By Casey Michel
By Dianna Wray
By Dianna Wray
By Sean Pendergast
By Casey Michel
By Cory Garcia
By Jeff Balke
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."
Underscoring the sense that the government case had been damaged by the defense assaults on Molineiro's credibility was the response of the prosecution. As soon as the informant finished his marathon stay on the stand Friday, within ten minutes, FBI agent Bob Dogium was narrating a highly incriminating tape of City Councilman Mike Yarbrough admitting receiving a $1,500 bribe from Reyes and then taking more cash while FBI cameras rolled.
It was as if the prosecution had decided to trump a defense sleaze card with its last ace in the hole.
How the feds went to trial without knowing the shady side of their star witness is a tale that rivals the bungling and backstabbing of the alleged bribery conspirators.
Federal Bureau of Investigation agents, since the days of Eliot Ness and Prohibition, have considered themselves the cream of U.S. law enforcement. Former U.S. attorney Ron Woods recalls how the antipathy between the FBI and other agencies such as the DEA or the Bureau of Alcohol, Tobacco and Firearms made it difficult to build prosecutions in cases in which more than one of the agencies was involved.
"They allegedly have the highest qualifications for getting in, and have always looked down their nose at other agencies, like Customs, ATF and DEA," says Woods, of the FBI mentality. "It creates a great deal of hostility. And the way they look down their nose at local law enforcement has created hostility all over the country."
A source on the federal side of the sting concurs, describing the DEA ranks as full of flunkouts from Quantico, the FBI training academy.
The mutual contempt between G-men and D-men worsened when the FBI received authorization to investigate drug cases several years ago, in effect invading the DEA's home turf. "Most federal law-enforcement agencies do not cooperate with one another because they are very jealous of their turf," says Woods. "Making cases and getting publicity for their individual agency is what they're all about. They're very jealous of another agency when they make a case."
Former acting U.S. attorney Larry Finder agrees that, although efforts to merge drug-fighting efforts between the DEA and FBI in recent years have had some success, the agencies still hoard their information and their informants.
In 1994, when Molineiro met the FBI's Ron Stern, he had already been a paid informant for the U.S. government for seven years. After being released from prison in Paraguay after serving a year's sentence for robbery, in 1987, Molineiro met DEA special agent Jim Bradley, who took a liking to the quick-witted Chilean and his talent for impersonation. Bradley began using Molineiro as an undercover informant to build narcotics cases, and when the DEA transferred Bradley to Houston in 1990, he arranged for his young protege to follow him.
Bradley and Molineiro were unusually close, and the relationship began to disturb other DEA agents, particularly when Molineiro stayed overnight at Bradley's apartment or popped up at his ranch outside Houston. It became a matter of investigation when Bradley recommended Molineiro for a $40,000 reward in a case where the informant had allegedly done little if any work.
Molineiro's path and that of attorney Kent Schaffer crossed in 1993, when Schaffer took on as a client a DEA agent, Danny Quintanilla, who had become involved in an investigation by the Justice Department's Office of Professional Responsibility into the activities of Bradley. Quintanilla had refused to approve the award of that big bonus to Molineiro, but Bradley had gone around him to get it approved.
The Bradley probe brought out more embarrassing information on Molineiro. Before the big reward, he had previously stolen $20,000 from a drug dealer named Ricky Carillo during a DEA probe, and fled to Paraguay. When Molineiro's controlling agent, John Sanchez, contacted him there, the informant at first denied he had the money. Later, according to statements filed with the Justice Department by Quintanilla and another agent, Abenincio "Eddie" Cordova, Molineiro alerted drug dealer Carillo that Sanchez was a narc, in effect endangering the federal agent's life.
But that theft hadn't been enough to get the DEA to get rid of Molineiro. Its investigation of Bradley revealed that once Molineiro got his reward, he placed the cash in a safe in Bradley's office, giving rise to suspicions that the money was actually being used by the informant as kickbacks to fellow agents. During the same investigation, Molineiro, threatened with a lie-detector test, admitted stealing the money from the dealer and lying to Sanchez. The DEA then banned him from further employment as a snitch, an extraordinary measure, according to Schaffer, who says no agent he's dealt with can recall an informant being blackballed by the DEA, whose personnel standards for informants are notoriously lax.
The resourceful Molineiro seems to have had no employment problems, however. He had already found a new job as an informant with the Federal Bureau of Investigation, where he shortly become a mainstay of the Public Integrity unit headed by agent Stern. By late 1995, he had become the key role-player in the public-corruption investigation of Ben Torres Reyes.
Thanks to Schaffer, Molineiro has not quite left his tarnished DEA past behind. Defense attorney Ramsey has subpoenaed DEA agents Sanchez, Cordova, Bill Rochon and Jose Gonzales to testify when the defense begins presenting its own case next week. When that happens, the jury will hear detailed accounts from the DEA agents that both prosecutor Mike Attanasio and FBI agent Stern claim they never were told during nearly two years of preparation for the current trial.
Molineiro's strange odyssey from DEA reject to sting star to sting scapegoat illustrates the problems that can arise for prosecutors when the left and right hands of law enforcement are not working in tandem.
Experts who've dealt with the various branches of the Justice Department have mixed opinions about who's responsible for the failure to communicate. Schaffer believes that the FBI knew about Molineiro's DEA problems, but simply ignored them in the rush to launch the sting operation against Ben Reyes, and perhaps did not tell the prosecutors.
Former interim U.S. attorney Larry Finder counters that it is very plausible that the DEA would not have produced such information when the FBI took on Molineiro as an informant and then used him as its key witness in the sting. Ron Woods believes the prosecutors must shoulder the blame for not intensively checking Molineiro's past.
"It's believable that [the DEA] wouldn't share that information, but it's inexcusable that the prosecutors didn't probe more fully about this guy's background," says Woods, now a defense attorney, who was initially consulted by Hotel Six defendant Maldonado. "The agencies may squabble with one another, but they damn sure have to answer to the prosecutor."
As for the FBI, Woods holds that Stern and others failed to follow their own internal guidelines to check out the pedigrees of informants thoroughly. "You can end up embarrassing yourself and the agency totally if you get somebody on board that's a mob member, that you weren't aware of, or has committed murders you weren't aware of," says the former U.S. attorney. "You got to do that thorough background check, and it doesn't sound like they did it in this case."
Barring a mistrial, the main impact of the revelations about Molineiro's history is that instead of a seasoned FBI agent with reliable credentials, the man entrusted to implant the sting turns out to be an admitted lawbreaker himself. Asked whether it might take a criminal to catch a criminal, attorney Schaffer retorts, "Would you want your government to use criminals to investigate you?"
The course of the remaining three weeks or so of the sting trial is now clear. The defense will prosecute Julio Molineiro, while the prosecution will have to hope the images and words it has captured on tape will be enough to persuade jurors that the defendants are as slimy as its star witness.
"As a prosecutor, when you're putting on a case built around a turd, you have to discount the turd and make your case independently," says former prosecutor Clark. "That's the ultimate task, to succeed in doing that."
Prosecutor Attanasio will certainly try, but, like Marcia Clark, you can bet he now wishes he had known the true character of the witness before he put him on the stand.
Contact Tim Fleck at tim_fleck@houston- press.com.