County Attorney Candidate Vince Ryan Sues Linebarger Goggan
Vince Ryan wants to be your county attorney. He also wants $7.5 million from the law firm that fired him.
So last April, Ryan, a former city councilman, sued the firm, claiming it promised him riches it never delivered. In its response and counterclaim, the firm states that Ryan was terminated for his ineffective work and is now trying to extort money. The firm also accuses him of breaching confidentiality agreements.
Seems simple enough.
But the firm happens to be Linebarger Goggan Blair & Sampson, LLP, the behemoth delinquent-tax collector that services the City of Houston, the Houston Independent School District, Harris County and hundreds of other public entities throughout the country.
It's a firm that formed like Voltron out of the 1998 merger of firms founded by Oliver Heard, who grew up in San Antonio, and Dale Linebarger, a San Marcos native who graduated from St. Mary's University School of Law in San Antonio.
Heard and Linebarger founded their respective enterprises in the late 1970s, and by focusing on the niche of delinquent taxes, they became two of the biggest collectors by the late 1980s. Their merger created the biggest firm of its kind in the nation, essentially cornering the collections market in Texas.
Thanks in large part to the late Heard's (he died during open heart surgery in 2000) colorful interpretation of certain laws, the firm has operated under a cloud of suspicion for years. In 2005, when partner Juan Pena was convicted of bribing San Antonio officials for a contract with the city and sentenced to prison, it merely added to the impression that the firm's overarching legal philosophy was quid pro quo.
As a Houston city councilman in the early 1990s, Ryan vehemently opposed the privatization of back-tax collections. In 1993, when City Council voted 11-4 to contract with Linebarger, Ryan was quoted in the Houston Chronicle as saying, "It's not good public policy, and it hurts the very people we are sent here to serve, which is the little people, not the big fancy rich people."
But two years later, Ryan either saw the light or saw dollar signs, because he took a job with the firm. And now a candidate for public office wants you to know that after 11 years with the firm, he deserved to have more fingers in the pie. He claims the firm strung him along and did not recognize his important contributions. Apparently, Ryan believes he is neither as Big nor as Fancy as he deserves to be.
And while the county attorney's office has historically lacked the kind of racist e-mail/fudged test score/drylabbing masterstrokes that make Houston the nation's shining beacon of political integrity, Vince Ryan's lawsuit might make this campaign more memorable. It's not often a candidate willingly hands over the bullets an opponent could use to load the gun.
Just in case you weren't aware, the Harris County Attorney is named Mike Stafford, and he's the only other candidate.
The job is pretty self-explanatory. Stafford is the civil counsel for the county and its various legal entities, which include the hospital, flood control and appraisal districts, among others. It's a pretty low-profile gig, except for when something happens like the sheriff's office gets sued over its deputies allegedly beating two innocent bystanders silly and starts deleting e-mails while at the same time the district attorney gets caught e-mailing his former (?) mistress the kind of soft-core, sub-Cinemax sweetness that would make even Danielle Steele gag. Then you can find yourself caught in the middle.
But otherwise, it's the kind of public office a person can run for without needing to have an actual platform. Ryan's campaign Web site, for example, has a section marked "Platform," but all it is is the office's job description.
The site does include his bio, however. It states that he volunteered and served in the Vietnam War, as well as in the 1989 invasion of Panama which booted dictator Manuel Noriega. Ryan is now a retired lieutenant colonel.
From 1981-1987, he served as an assistant county attorney, then from 1987-1993 as a Houston city councilman. In 1994, President Bill Clinton appointed him to the Board of the Panama Canal Commission, which oversaw the transition of said canal to Panamanian control in 1999. That same year, the 47-year-old Ryan got hitched to Teresa Pamela Rodriguez. They have three sons.
Curiously, his 11 years with Linebarger Goggan are not mentioned. For that, one has to look at his lawsuit.
Filed in April, the suit claims Ryan was instrumental in the 1998 merger of Calame, Linebarger, Graham & Pena with Heard, Goggan & Blair. Ryan also believes he played an integral part in landing the white whale that was the HISD contract.
According to the suit, Ryan started as a consultant with the smaller Calame, Linebarger in 1995. He was initially paid $2,500 a month for part-time work, which isn't particularly Big nor Fancy, but he soon got a bump to $7,500, which comes to $90,000 a year for a part-time consulting gig.
"On or about October 12 1995, Ryan agreed to work full time for the firm with the title of regional managing attorney," the suit states, "with a salary of $9,000 per month, a car allowance of $600 per month, along with health insurance for Ryan, his wife, and two newly born twins, twins whose hospital care along with Ryan's wife before and after they were born cost $360,000, mostly covered by Ryan's wife's health insurance then in effect." (The suit is brimming with such superfluous factoids, including his military career and the fact that one of the merger discussions took place at the River Oaks Grill).
By the time of the merger, Oliver Heard and his firm had created an interesting public image.
In 1990, under investigation by the Travis County District Attorney, it was revealed that then-State House Speaker Gib Lewis admitted to flying to a Mexican resort with four members of Heard's firm, with the tab picked up by a lobbyist. (There was at least one report that they were accompanied by a topless dancer, possibly named Chrissee. Lewis claimed not to remember being accompanied by a stripper, or anyone named Chrissee, for that matter).
The investigation also revealed that Lewis failed to report a $5,000 payment by Heard's firm toward back taxes on a business Lewis had a piece of. Ultimately, Lewis agreed to plead no contest to misdemeanor ethics violations, pay a $2,000 fine and quit public office.
A year later, State Rep. Albert Bustamante was convicted in federal court of "accepting an illegal gratuity" in connection with a $20,000 guaranteed loan he accepted from Heard and another attorney. He was sentenced to 42 months in prison.
A few years after that, Heard came up with a way to make even more money off the deadbeats his firm collected from: offer them a loan, through a separate company, so they could pay their taxes and keep their property. Heard's firm took a one-third interest in Texas Tax Liens and offered the loans at the too-good-to-refuse interest rate of 18 percent. And if the owner couldn't keep up, Texas Tax Liens took the property.
Oliver Heard was the undisputed king of collections, and Dale Linebarger wanted a piece of that dream. Vince Ryan was only too eager to make the dream a reality.
Nearly every city and county in Texas uses outside firms to collect back taxes. And a lot of those cities use Linebarger Goggan, which claims about 2,800 clients nationwide. With approximately 1,600 employees across the country, the firm says it collects about $1 billion a year for its public clients.
The thinking is that private firms have more incentive — and more efficiency — to collect, since they take a percentage of funds collected. Linebarger Goggan is paid anywhere from 15-30 percent. It's a competitive field, and the firm makes no bones about its extensive lobbying. But some critics say the firm gets a little too cozy with the people it works for. And sometimes it appears they're right.
In the past five years, the firm has:
• Seen a name partner imprisoned for bribery.
• Lost its contract with the City of Chicago for paying for a Chicago employee's trip to San Antonio. Chicago's inspector general called it "either a fundamental incompetence of their core function, a deliberate blind eye to...malfeasance, or both."
• Been told by a Louisiana appellate court that its contract with the City of New Orleans violated that state's constitution, meaning a potential $28 million refund to debtors. The case is on appeal before the Louisiana Supreme Court.
• Settled a lawsuit with a rival firm that accused Linebarger Goggan of offering illegal gifts and rigging contract bids.
• Lost its contract with the City of Mansfield, Texas, for what the city council called an inappropriate $2,000 campaign contribution the firm made to the mayor after his election.
In addition, when Congress passed a 2004 measure allowing the IRS to hire private collectors, Linebarger Goggan was one of the three firms hired. Unfortunately, they were also the first (and only) firm to not have their contract renewed, for reasons the IRS never disclosed. (The firms were able to keep up to 24 percent of what they collected. The IRS's public advocacy officer said the arrangement would wind up costing the public more than if the IRS had collected the taxes itself. And, in an astonishing feat of pot-kettle pyrotechnics, the advocacy officer claimed that private firms showed "poor customer service").
But Dale Linebarger and former firm attorney Bill King say that private firms are able to collect more, and more efficiently. They say this benefits those who pay their taxes on time — which is about 95 percent of the people. The vast majority of delinquent property owners, according to Linebarger and King, are slumlords and absentee owners. The law firm itself isn't shoving grandma out into the street, forcing her to survive by her walker and wits.
Structurally, say Linebarger and King, the cost of government collection comes out of an entity's general fund — which ultimately means that it's taxpayer-funded. But private collection, they say, is solely deadbeat-subsidized. The delinquent taxpayer has to pay attorneys' fees along with the past due amount.
"The cost is being allocated to the person that caused the problem," King says, "instead of being spread out among all the taxpayers. Which seems to me to be a fundamentally equitable situation."
The firm also tries to be a good corporate neighbor — an art it hasn't mastered nearly as well as that of lobbying.
In 2005, when city and community leaders in San Antonio created a hurricane relief fund to help Hurricane Katrina evacuees, the San Antonio Express-News reported that United Services Automobile Association contributed $1 million, the Greater San Antonio Chamber of Commerce donated $32,000 and Linebarger Goggan stepped up to the plate with...$10,000. The firm spent approximately 12 times that amount on federal lobbying in the last six months of 2005 alone.
But there's one organization where Linebarger Goggan can do no wrong: the U.S. Conference of Mayors.
In 2001, the conference gave the firm its Award for Excellence in Partnership for its collection efforts for the City of Dallas. In 2004, it gave the firm its similar-sounding-yet-totally-different Award for Outstanding Achievement in Partnership for its Chicago contract (which would be terminated four years later). The firm won the same award in 2007, for its work with the City of Houston's "Houston Hope" program, whereby delinquent properties in nine designated neighborhoods are foreclosed upon, purchased by the Land Assemblage Redevelopment Authority and sold to private developers and community development corporations for the building of affordable single-family housing. King says the firm waives its fees on the Houston Hope properties.
Now here's where Ryan's lawsuit gets really weird.
The meat of the complaint alleges that Ryan was promised Big Fancy money if the merger was successful and the resulting monolith landed the lucrative HISD contract. But while he was crucial to both, Ryan claims, he was left out in the cold.
"Time and again, the defendants led Ryan on with promises they never intended to fulfill," the suit states. "For example, Ryan was promised by Dale Linebarger during this period if the [HISD] account...was acquired, Ryan would be 'as rich as Juan Pena in the Valley.'"
Like Heard, Pena was a name partner who had come up with a cool way to make extra dough: bribery. In 2005, Pena pled guilty in federal court to bribing San Antonio city councilmen to land a city contract. He was sentenced to 30 months in prison and fined $1 million. Prosecutors alleged he was worth $14.8 million.
So Ryan is now upset that he never made as much money as a dude who bribed public officials. When asked why he made sure to put that in writing in a public document, Ryan says, "I did not do anything dishonorable in my 11-plus years of association with them. I conducted myself in an aboveboard, first-class manner." Plus, he points out, the promise was made before the scandal came to light.
But Dale Linebarger says that the promise was never made, and that Ryan "is bringing it up and mentioning that name in an effort...to embarrass the law firm and essentially extort money from us."
Linebarger left the firm in 2006 and is now in private practice in Austin. He says Ryan was not integral to either the merger or the HISD contract, and that Linebarger had numerous discussions with Ryan about where exactly he stood in the firm.
"It's kind of like when the girlfriend threatens to call your wife," Linebarger says. "He made all of these allegations before he filed the lawsuit, and we told him he was incorrect and we disagreed with him and we offered him some compensation...in order to try to work it out with him."
As baseless as Linebarger believes the suit is, he was not surprised. Prior to suing, Ryan filed an unsuccessful age-discrimination complaint with the EEOC.
"They did seemingly purge the senior staff in the Houston office at the time they purged me," Ryan says. "So it was one way to fire something across their bow to see if they'd blink."
Apparently, they didn't.
"I would say that he had plenty of information and knowledge as to our difference in opinion on compensation," Linebarger says. "He also had the option, of course, of quitting and going to get a better job if he could've found one. Instead, he decided to wait about [ten] years and file a lawsuit."
To which Ryan says, "They're a very politically savvy and powerful group of people. That's another reason I took as long as I did to take that last formal step after every attempt at negotiating a settlement."
Ryan claims he passed up other opportunities out of loyalty to the firm, which leads us to the most head-scratching part of his claim: Ryan once considered filing a private lawsuit against the firm's biggest client — HISD, the very contract he claims to have been instrumental in landing.
According to Ryan's current lawsuit, Ryan owned a company with former HISD Superintendent Billy Reagan that hired teachers from Panama and the Philippines as part of the district's Highly Qualified Teachers program. But, the suit states, HISD terminated its business with that company, "because, as repeated by two high HISD officials, the principals in the district had 'cultural differences and difficulties' with those teachers, arguably an illegal reason with serious public policy implications."
Because Ryan chose not to sue HISD, the suit claims, the firm was unjustly enriched.
While you're wrapping your head around that one, chew on this bit of pretzel logic: The suit also claims that, while Ryan was still at the firm, it "deceptively convinced the Texas State Legislature to increase the [collection] fees which can only be paid to attorneys in Texas, unlike virtually every other state in the Union, from 15 percent to 20 percent, thereby tremendously increasing its profits."
Profits that would ostensibly cover the $7.5 million Ryan's asking for. (The suit does not clarify whether Ryan would collect from the firm's Ill-Gotten Gains Fund or the Totally Ethical Profits Account, but that's probably a question best left to the number crunchers).
Yet the suit is not just about the money Ryan believes he's owed for his work. He also claims "intentional infliction of emotional distress."
The suit describes the circumstances surrounding the distress, in part, thusly: "Defendants used compulsion and coercion to force Ryan to abstain from...the voicing of even his opinion of their operations and deceptions towards their clients."
Ryan's attorney says his client wasn't voicing these opinions to third parties. Apparently, Ryan just wanted to be able to tell other members of the firm how much Linebarger Coggan sucked.
Because the higher-ups frowned upon this, it distressed Ryan, so that accounts for some of the $7.5 million demand.
When asked what he thinks now of the privatization of delinquent-tax collection, Ryan says, "After 11 years of being on the other side, I can't say I disagree with any of the things I said back in the 1980s or [early] 1990's."
Harris County Attorney Mike Stafford declined personal comment for this story, but First Assistant County Attorney John Barnhill told the Press: "We consider this to be a private matter between Mr. Ryan and his former employer."
Neither Ryan nor his lawyer, Marc Hill, believe this suit should have anything to do with his campaign.
"There's...his life as a lawyer that had worked [at Linebarger Goggan], was made promises and didn't receive what he was promised," Hill says. "...And then draw a line down the table. On that side of it, here's the candidate."
And the candidate is touting his experience in Latin American relations, exemplified by his service on the Panama Canal Mission. But there's more. Ryan came to an interview with the Press armed with printouts from his Web site, and other biographical papers, including one with a list of his Latin American-related accomplishments. These include:
• Master's degree from Rice University, thesis on the early development of the Mexican petroleum industry
• Traveled to Belize
• Read and understand Spanish well, conversant verbally
Voting takes place November 4.
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