Making a Killing

In the '70s, Walter Waldhauser arranged four contract murders. Nearly 20 years later, he has a new name and a new line of work -- but he still generates a profit from death.

In Dallas's high-rent West End, on the fourth floor of the marble-halled Paramount Building, Michael Lee Davis was fumbling through a stack of papers in his office's reception area. The vice president of Southwest Viatical, he looked up hopefully when a visitor entered the office. A viatical company buys the life-insurance policies of the HIV-positive for pennies on the dollar, then collects the full insurance benefit when the client dies. This visitor might be a potential client, a new source of profit.

It's not the first time that Davis has tried to make money from the deaths (and life-insurance policies) of others. Roughly 20 years ago, when his name was Walter Waldhauser Jr., he helped carry out the contract killings of four Houstonians, including a 14-month-old boy shot in his crib. Now, after serving less than ten years in prison, Waldhauser has exchanged his prison whites for a snappy blue pinstriped suit.

It's a chilling thought for the lawman most responsible for sending him to prison.

"If I knew that this guy had a life-insurance policy on my life, and he was the beneficiary on it, I'd be scared to death," says former homicide detective Johnny Bonds. "I'd feel like a walking dead man. Because he will kill you for money."

On the morning of July 6, 1979, a housekeeper made a grim discovery when she arrived for work at the Wanstrath family's house. The long body of John Wanstrath was slumped in his living-room easy chair. His wife, Diana, lay at his feet. Both had been shot in the head. So had their adopted infant son, Kevin, whose body was still in his crib.

Johnny Bonds and his partner, Eli Uresti, arrived at the house in Memorial a short time later. They noted that despite the violence to the bodies, the house seemed relatively in order; nothing appeared to have been stolen. They assumed they were investigating a murder/suicide, that John Wanstrath had killed his wife and son, and then himself.

Bonds followed crime-scene protocol by first observing the bodies without moving them. Next, he began looking for the murder weapon. On his hands and knees, the detective searched under and around the easy chair but found nothing. Still unconcerned, he figured the gun must be lodged between John Wanstrath's large frame and the inside of the chair. He waited for the medical examiner to arrive and move the body.

But even then, there was no gun to be found. Bonds and Uresti changed their minds about how the Wanstrath family had died: It must have been a murder for hire.

Unfortunately for the detectives, Dr. Joseph Jachimczyk, Harris County's flamboyant chief medical examiner, had his own theory about the deaths. Jachimczyk authorized what he called a "psychological autopsy" that involved studying everything from the food the family ate to the music they listened to. He concluded that Diana Wanstrath had been suffering a bout of depression, and had killed both her husband and son before shooting herself.

From the beginning, Bonds and Uresti didn't buy that theory: It failed to explain what had happened to the murder weapon. As the detectives' public disagreement with the popular chief medical examiner escalated, Bonds found himself transferred from the homicide division to internal affairs -- the Siberia of the police department.

Still, he continued to work the case.

The Wanstraths' bodies were discovered on a Friday morning. On Saturday, The Houston Post ran an account of the murders in a front-page story by reporter Rick Nelson. Later that day, Nelson received a call from a man who refused to identify himself. It would be almost a year and a half before Nelson learned that the caller was Don Chaline, a gambler and small-time crook (see "Death of an Informant," Houston Press, July 24, 1997). Anonymously, Chaline told the reporter that, although he could not prove there was a connection, Diana Wanstrath's brother, Markham Duff-Smith, claimed to have had their mother killed four years earlier.

And in fact, in 1975, Trudy Zobolio had turned up dead in her River Oaks home, strangled with a pair of pantyhose. The medical examiner's office had ruled that death, too, a suicide.

Chaline also told the reporter that there had been a middleman in the Zobolio hit -- a guy who was into real estate and collecting coins. Nelson turned the information over to Bonds. To the detective, the informant's story sounded credible.

During questioning, Bonds remembered, Duff-Smith had talked about his dead family members without emotion and indicated that the interrogation was a great imposition. Bonds began a closer of examination of Duff-Smith's background and business dealings.

He found that in addition to standing to gain financially from the deaths of his relatives, Duff-Smith was running a scam on insurance companies. According to Bonds, Duff-Smith would take a job selling insurance, and convince his friends to insure their lives for amounts up to $500,000. The friends never made payments; Duff-Smith would simply make the first payments himself and pocket his sizable commission. When the policies were eventually canceled because the premiums were not paid, the insurance company would plan to recoup its commission from Duff-Smith's future commissions. At that point, Duff-Smith would simply quit, go to work for another insurance company, and start the same scam all over again.

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