Killer On The Loose

The explosion of the battering ram splintering a heavy front door jarred the predawn stillness of a quiet Dallas suburb last Thursday. Seventeen SWAT officers of the Plano Police Department rushed into the fashionable two-story house in their search for the elusive homeowner, Michael Lee Davis.

With the SWAT team were Plano Detective Curtis Coburn, three Texas Department of Insurance investigators and six warrants for the arrest of Davis.

Six months of intense investigation brought charges that Davis masterminded a massive insurance fraud scheme involving more than $1 million in coverage. He is accused of luring clients of the AIDS Resource Center in Dallas into taking out life policies by lying to insurers that they were not HIV-positive. Sources close to the investigation say Davis would then buy the policies for a fraction of their full value and resell them to investors at a hefty profit.

The alleged scheme was hardly the standard insurance fraud -- and the target of this early-morning manhunt had emerged from an even more unpredictable past.

In 1980, when Michael Lee Davis was still Walter Waldhauser Jr., he confessed to being the middleman in one of Houston's most infamous multiple homicides -- killings committed to cash in on life insurance payoffs. One of the victims was a 14-month-old boy. The triggerman in the case claimed that Waldhauser even held the tot's mother down as she was shot in the head.

Waldhauser received three concurrent 30-year prison sentences. Despite the nature of the crimes, he was paroled after serving only nine years of his term.

Last October the Houston Press tracked the new life of the convicted capital murderer. He had legally changed his name to Davis and had become vice president of Southwest Viatical in Dallas. The viatical market deals in existing life insurance policies of people with AIDS or HIV. Dealers such as Waldhauser/Davis pay pennies on the dollar for patients' policies, then collect full value when patients die.

A series of Press articles pointed out that the viatical business might not be such a good idea for a man with Waldhauser/ Davis's past. The articles attracted the interest of state insurance regulators and even the Texas Board of Pardons and Paroles. Both groups were keenly interested in revelations that some of his associates at Southwest Viatical were also ex-cons.

Waldhauser/Davis had been on nothing more than "postcard parole," which required merely that he report annually to authorities by mail. But last November, a month after the first Press article, Davis had his parole revoked for failing to make his annual reporting deadline.

Four weeks later parole officials reversed themselves and freed Waldhauser/Davis again, with the proviso that his parole requirements be tightened. They fitted him with an electronic monitoring device.

After about three months, however, parole officials dropped the electronic monitoring for Davis. The device was gone. And now, so is Davis.

Police crashed into his house and combed the rooms for any sign of Waldhauser/Davis. Again, the convicted capital murderer and accused insurance fraud kingpin has stayed a step ahead of the law.

Plano Police Detective Curtis Coburn is the latest law enforcement officer obsessed with putting Waldhauser/Davis behind bars. After Waldhauser/Davis's parole was jerked late last year, Coburn learned that the killer and ex-con was a Plano resident. The cop didn't like the idea of what he describes as a piece of "human trash" living in his city.

Coburn took it upon himself to occasionally stake out Waldhauser/Davis's home and monitor his activity. He also researched county records and discovered that there was no mortgage on the Waldhauser/Davis home. That indicated an apparent cash purchase of the $180,000 house -- unusual for someone who had claimed on his parole reports to have been unemployed for the past few years. At times Coburn even rummaged through the trash outside the house in hopes of finding something incriminating.

So Coburn didn't need much prompting when state investigators called to ask for his help in the predawn raid to take Waldhauser/Davis into custody. And he was just as upset as they were when it was discovered that Waldhauser/ Davis had already hit the road after somehow learning that his parole was about to be revoked.

Coburn had arrived at the location early -- 4 a.m. -- to await the arrival of SWAT and the insurance investigators. At 5:45 a.m. SWAT officers made what is called a "hard entry," using the battering ram to burst into the house.

Seconds later Coburn heard the screams of Waldhauser/Davis's wife, Beverly. In the dark, she pleaded with the intruders not to kill her.

"At that point, I don't think she knew it was the police," says Coburn. "I think she thought it was one of her husband's old friends coming to settle a score."

According to one of the raiding officers, Beverly claimed that she hadn't seen her husband since he had learned -- how, she didn't say -- that parole officials had had an arrest warrant issued to revoke his parole. (Calls to the couple's home were not answered.)

Indeed, parole officials in Dallas had obtained that arrest warrant one week earlier. That was after Waldhauser/Davis failed to show up for his scheduled monthly visit with his parole officer in May. The parole records also reveal that only a month before his failure to report, the Dallas parole office had recommended that Waldhauser/Davis be taken off electronic monitoring.