In Their Own Words

Judging by the idle chatter of Hotel Six politicos, the moral barometer at City Hall is in free fall

The young African-American woman representing the Houston Police Department tentatively stepped forward in the Hotel Six bribery-conspiracy trial to face federal Judge David Hittner. Assistant City Attorney Sandra Robinson had come to the tiny courtroom on the eighth floor of the Federal Building to request that the judge kill a defense subpoena to make the HPD produce its records on the employment of a narcotics informant, Julio Molineiro, who is also a key undercover agent for the FBI testifying against the six City Hall insiders caught in the federal sting.

"It is fundamentally unfair and morally wrong," intoned Robinson, "to use his services and then throw him to the wolves."

Hittner cocked his head quizzically and offered a dry rejoinder to Robinson's earnestness. "You haven't been around here?" asked the judge, with just the hint of a mischievous smile. A ripple of appreciative laughter ran through the courtroom.

To Hittner and everyone else who has been immersed in more than two weeks of virtually nonstop audio- and videotapes filled with obscenity, cynicism and backstabbing, Robinson's words must have seemed primly Victorian. It was as if she had stepped out of a time machine from a world where virtues like loyalty and public trust are treasured, and landed in a cold-blooded future where moral values are in free fall and friends are best used like toilet paper and disposed of in similar fashion.

Forget those dry indictments outlining the allegations of bribery and conspiracy against current councilmembers John Castillo and Michael Yarbrough, former councilmen Ben Reyes and John Peavy, former port commissioner Betti Maldonado and lobbyist and former Reyes aide Ross Allyn. The real public wake-up call in this proceeding, delivered via the voices of the officials themselves, concerns the plummeting ethical standards prevailing in some circles at City Hall. By the measure of the tapes, the morality well on Bagby Street is nearly bone dry.

No one expects much of politicians these days, in an era where the public assumes a president is lying under oath about his sexual escapades, but is still willing to give him commanding approval ratings for his performance in office. But even with drastically reduced expectations, Hotel Six devotees are discovering that with some of their elected and appointed officials, as with the limbo, there seems to be no limits to how low they can go.

FBI informant Molineiro drove toward the Carrabba's on Kirby to meet a lunch guest, Councilman Michael Yarbrough. On the passenger side of the vehicle sat former councilman Ben Reyes, just beginning his new life as a private citizen.

Reyes rehearsed with the informant the planned maneuver to pass Yarbrough cash in exchange for his help in leading the forces on Council supporting Wayne Duddlesten's downtown convention center hotel project.

"I'm going to invite him to the bathroom," explained Reyes, who began rummaging through a briefcase in the back seat and fished out an envelope. "Is this the one, daddy?" Reyes asked.

"Yeah," replied Molineiro. "There are 1,500 in there. You take it. That will be all right?"

It was January 12, 1996, a week after the term-limited Reyes had left City Council, and six months since he had been contacted by the undercover agent, who was pretending to be a South American businessman fronting a company seeking City Hall contracts. Much had transpired since that date, the most notable event being Reyes's acceptance of a satchel containing $50,000 in cash from Molineiro at a westside apartment rented by the FBI as part of its public-corruption sting targeting Reyes.

The two men entered Carrabba's, a favorite hangout of Reyes, and settled at a table. Within minutes, Yarbrough arrived for his appointment.

After chatting with Molineiro about their mutual admiration for the Brazilian city of Sao Paulo, Yarbrough got to the point. "I need a job, man," said the councilman, seeming to forget momentarily that he had been elected by the citizens of District B to serve them for a salary of $42,800 a year. Perhaps not full-time pay by some people's standards, but not exactly small change, either.

"We got it," replied Reyes to Yarbrough's verbal employment application. "You need a job, we need a leader. And, uh, in just a while we go in the bathroom."

Without missing a beat, Yarbrough answered, "okay." Since Molineiro did not accompany the pair to the urinal, his tape sheds no light on the burning etiquette question: Should men wash and dry their hands after exchanging cash in a public restroom?

Reyes's lunch conversation with the councilman proved far more interesting, and revealing of the ethical mindset of the pair, than the boring details of passing cash. Yarbrough, with his eye on the future, inquired about the chances that the term-limits law that had just knocked Reyes off City Council might be rescinded.

"I don't think so, daddy," explained Reyes, who allowed that the three-term limit was "stupid" because it had strengthened the hand of "the big-money guys and the damn bureaucrats." Yarbrough observed that it was hard for a politician to get to know benefactors when time in office is so limited. "You say, shit, man. Damn! We just got to the point where we started liking each other."

"And, I got to go find somebody else," added Reyes.
"Find somebody else," parroted Yarbrough. "Shit! You know?"
The two then ruminated on the role of then-Public Works Director Jimmie Schindewolf, credited by Reyes with being more powerful than the mayor. "He'll run the whole fucking thing. So why does he need to be mayor?" At that point, Schindewolf was being mentioned as a possible candidate to run for Bob Lanier's office in 1997, but Reyes held out grimmer prospects.

"He's going to die, man," explained Gentle Ben. "He's done had two heart attacks.... He's got a bad heart."

(At last check, Schindewolf, who resigned as public works director last month, had completely recovered from heart bypass surgery and is headed for green pastures as an engineering consultant for the Houston Sports Authority.)

The tete-a-tete between Reyes and Yarbrough then turned into a veritable corruption pep rally, as Ben gave a "be like me" talk to the younger councilman. Reyes explained how, in his first, relatively innocent years on Council, he'd let himself be bought for a song by city contractors. One had asked Reyes to make sure he got a contract yielding $200,000 in profits.

"First, he tried to hoodwink my ass," Reyes regaled Yarbrough. "Giving me a little old bullshit, little old package." As Molineiro later testified, Reyes customarily referred to cash payoffs as "a package."

"I said 'no daddy, it don't work that way,' " Reyes told Yarbrough. " 'So you gotta do better than that.' "

"And he got right," chortled Reyes. "Them motherfuckers, if they can get away with a nickel, they'll give you a nickel."

Rather than the stunned silence you might expect from an elected official hearing ribald tales of payoffs, Yarbrough's response was as telling as Reyes's story. "Yeah," he exclaimed enthusiastically. "Yeah!"

Reyes made it clear it would take more than a nickel to buy him these days. "No, daddy, you got to have a quarter!" he exhorted Yarbrough, who chirped back, "Yeah." Reyes then put the capper on the conversation with, "Fuck that goddamn nickel shit."

Shortly thereafter, the two excused themselves and headed for the bathroom, where the transaction presumably involved something more substantial than rolls of nickels.

Betti Maldonado hurried into the office of the Cayman Group at the Phoenician complex on Bering Drive loaded down with takeout from Cafe Express. It was May 1, 1996, and Betti was a bit frazzled because things were not going quite as planned. An attempt to give Councilman John Peavy a packet of cash earlier that morning at the Hyatt Regency hotel coffee shop had fizzled when Peavy refused to take the envelope. Now she was going to dissect the disaster over lunch with Julio Molineiro, filmed by FBI video cameras.

Ben Reyes had allegedly passed money to Peavy four months earlier in the Warwick Hotel restaurant. After Reyes became wary of the federal operatives and had backed away, the agents had turned to Maldonado, then a port commissioner and a friend of Mayor Bob Lanier and his wife, Elyse, to take up the slack.

Betti had obliged, and had passed one envelope with cash to Councilman John Castillo during a meeting at the Hyatt Regency two days earlier. Then came her second, abortive try with Peavy.

Maldonado accepted the blame for Peavy's refusal to take the cash, explaining to Molineiro, "I have never, ever dealt with them that way. Never ... I've never gotten to that other level."

The statement provides defense ammunition for Maldonado's attorney, Dick DeGuerin, who contends that the FBI entrapped his client into doing illegal acts she would never have otherwise committed. Unfortunately, Maldonado also seems ready and willing on the tape to explore "that other level."

Part of the problem, Maldonado complained to the agent, was that she was being forced to give the councilmembers cash in the presence of Molineiro and FBI agent Bob Dogium, who was playing the part of Cayman Group president Marcos Correa. They should have more confidence in her, declared Maldonado, and be willing to give her $10,000 with the freedom to pick the time and place to pass it on to councilmembers.

Maldonado earlier explained to Molineiro who was willing to take cash. "With John [Castillo] ... I mean, John has already been in this forever. So it's no big deal. Michael is also more ... no big deal, and really, Peavy normally is no big deal."

Since the sting became public in May of 1996, Maldonado has accused the FBI of targeting the officials snared in the sting because of their race. Yet Maldonado herself provided an outline that excluded white councilmembers from consideration for payoffs.

"It's not going to happen with Gracie [Saenz], with Orlando [Sanchez], no. With Judson [Robinson], you know, no way ... and certainly not with the gringo councilmembers, not even Joe Roach."

While Maldonado emphasized she had not previously made cash payments to councilmembers, she was hardly a Pollyanna about how things work at City Hall.

In an earlier meeting with Molineiro and Dogium, Maldonado described the intense lobbying effort by the French wastewater giant PSG to close a deal to privatize the city's water plants. "They were giving out money like I have never seen before on Council," marveled Maldonado. "These guys are giving, I'm going to tell you [because] I have never seen this, 20 grand!"

"Fuck," exclaimed Dogium, and Maldonado continued, "they gave one councilmember 50 [grand.]" But it was not necessary to give everybody money, she continued. "I know what you can get away with, with who."

Backed into a corner by the taped admissions of their clients, the Hotel Six defense team is forced, like the legal stars defending O.J. Simpson, to attempt to turn the tables and put law enforcement on trial. The most obvious target is Molineiro, an informant with a not-so-distant past.

Demonized in opening arguments by Reyes attorney Mike Ramsey as "the creature," "a worm" and a "piece of work," Molineiro has thrived during more than a week on the stand. His broken-English "Chess sir" and "no sir," an enigmatic smile and considerable gifts as a role-player have served him well. The 39-year-old Chilean may not be the snitch-next-door, but he has at least come across as a human being, with a common-law wife and two children in Houston, and a wife and children he left behind in Chile a decade ago.

After the defense came up with DEA internal documents, Molineiro was forced to make a series of damaging admissions under cross-examination from Peavy attorney Dan Cogdell. The informant acknowledged that he had stolen $20,000 from a drug dealer while he was working for the U.S. Drug Enforcement Agency, lied to his controlling agents and then fled temporarily to Paraguay.

Molineiro had five previous convictions in South America for robbery and theft before he was hired by the DEA after he got out of prison to do undercover narcotics work. After the agency helped Molineiro come to Houston, he stole the money and fled to Paraguay in 1991. Inexplicably, he was allowed by U.S. authorities to return to Houston and was even awarded a $40,000 bonus by the DEA for his role in a subsequent narcotics case.

The informant claimed he never told prosecutors about the drug-money heist. The defense found out about it from sources in the DEA, and asked Judge Hittner to declare a mistrial based on the federal Brady statute requiring prosecutors to disclose all evidence to the defense before trial. Judge David Hittner denied the motion, but indicated he will consider declaring a mistrial later.

Under grilling by Peavy attorney Dan Cogdell, Molineiro also admitted he had received $127,000 in cash for salary and expenses from the DEA in 19901991, but did not begin paying U.S. taxes until 1993. He claimed that when he went to work as an informant for the Internal Revenue Service, an agent told him he would have to start filing tax returns. The informant drew laughter from a courtroom audience when he claimed he had not paid taxes until then because he didn't have a Social Security card, "and in my mind, if I don't have a Social Security number, I can't pay taxes."

Molineiro also confessed to using cocaine as an undercover agent in both South America and the U.S., but claimed it was part of his role-playing as a drug dealer. Cogdell produced the statement of a former DEA agent describing Molineiro as "a potential embarrassment to the DEA" and a self-admitted cocaine user who was "impossible to control."

Despite the admissions of theft, drug use and tax evasion, Molineiro remained unruffled and cheerful throughout the cross-examination, and at times seemed to be enjoying it. After Molineiro's undercover assignments as a drug dealer in life-threatening roles, facing the sharpest Houston defense attorneys probably seems like pretty tame stuff.

As his interrogation proceeded, the quick-witted informant began improvising his own jabs at the defendants. When Cogdell suggested that perhaps Ben Reyes had kept an envelope of cash rather than passing it to his client Peavy at the Warwick Hotel, Molineiro parried, "Are you suggesting that Mr. Reyes is a thief?"

"Yes, sir, that's exactly what I'm suggesting," Codgell responded, no doubt sending a chilly draft in Reyes's direction.

Other than the threat of a mistrial, the defense attacks on Molineiro have lacked the impact of the audio- and videotapes he helped produce. Even the informant's admitted thefts, drug use and tax evasion seemed inconsequential compared to the image of councilmembers accepting bags and envelopes of cash.

The bottom line is that no reasonable observer expects the moral and ethical standards for a narcotics informer plucked out of a South American prison to be comparable to those of City Council members or a port commissioner. The fact that they apparently are tells you just how wrong things have gone at Houston City Hall.

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