A Matter of Trust
The Sunday trial session at the Harris County Civil Courthouse was unusual. And so were the participants.
One of those heading down the nearly desolate hallways was Ted Olson; he had been solicitor general of the United States until last July. A former prime litigator for national Republican causes, Olson had successfully argued several politically charged cases to the U.S. Supreme Court. The biggest of all came in 2001, when the court upheld George W. Bush's presidential win in Florida.
Soon after, President Bush named him the federal government's top lawyer before the high court in 2001. He's even reported to be on some short lists to become a Supreme Court justice himself.
With him at the Houston courthouse was Toni Lawrence, who had won an election in 2003 to represent northwest Houston on City Council. But their titles took secondary status here -- the councilwoman and former U.S. solicitor general were now addressed as defendants, accused of civil fraud.
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"As far as these kinds of cases go," says Lawrence attorney Robert MacIntyre Jr., "this one was most unusual."
Olson lawyer Rusty Hardin put it another way in court documents: "This is a case of debt collection run amok."
In 1980, lumber company owner Victor Bracher took out a loan for $511,000 to continue property purchases that began with his father. First City Bank - Inwood Forest was in effect renewing a previous loan to Bracher so he could buy more distressed properties.
To secure the 1980 loan, Bracher pledged about 60 pieces of land, most of them containing revenue-producing rental houses in Houston's East End.
Bracher and wife Louise decided in 1982 to take care of future needs for their three adult children: Toni Bracher Lawrence, Barbara K. Bracher and David A. Bracher. The parents established three trusts that gave the kids equal shares of other properties, to be passed along to the kids when the senior Brachers died. The trusts were irrevocable, meaning in part that they were to be insulated from claims by potential creditors.
When Victor Bracher died in 1987, he still owed more than $300,000 on the loan from 1980. He also was delinquent in paying property taxes that had begun piling up on the land pledged to secure the note.
"The bank decided that rather than try to foreclose on the loan or going to his estate to get the money -- and he had plenty of funds to pay the loan at the time -- the bank would just renegotiate it because it would rather have the loan," Hardin says.
Louise Bracher, as executrix of the estate, was drawn in. "The evidence was that the bank would keep going by and calling daily, trying to get her to personally sign on to this loan," Hardin says. She soon agreed to take out a $390,000 note that was due to be repaid by 1991.
Then debt problems hit First City Bank - Inwood Forest. Name changes and mounting defaults took it into bankruptcy and receivership. The Bracher note was assigned to FCLT Loans for collection in 1995. Two years later, FCLT sent a formal demand that Louise Bracher pay up.
By that time, the properties pledged for the loan were falling into neglect, and Louise Bracher was in poor health and getting worse. "It sort of fed on itself," MacIntyre says. "She wasn't able to collect the rent and manage the properties, service the note and pay the taxes. It was a downward spiral."
FCLT sued her in 1998, although she had died the previous year. The company gained a probate judgment against her estate. It also targeted the children and their trusts as well for alleged fraud, in some eight changes to the original district court suit. By that time, Barbara Bracher -- a conservative political commentator on national news outlets and author of two critical books on former first lady Hillary Clinton -- had married Ted Olson.
The suit alleged that Barbara Olson and Toni Lawrence, as executrices of their mother's estate, had benefited from the disputed properties and "refused and continued to refuse to pay the legitimate debt of the Bracher estate," FCLT attorney Mynde Eisen said in court filings. The collection firm wanted the assets of the children frozen until more than $700,000 in alleged debts was paid.
In 2001, Ted Olson was suddenly brought into the legal fray. On the morning of September 11, Barbara called him twice from her cell phone. She was on a commercial flight that was being hijacked by men with knifelike instruments, she told her husband. Minutes later, the airliner slammed into the Pentagon. Toni Lawrence's sister became a victim of 9/11.
Lawrence was spared from political fallout over the civil fraud allegations in her three runs for the District A City Council position. An opponent in her successful 2003 race sent out an attack mailer linking her to $109,000 in unpaid taxes. She largely diffused the issue by explaining that the delinquent taxes didn't involve her -- they were part of a failed venture by her brother, in a loan co-signed by her father.
FCLT's efforts against the trusts and family appeared to flame out in 2001, when state District Judge Mark Davidson threw out the FCLT lawsuit as unwarranted. But within a year it was back, reinstated in a ruling authored by Court of Appeals Justice Paul Murphy.
At trial, some of the prime defense evidence came from the bank itself -- internal memos by its officials had never raised any specter of improper conduct by the Brachers, or the possibility of fraudulent transfers. In fact, some appraisals by the bank indicated that officials easily could have covered the debt years ago by taking control of the collateral property or even going after some $4 million in other assets amassed by Victor Bracher before his death. The civil fraud claim appeared to have been a legal ploy that came much later, defense attorneys argued.
The special Sunday finale to the trial was agreed to because of scheduling conflicts by some of those involved. In the end, the panel's verdict was virtually identical to Davidson's finding: There was no fraud.
"This was a bank that made some bad choices earlier and didn't pursue the collateral that they always had," Hardin says. "They tried to go after money that people weren't obligated to pay. We were delighted that the jury saw through that."
Olson, of Great Falls, Virginia, was left wondering why he'd even been put through the process. Hardin shook his head: "Every time I talk to Ted, he says, 'I don't even have any property in this state; I've never done anything in Texas.' "
No one denies that FCLT has a valid claim to the East End property, however mired it is in back taxes and disrepair. MacIntyre says Lawrence and others have offered it the deed, and FCLT has refused.
Lawrence and Eisen did not respond to requests for comment.
"No one disputes that they have a valid judgment, but they can't take that and try to get funds from Toni and my other clients," MacIntyre says. "They simply didn't have anything to do with it."
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