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.

Shadow Play
General admission seats were impossible to come by as the trial of state Representative Sylvester Turner's libel lawsuit against Wayne Dolcefino and Channel 13 got under way last week. Of the three rows of seating in Judge Elizabeth Ray's tiny courtroom, the first pew was reserved for the plaintiff and defendants and their entourages of lawyers and legal assistants. The second row was earmarked for the press and the camera from cable's Court TV, which is airing the trial daily. The definition of "press" proved quite flexible, however, with the attendees including several attorneys sporting press passes.

The last row was reserved for the public, but the meaning of "public" also seemed stretched by the quiet group of note-taking observers who curiously matched the demographics of the jury itself: six men and six women, including two black males. Although several of the note-takers denied it, they apparently are part of a shadow jury, a frequently used legal tactic through which a jury consultant tries to gauge the reactions of the real jurors. The shadows typically are paid a daily rate of $75 to $100 each and are debriefed by the consultant at the end of each day's testimony. Turner attorney Ron Franklin denied to the Press that he had hired the group, but Dolcefino attorney Chip Babcock ducked the question. If the shadows are working for Channel 13, presumably the consultant has suggested to Babcock that he should have Dolcefino refrain from constantly smirking at the opposition in court.

No word on what the shadows, or the real jury, made of the combative testimony of veteran private investigator Clyde Wilson, who wasted no time in declaring his belief that Turner is fit to be neither mayor nor state representative. Apparently not content to speak reprovingly of a past African-American mayoral candidate, Wilson used the occasion to trash a future one as well. After Franklin accused Wilson of receiving a ticket-collection contract from the Lanier administration as a payback for leaking damaging material on Turner to Dolcefino, Wilson retaliated by repeatedly naming Lee P. Brown as one of the recipients of a cut of that contract "for doing nothing at all." While the former HPD chief was initially listed as a partner in what was to become Bayou City Enterprises -- the minority contractor that did receive a cut of the contract -- there's no indication Brown received anything as a result of his early involvement, other than a few belated nicks from Wilson's verbal razor.

Only His Hairdresser Knew for Sure
If developer Ken Schnitzer had just listened to the advice of his barber and manicurist, he might not have needed the intercession of U.S. District Judge David Hittner to overturn his jury conviction on bank fraud charges. Schnitzer regularly patronizes Estevan's in Greenway Plaza, as does Trenton Torregrossa Jr., a former director of the failed Cornerstone Savings. Torregrossa was imprisoned for 15 months after being found guilty of bank fraud and illegal loan participation, but he and two other defendants had their convictions in Hittner's court overturned by judges from the U.S. 5th Circuit Court of Appeals last year. When Torregrossa dropped by the shop after his release, he gave manicurist Vinnette Grant and barber Jeanne Mar a newspaper clipping detailing the strategy his attorney, Bill King, had used for the appeal. When Schnitzer came in for a post-indictment trim, Grant and Mar urged him to read Torregrossa's story. "But he gave it back to me," Grant recalls, "and said, 'I already got my own lawyer. I don't need another one.' "

But Schnitzer returned to the shop in a distinctly different mood after his conviction and plaintively asked, "Can y'all believe all the jurors found me guilty?" Grant and Mar again pushed the clipping on him and insisted he call Torregrossa's lawyer. Schnitzer eventually did call King, who was added to his legal team for post-verdict maneuvers. A former officer for the failed Columbia Savings who knows banking regulations intimately, King says he discovered that federal prosecutors had based their argument against Schnitzer and his co-defendants on accounting standards for S&Ls that were not in effect during the time of the alleged violations. Hittner cited that fact as a key reason for overturning the jury's verdict.

Schnitzer dismisses the notion that his barber and manicurist played any role in his acquittal by Hittner, but King is more appreciative of the barber shop referral. "Maybe I ought to go get a haircut there to thank them," he says. A big tip might be in order as well.

Tip The Insider by calling 624-1483 or 624-1496 (fax), or by e-mail at insider@houston-press.com.

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