brown & Root. Maldonado's deal could have been worth well in excess of $100,000 annually, according to program insiders. The contract was especially attractive because it had a multiplier clause that would allow the recruiter to charge the city several times the salaries of minority subcontractors brought into the program (something to ponder the next time you pay your water bill).

Maldonado's contract was to be the final move in an intricate power play by former councilman Reyes to oust an Austin-based subcontractor, Caesar Arizpe, and replace the firm with Maldonado, with possible later involvement from Reyes and his girlfriend, electrical engineer Rosalie Brockman, who had worked for Arizpe. Several sources confirm that Reyes made calls to councilmembers in a successful lobbying effort to get Arizpe's contract pulled. All went for naught when the federal investigation of the hotel dealings became public in May and effectively killed the deal.

"She kind of vacillated when this was all breaking as to whether she wanted to stay involved in that," says Maldonado's attorney, Dick DeGuerin. "She was afraid to make the mayor or the city look bad, since she was going to be right in the middle of this. Eventually, she decided to withdraw for that reason alone." DeGuerin says he didn't know if Reyes was involved in the deal.

Reyes had helped Brockman, a former worker in one of his failed congressional campaigns, get a job monitoring minority engineering contracts under Arizpe. After she was hired, Reyes became an almost daily presence at the wastewater program's third-floor offices at 1100 Louisiana. "When I'd get in in the morning, he'd be there," says one source, "copying subcontractor files from Rosalie's office. We used to joke that was his office." During the same period, Reyes was working closely with the two undercover agents posing as Latin-American investors and seeking desirable investment opportunities in city projects. The fake investors, who wound up angling for a piece of the hotel contract the city was to negotiate with developer Wayne Duddlesten, also used Maldonado to help pass cash contributions to selected councilmembers. Those associations have made Reyes and Maldonado targets for possible indictment by the federal grand jury currently reviewing the FBI's evidence.

Brockman resigned her position in the wastewater program last spring, with the expectation of rejoining later as a consultant after Arizpe was replaced, sources in the wastewater program claim. An Insider phone call to lawyer Mike Ramsey, who represents Reyes, as well as his brothers Greg and Tony and Brockman, was not returned. Since the Maldonado contract was never consummated, it is not expected to figure in the ongoing federal probe. Perhaps Maldonado will remember it as the big one that got away.

The All-Powerful Hotze Made Me Do It!
State District Judge John Devine must be a man in a hurry. Less than two years into his four-year term on the bench of the 190th Civil Court, the anti-abortion crusader last week jumped into the court-ordered special election for the redrawn 25th Congressional District. In doing so, he landed squarely on the aspirations of fellow Republican Brent Perry, a Bracewell & Patterson lawyer who won the GOP nod to oppose incumbent Democrat Ken Bentsen before a panel of the U.S. 5th Circuit Court of Appeals nullified the primary results by setting the "all comers" special election.

Devine, who doesn't live in either the old or new 25th District, says he decided to make the race after praying for divine guidance. But his decision seems to have had some earthly inspiration as well. Several days before Devine's announcement, Perry encountered Dr. Steven Hotze, the power behind a potent conservative vote-delivery machine. According to Perry, Hotze informed him that he was not a strong candidate and should step out of the way for Devine (one of Hotze's brothers, Jim Hotze, briefly entered the race before pulling out). Perry says he visited Devine in his court chambers the following day to try to talk him out of running. But Devine told him that Hotze had promised to put the judge's name on a mail-out to 250,000 voters, as well as getting him exposure via Hotze's automated phone bank. Since federal election law limits individual contributions to $1,000, Perry questions the legality of that commitment.

Devine also is less than reticent about using his court facilities to promote his ambitions. A group of supporters gathered in the 190th last week and were escorted to the judge's chambers to discuss his congressional bid -- after a reporter and several emissaries from the Perry camp were screened out. Devine later dismissed questions about the propriety of using publicly funded space for political purposes, claiming his chambers are his private offices. And the judge just laughed when asked whether he intends to keep his bench while campaigning for Congress. "I've got to feed these kids," he replied, referring to sons Joshua and John and daughter Genesis.

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