Leftover Lies?

On the morning of May 9, almost exactly three years ago, FBI agents had the advantage of surprise as they turned on their recorders and began interviewing City Councilmen Michael Yarbrough and John Castillo at their homes.

In the months and years that would follow, the public would learn details of the City Hall Sting investigation that was just breaking that morning. But on that day, these City Councilmembers did not know that the Cayman Group was a bogus undercover operation spreading cash in an effort to influence the vote on the Duddlesten proposal for the convention center hotel project, or that federal agents had recorded and videotaped their meetings with the group. They did not yet have a battery of the city's best criminal lawyers helping them rationalize seemingly damning behavior and statements.

What came out of the mouths of the pair that May morning would differ radically from what they later testified to in two different bribery-conspiracy trials.

Yarbrough later claimed he was woozy when agents rousted him out of bed because he had taken a muscle relaxant for a softball game injury.

Castillo, interviewed at 8 a.m., said he was distracted by his wife's impending surgery and also said, "I'm not a morning person." Of course, not too many people we know consider themselves "morning with the FBI" persons.

Fellow defendant John Peavy was also interviewed by the FBI that day. He never took the stand to testify in the trials. His interview was never admitted into evidence and has not been made public.

It is a felony to lie to an FBI agent, as former Department of Housing and Urban Development secretary Henry Cisneros found out, to his chagrin. Agents charged him with perjury for covering up payments to mistress Linda Medlar during FBI screening interviews for the cabinet post. Federal sources in Houston say it is unlikely any such action will be taken against Yarbrough and Castillo.

A sampling of the blatant initial misstatements and how those changed in trial testimony:

Good Morning, Michael
* Agents asked Yarbrough about his meeting with the Cayman Group and undercover FBI agent Bob Dogium, alias Marcos Correa, four months before. At first, he could dimly recall only a Hispanic named Harpo.

After agents refreshed his memory, Yarbrough remembered Correa but mistakenly said it was informant Julio Molineiro, posing as Carlos Montero, who gave him several hundred dollars in cash. Dogium had actually handed Yarbrough an envelope containing $1,500, which he had shoved in his coat pocket.

* Yarbrough said he could not recall a company named the Cayman Group, even though he had been extensively briefed about it by former councilman Ben Reyes and had met company operatives in two luncheon meetings. This reflects on either his veracity or his powers of observation, or possibly both.

* Yarbrough told agents he leaned favorably toward the Duddlesten proposal but, "I was holding up to the very last minute." He claimed in trial testimony that he had already committed to the proposal and therefore could not have been bribed for a vote.

* Yarbrough attorney Robert Scardino argued that his client was unaware of the business connection between Reyes and the Cayman Group. But the councilman told the agents he thought Reyes represented Marcos and Carlos, "'Cause he's a former councilmember and he's no longer on Council ... so they might have solicited his support.... Ben was there saying, 'Hey, I'm with them.' "

* Yarbrough told the agents his discussions with Reyes and the Cayman Group about the hotel project had been "as general as possible" and that he never committed to it. On tape, Reyes offers him a leadership role for the group in pushing the Duddlesten proposal and then invites him to the bathroom during a lunch at Carrabba's.

* Yarbrough admitted to the agents he received cash from the Cayman Group but says it went to good works projects. Explaining the way he operates, Yarbrough told agent Brian Lynch, "Generally people ask you, 'Say, hey, you got any special projects or something like that?' ... It was not to offer, to sway a vote or anything like that. But he asked me, and I said, 'Well, I do things with senior citizens and different groups all the time.' " FBI tapes of the meeting in question show agent Dogium specifically discussing the hotel and Yarbrough's vote with the councilman.

* The councilman told the agents he had never discussed with the Cayman Group trading his vote for cash. In his lunch with Dogium, Yarbrough repeatedly assented when the agent said he didn't want a half vote, he wanted a full vote for the hotel, and then handed over cash.

* Explaining why he took cash from the bogus businessmen, Yarbrough claimed he didn't want to hurt their feelings. "I mean, I wasn't gonna tell 'em, 'Carlos, go back in there and write me a check.' I didn't know whether that would be offensive to him...."

* During his two trials, Yarbrough claimed he had received cash from Reyes but that it was the receipts of a fund-raiser the former councilman held at his house. In his statement to the agents, Yarbrough never mentions such a cash payment but does recall $500 to $750 in checks.

Other than those checks, Yarbrough flatly denied ever receiving checks or cash from Reyes. In trial testimony, Yarbrough admitted having received cash from Reyes but says it was the leftovers from the fund-raiser at Ben's house.

* Asked whether he had any receipts to show what happened to the money, Yarbrough answered that he didn't bother with receipts for cash donations. "I bought some fruit baskets and, and uh, we fed some people, and gave money to a nonprofit which I sit on the board of [Institute for Healthy Families]."

When agent Tony Wargo asked Yarbrough if he keeps no record of cash gifts, the councilman answered, "Yeah, I mean, you know, that's just like if, if I came to you and say, 'Uh, I have ten senior citizens I would like to buy some baskets.... Then you would say, 'Okay, Michael, it's up to you how you wanna donate the money' ... you could write a check or you can give cash, and I'll just go buy it." Yarbrough told the agents that no one who gave him cash for his projects ever thought to ask for a receipt in order to get a tax write-off.

Morning with John
Tapes of a meeting among Castillo, Betti Maldonado and Montero at the Hyatt Regency coffee shop in late April 1996 reveal a detailed discussion of the hotel project before Maldonado gave the councilman an envelope with cash. But Castillo had this recollection for agents Jim Trimbach and Kenneth Kempf: "We met 'cause he wanted to know what the status [of the hotel contract] was because they hadn't heard from Duddlesten."

* Asked later whether he had received any money or anything of value from an employee or representative of the Cayman Group, Castillo answered, "Not personally, no. But campaign, yes." At that moment Castillo continued to hold an envelope containing $2,600 that Maldonado had given him during the Hyatt meeting.

* In the interim between the Hyatt meeting and the agents' visit, Castillo spent $400 of the cash at a scholarship fund-raiser to win the title "King Ugly." Castillo insisted in the interview he had received checks only from the operatives or their representatives and all had been reported as campaign contributions.

* Castillo told the agents he did not know if Reyes had an affiliation with the Cayman Group. "I think I've seen them together once or twice," said Castillo of Reyes and Molineiro. In fact, Reyes had made his association explicit in a meeting with Castillo and Molineiro at the Ruggles bar, where he implored Castillo to become a leader for the hotel proposal after giving him a wad of cash.

* In his interview, Castillo explained that he had met Reyes at Ruggles to discuss Ben's interest in the Greater Houston Wastewater project. Tapes of the meeting show the discussion was about little else than the hotel project.

In his later court testimony, Castillo said he had gone to the bar only to give Reyes the former councilman's IRS 1040 form that had been mistakenly mailed to City Hall. Castillo told the agents the meeting took place after the Council vote on the hotel project. In fact, it had occurred three weeks before the vote.

* Agent Kempf asked Castillo whether he had ever received anything of value from Reyes. He ticked off only $300 in postage for a campaign mail-out and did not mention any recent cash. At his later trial, Castillo admitted Reyes had given him cash at the Ruggles bar but explained it away as an old debt incurred two years before when he had worked in Reyes's congressional campaign.

-- Tim Fleck

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