By Chris Lane
By Jeff Balke
By Aaron Reiss
By Angelica Leicht
By Dianna Wray
By Aaron Reiss
By Camilo Smith
By Craig Malisow
Veteran Houston criminal defense attorney Kent Schaffer dropped by the Hotel Six proceedings last month to catch some of the early action, and wandered out into the hallway during a break. In his path stood Julio Molineiro, the FBI's bespectacled, wisecracking undercover informant and the prosecution's upcoming star witness in the bribery-conspiracy sting trial. For a moment the two men stared at each other.
According to Schaffer, a suddenly jittery Molineiro then walked over to FBI special agent Ron Stern, his boss and the architect of the sting, and hurriedly whispered in his ear. Stern turned and studied Schaffer's bearded face.
At the same time, the lawyer realized he knew Molineiro, but couldn't quite place him. "I was sure I'd cross-examined him sometime," recalls Schaffer, who has extensively represented both narcotics agents and their targets and is good friends with most of the lawyers on the Hotel Six defense team.
It didn't take long for Schaffer to begin piecing together exactly where he and Julio had met before, and it wasn't down by a schoolyard. Schaffer had represented a Drug Enforcement Agency agent in a Justice Department investigation that involved Molineiro and included allegations he had stolen money and collected a $40,000 reward from the government that he didn't deserve. Schaffer's office case file turned out to be a defense treasure chest that included internal DEA documents describing Molineiro as "out of control" and "a potential embarrassment to the agency."
Through sheer happenstance, a defense confronted with a mountain of damaging evidence had struck a gusher, one with the potential to rip open the nearly seamless net of audio- and videotapes documenting an alleged bribery conspiracy by the six City Hall insiders. Indicted in the case are Houston City Council members Michael Yarbrough and John Castillo, former councilmembers Ben Reyes and John Peavy, former port commissioner Betti Maldonado, and lobbyist Ross Allyn.
Molineiro had beguiled the wily Reyes into dropping his defenses in the fall of 1995 and the following winter, as FBI undercover agents photographed the official accepting a satchel stuffed with $50,000 in cash. The informant taped Reyes as he outlined a bribery scheme to pay off three councilmembers.
But it seems Reyes was not the only one fooled by Molineiro's acting abilities. The informant had earlier convinced FBI agent Stern that he, and not a full-fledged FBI agent with a clean background, was the ideal candidate to play the role of South American investor Carlos Montero.
In reality, the informant carried a load of baggage, including admissions of theft, drug use and endangering a federal agent, that would shortly be dumped into public view in Judge David Hittner's courtroom, thanks to Schaffer's chance visit to the trial. Although that information was well known among DEA agents and officials in Houston, none of them apparently passed on the data to the FBI or Justice Department prosecutors before the Hotel Six proceedings began last month. The failure of the DEA, the FBI and the prosecutors to share that information will undoubtedly spawn an internal Department of Justice investigation no matter what verdict the Hotel Six jury renders in the case.
Since federal law requires the prosecution to make full disclosure of exculpatory evidence to the defense before trial, the misadventures of Julio Molineiro could provide a free checkout card for the Hotel Six defendants, no matter whether they are innocent or guilty of bribery and conspiracy. Judge David Hittner has thus far denied defense motions for a mistrial and directed verdict of acquittal, but he could still declare a mistrial after the government finishes presenting its case.
But a mistrial may no longer be good enough for the defense. Reyes attorney Mike Ramsey, smelling blood from the revelations about Molineiro's past, last week indicated to Hittner he'd like to see the case go to the jury.
Once Schaffer delivered his mother lode of dirt on Molineiro to the defense, he told Ramsey that for $5,000 he'd do the cross-examination of the informant himself. When Ramsey apologetically explained that the cash-strapped defendants didn't have that kind of money, an exasperated Schaffer fired back, "No. I mean I'll pay $5,000 to get to cross-examine him." The offer was not accepted.
Clearly, the Molineiro revelations have at least temporarily rocked the prosecution on its heels. "It's monumental," comments a current federal prosecutor of the predicament Hotel Six lead prosecutor Mike Attanasio finds himself in after showcasing Molineiro as the vehicle to introduce to the jury most of the key audio- and videotapes incriminating the defendants.
While Molineiro's main role in the trial is to simply set the scene for the audio- and videotapes, his is the face that the jury has studied on the stand for nearly two weeks. If the defense can prove that it is the face of an inveterate liar, thief and drug abuser, the impact of the FBI's show-and-tell multimedia display is inevitably undermined.
"It's your worst nightmare to get surprised in a trial like this," laments another prosecutor, "and in this case it's been done by your own people."
Former Houston federal prosecutor Mike Clark likens Attanasio's current conundrum to that faced by the O.J. Simpson prosecutors. "The best analogy I can think of is what happened to Marcia Clark and that nice bigot she put on the stand," says Clark, no relation to Marcia, alluding to former Los Angeles police officer Mark Fuhrman. "Those are the kinds of things you want to know about before you indict and go forward."