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Going Through These Things Twice

A handful of reporters, photographers, trial groupies and lawyers milled around in front of the downtown federal building in the sullen, hazy heat of a late Thursday afternoon last month. A mistrial had just been declared in the multimillion-dollar Hotel Six bribery-conspiracy investigation and trial, and the motley crew clustered eagerly near the only unlocked door. They waited for the dismissed jurors to trickle down from the courtroom, hoping the more talkative panelists might shed some light on why they had failed to reach agreement on verdicts against five current or former city officials.

Taking in the scene was Ross Allyn, the bespectacled, frizzy-haired lobbyist who has seen the case from both sides. First he was one of the original six defendants and then an acquitted observer, courtesy of Judge David Hittner, who had ordered charges dismissed against Allyn earlier in the trial for lack of evidence.

Allyn and his attorney would later dun the federal government for $372,000 to cover his legal bills. But at this moment, in the confusion surrounding the mistrial, Allyn focused less on debt collection and more on dispensing sympathy for his former codefendants.

"My heart just goes out to all the defendants, to have to go through this once again," declared Allyn, obviously relieved to be analyzing the legal wreck from the safety of the roadside rather than while pinned in a crumpled passenger seat. "It's a terrible, terrible burden to put them through."

Of course, it's a terrible burden to put us all through as well. The trial is tentatively set to begin again in mid-September: On video replays, Ben Reyes will again deliver his "buy us some leaders" lecture and take his bag of loot. Michael Yarbrough will confirm that he only got $1,500, half of what he was promised by federal agents, and then will take the balance and pocket it. Betti Maldonado will giggle once again when an informant asks what they are up to, and blurt out "a conspiracy!" followed by a shriek of giddy laughter. At some point, oily FBI informant Julio Molineiro will smile his Cheshire-cat grin and say "Chess, sir," or "No, sir." A new set of jurors will hear how the FBI set up a dummy company called the Cayman Group whose bogus businessmen offered cash to city officials to buy their way into the downtown hotel convention project.

We've heard it all ad nauseam, and now we will hear it all again. To paraphrase Bob Dylan, not even a $50,000 satchel of cash can pay the price to keep us from going through all these things twice.

City Councilman Rob Todd called the specter of a retrial a continuing "black eye" for the city. Coming from the District E official, that's saying a mouthful, considering his own recent contributions to the image of city government -- denouncing the public sale of edible underwear and challenging a mayoral order mandating equal treatment for gays in city hiring.

While the crowd waited downstairs for the jury, federal Judge Hittner huddled in his eighth-floor chambers for a final debriefing of the 12 panelists. In four days of deliberation, they had come close but failed to reach agreement on the guilt or innocence of any of the defendants. Hittner ran through a laundry list of notes explaining what had transpired during stretches of the trial when jurors had been excluded from the courtroom. Then the judge and jurors traded views on the high and low points of the proceeding.

According to one juror, the panel had a rare moment of unanimity in commending the conduct of federal prosecutor Mike Attanasio, who had been razor sharp, superbly organized and totally under control throughout the trial. So cool and under control was Attanasio that a Houston assistant U.S. attorney, while watching his closing argument, nit-picked that the presentation lacked a certain "oomph."

Conversely, panelists in a subsequent interview with lawyers and prosecutors took defense attorney Dick DeGuerin to task for his repeated attempts to prompt witnesses into describing Betti Maldonado as a gullible naif, a tactic some found insulting to his client's dignity and their common sense.

The judge also discussed his rulings limiting the defense references to racial targeting of the defendants. Jurors responded by telling Hittner they did not find evidence of such racial motivation in their review of the evidence.

The mistrial voided nine weeks of labor by the judge and his court staff, extensive preparation by two of the Justice Department's top prosecutors and a cadre of FBI special agents, and the efforts of six top Houston criminal defense attorneys. Given the squandering of all that legal blood and sweat, Hittner seemed unusually cheerful as the proceeding ground to an inconclusive halt.

Throughout the trial, the judge displayed bursts of temper. At one point, he brought in the Hotel Six jury to watch as he verbally whipsawed two prospective jurors in other cases who had failed to make the cattle calls from which panels are selected. He had humiliated one of the men by ridiculing his failure to wear a suit and tie in court. Shortly before the Hotel Six proceeding ended, he bellowed, "Get them here!" several times at defense lawyers when their clients failed to make a 15-minute court call. Hittner did apologize later for that outburst.

 

Yet instead of hectoring the Hotel Six jurors for failing to reach a verdict or pushing them into several more days of deliberation, Hittner sent them packing with the advice not to feel down because even a mistrial is an exercise of the system at work.

"It surprised me that he accepted [the mistrial] so readily," says jury foreman Gerald "Butch" Frazee, who had steeled himself to expect critical words if not outright wrath from the judge.

Though he didn't acknowledge it, Hittner's calm demeanor likely reflected his relief that this trial didn't produce convictions that might not have withstood the scrutiny of the inevitable defense appeals. During the proceeding, the attorneys for current councilmembers Yarbrough and John Castillo, former councilmembers Reyes and John Peavy and former port commissioner Maldonado had repeatedly, and unsuccessfully, asked the judge to declare a mistrial.

After the trial started, a series of defense revelations detailed the misdeeds of Molineiro, the Chilean-born informant who masqueraded as a Latin American businessman from the Cayman Group. The prosecutors had chosen to make the informant the anchor of their presentation of most of the much-ballyhooed audio- and videotapes. Criminal attorney Kent Schaffer provided the defense with evidence that forced Molineiro to admit he had lied, stolen money and used drugs while in the employ of U.S. law-enforcement agencies.

Any convictions returned in the trial could very well have been overturned because the government, in pretrial discovery, did not disclose internal federal documents severely damaging to Molineiro's credibility. Prosecutors claimed to have been unaware of the documents earlier.

"I believe this judge, like any, would not like a verdict in a high-profile trial to be overturned on appeal," Frazee said. He was asked whether the threat of successful appeals might have made the mistrial more palatable to Hittner.

"You may," opined Frazee, "have put your finger on it."
The foreman, who had voted for conviction on all 11 counts and believed the trial documented corruption in city government, immediately embarked on a series of media appearances after the mistrial in which he called for tighter campaign and ethics regulations for local politicians.

His final appearance before City Council last Wednesday had all the prerequisites for a dramatic confrontation. Frazee, a chemical company president, was kept cooling his heels most of the day as councilmembers moved one speaker after another ahead of him.

He eventually read a four-page statement to the Council, looking up only once during an unscripted tangent to directly address Mayor Lee Brown. He implored the mayor to turn the Hotel Six trial into a positive experience by crafting new ethics regulations.

The mayor and councilmembers remained silent, refusing to respond to Frazee's challenges. City Attorney Anthony Hall previously alerted them that it might be inappropriate to discuss cases where no verdict had yet been rendered. For whatever reason, on this subject, the politicians seemed to have no desire to pontificate.

Defendant councilmembers Yarbrough and Castillo simply watched as Frazee spoke directly to them. "Your own defense creates grave doubts in my mind about your integrity," Frazee told the pair. "I believe your constituents deserve better."

Yarbrough chatted on a telephone during part of Frazee's five-minute talk, while Castillo fiddled with some papers. No doubt they were both silently giving thanks that whomever is chosen the next foreman of a jury of their peers, it won't be Butch Frazee.

The replay of the Hotel Six trial will bear more than a passing resemblance to a Hollywood big-budget action flick subjected to a test-screening before a very critical audience. Some things just didn't fly in the first cut, and one was that plump little Chilean informant, Molineiro, in the role of law-enforcement good guy.

Before Judge Hittner dismissed the jury, he heard a final round of motions from defense attorneys. One of them came as no surprise to anyone who had followed the testimony.

Reyes's attorney, Mike Ramsey, immediately asked the judge to order the prosecution to make sure Molineiro did not skip the country before the next trial. Hittner complied in unusually strong language, saying he would hold the prosecutors responsible if Julio pulled a complete fade-out. He might have been reading the prosecutors' minds concerning what they'd really like to do with their radioactive informant.

 

Molineiro is both the worst and best thing that ever happened to Reyes. His street smarts allowed him to win the crafty councilman's confidence and gather the incriminating conversations that are the cornerstone of the trial. His repeated failings as an informant have given Reyes his one chance to escape conviction against overwhelming evidence.

The problem for the prosecutors is that most of the on-location action shoots by the FBI Stingovision crew put Julio in a co-starring role, making it impossible to eliminate his speaking lines in court. Future jurors will undoubtedly be extremely curious about that chatty little guy with the beer belly and the big cigar who is in on most of the essential action, including the presentation of the $50,000 payment to Reyes. No one's going to buy the explanation that Julio was simply the FBI's "best boy" toting the sound equipment around on the set.

Given all the negative material the defense has on Julio, the feds will likely have to retool his character to that of a slimy street person who was utilized by the FBI only because he could bond with Ben. Just as Ramsey "inoculated" client Reyes by voluntarily disclosing how Ben had falsely claimed to be wounded in Vietnam, so the prosecutors will try to disclose all Molineiro's warts at the start of the second trial.

"Attanasio's a bright kid," said attorney Dan Cogdell of his 32-year-old federal opponent. "I think he's got a better case without Molineiro than with him." Cogdell, who represents Peavy, allows that keeping Molineiro off the stand affects some of the government's case, but he figures Attanasio can work around the holes.

In the replay, Molineiro's high-profile role in court will likely go to his supervisor, FBI Special Agent Ron Stern, the man who designed the federal sting. "All they have to do is put Stern on to say I was there, I listened to all the tapes and I've reviewed the recordings, and they're complete, they're accurate and they come in," says Cogdell. "You don't have to have everyone on the tape there."

Cogdell is concerned that if the government uses Stern to introduce the tapes instead of Molineiro, it may make it difficult to present impeachment evidence showing that Molineiro was a known liar and thief who was capable of manipulating the tapes to falsely incriminate his targets. "Without Molineiro, some of that fun stuff may not be there," says Cogdell.

Ramsey, in representing Peavy, feasted on Julio throughout the trial with descriptions like "worm," "snake" and "a rotting mackerel glistening in the moonlight." Ramsey seemed unconcerned at the possibility of losing his favorite federal whipping boy.

"If they don't [use Molineiro], we will," Ramsey laughed as he talked to the post-mistrial media gathering. "Julio will be here again if we go to trial again."

A human chameleon, Molineiro was recruited fresh out of a Paraguay prison in the early 1980s. A DEA mentor brought him to the United States to do drug surveillance work in Houston. On the stand during the first trial, he absorbed like a sponge the mannerisms and jargon of the lawyers who interrogated him. Just as he had masterfully portrayed a corrupt Latin American businessman in winning Reyes's confidence, Molineiro transformed himself into the role of expert witness for the FBI, at least until defense attorneys forced him to admit to theft, drug abuse and official misconduct.

The first time around, Hotel Six played out as a duel of the two master con men, Ben and Julio. Much of that was depicted in the series of FBI audio and video recordings featuring the two with a rotating cast of supporting players. At times during the first proceeding, Molineiro and Reyes almost seemed like reverse sides of the same coin. They were easily the most intriguing personalities to testify -- Molineiro a glib shape-shifter and Reyes a dark, brooding presence.

Both have built careers based on government service, but of very different sorts: Reyes began in the state Legislature in the early '70s representing his Denver Harbor stronghold in East Houston, and progressed to a district position on City Council covering the same area. He tried going national with two campaigns for Congressional District 29, a seat carved by the state Legislature for the express purpose of electing a Hispanic. Incumbent Gene Green defeated Reyes in both contests, largely because Reyes was already burdened with accusations of personal corruption.

Portentous and powerful to the end, Reyes on the stand remained unruffled, and prosecutor Attanasio treated him with far more caution than he had Castillo and Yarbrough. In the end, it seemed to pay off for the prosecutors.

 

"The way [Reyes] operated, it seemed like he knew how to give bribes and who to influence and who not to influence," says former juror Kevin Ross, a meat cutter at Fiesta. "Just like we said in the jury room, he could B.S. his way out of almost anything."

Still, in the test-screening, Ben scored ahead of Julio.
"I still give a little more credibility to Ben Reyes, because he's done a lot of good for my city, and I love Houston," allows Ross. "Molineiro -- we didn't give his testimony anything. In our deliberations, we just didn't even take him into consideration, because we didn't believe a word he said on the stand."

On the other hand, Ross says the jury took the tapes, despite the defense attacks on their maker, very seriously indeed.

The message from the first jury to the prosecution is clear: Hotel Six: The Sequel should let the tapes do the talking as much as possible, while minimizing the lip from Julio.

Whether the same cast of defendants shows up for trial in September is open to speculation.

Reyes and Yarbrough remain squarely in the sights of the prosecutors. They were captured on videotape taking cash in a manner that made it highly implausible to characterize the money as a campaign contribution. The fact that at times the panel was within one vote of securing a bribery conviction on Reyes will undoubtedly sharpen the prosecution focus even further on his role in the alleged conspiracy.

Yarbrough took the stand in his own defense and was humiliated when he admitted that he had not filed income taxes for three years. While he will have undoubtedly patched that hole by filing returns before September, his defense presents a dilemma for his attorney, Mike DeGeurin.

"Yarbrough was damned if he did and damned if he didn't," a defense team member said about the councilman's sorrowful performance under cross-examination.

"To me, the single worst evidence in the trial was, 'We don't want half a vote, we want a whole vote'," says the attorney. He referred to a videotaped meeting in which FBI agent Bob Dogium explained to Yarbrough why he was paying him a second installment of $1,500.

"If I have a memory of damaging evidence in this trial, that was it," says the defense team lawyer. "So Mike [DeGeurin] kinda has to say, '[Yarbrough] loves dogs, look at the house he grew up in, his father was a postman.' I mean, he's gotta go there."

Castillo and Maldonado are in the second tier of targets. Maldonado is there because she admittedly broke the law in passing cash to councilmembers. Attorney Dick DeGuerin's defense that she was entrapped into her actions found less sympathy than expected from the first jury, which may force him to rethink his strategy.

In Castillo's case, the jury had trouble buying the claim, made by him and Reyes, that Reyes was merely repaying an old campaign debt to Castillo in a cash exchange in the bar at Ruggles.

Juror Michael Goldsmith favored acquittal for some defendants, but he didn't cut Castillo any slack on that explanation.

"I personally think that's ridiculous," says Goldsmith. "If someone owes me $25,000, I'm not going to let it sit for two years and then go, 'Can I have $2,000 of that?' I'm going to want it. Considering he had an entire campaign fund to pay this money out, he could have paid it at any time."

The most independent members of the defense team were Castillo's lawyers, Bob Bennett and George "Mac" Secrest. They kept their own counsel much of the time and put Castillo on the stand, to the dismay of some of the other attorneys.

"They were most fearful of the guilt-by-association backlash," says one team member, who still lauded Bennett for a superb effort. "And maybe appropriately so, because Castillo has been linked to Reyes for so long. And that's not necessarily a beautiful flower, under the circumstances, to be in the shade of."

"I don't think we're going to do anything differently," says Castillo counsel Bennett on the next trial. "We showed John Castillo's public face and his private face -- his bank accounts and tax returns. We gave the jury everything about John Castillo, including his truthful testimony."

One piece of evidence that didn't make it into the first round could provide the government with an additional challenge to Castillo's credibility. It concerns a conversation between Castillo and Ross Allyn as they drove away from a meeting with Molineiro at a West Loop office in December of 1995.

Allyn provided his version of that talk to the FBI during negotiations in May 1996 to become a cooperating witness, under the guidance of his first attorney, Jay Nadel. After the discussions fell through and Allyn was indicted, he hired attorney Paul Nugent, who successfully moved to have the FBI conversation suppressed.

 

Now that Allyn is no longer a defendant in the case, he could be called as a witness by the prosecution to repeat what he told the FBI.

During the trial, Castillo testified that after they left the meeting with Molineiro, he had told Allyn to make sure any contributions from the Cayman Group were made by check, even though the FBI tape of the meeting has him saying, "Cash is fine."

According to what the FBI claims Allyn told agents later, he and Castillo drove from their meeting, with Allyn expressing suspicions about the Cayman Group and cautioning the recently elected councilman that it was not wise to take cash from them.

Allyn said he couldn't believe that Castillo would take cash from Molineiro, who was masquerading as businessman Carlos Montero. But Councilman Castillo reportedly replied, "Well, if it's done right, when you take cash, you always want to use a public place or a car, or in your own office."

That interview may go a long way toward explaining why the government was so reluctant to excuse Allyn from the group of defendants, and why prosecutors consider Castillo in the top tier of defendants. During the trial, Castillo denied to prosecutors that he had made the remark.

Contacted at his home, Allyn says it's been a long time since he saw the summary of his statement to the FBI. He declined to make any comment about its contents.

With Allyn acquitted and out of the dock, Peavy would appear to be the only remaining defendant with sufficient bargaining chips to cut a deal with the government and avoid retrial.

Under the guidance of lawyer Cogdell -- who has shown a knack in previous multi-defendant federal cases for lowering his client's profile and securing an acquittal -- Peavy got an even split from the jury on his bribery-conspiracy counts.

"Some of the other people, they had them on tape confirming they had accepted bribes. They never had that with Peavy," says juror Goldsmith.

Peavy never took the stand to answer questions about the alleged bribes, and likely would not in future proceedings. "That won't change," Cogdell said. "John is a very decent guy, but he's not articulate. Attanasio's a good prosecutor, and it wouldn't be a fair fight."

Because Peavy did not take the stand, he was not confronted with his own interview with the FBI on May 9, 1996, the day the sting became public. In mostly monosyllabic responses, the former judge denied receiving cash from the Cayman Group. That statement is easily countered by a videotape of FBI agent Bob Dogium presenting him with a box of cigars and an envelope containing $2,500 in the parking lot of Carrabba's restaurant.

Peavy also denied receiving money from Reyes in the May 9 interview. He then made the blunder of visiting political consultant Sue Walden after the sting went public. According to Walden, Peavy blurted, "I took the money," and then produced a roll of fresh bills. Peavy implored Walden to return the cash to the FBI. She refused that request and then advised him to get a lawyer.

Despite all that evidence, Peavy is the most likely defendant to be dropped if the government decides to tighten its presentation and streamline the case. The only way that could happen is if, in exchange for immunity, Peavy confirmed that he received a cash envelope from Reyes during a bathroom conversation at the Warwick Hotel in January 1996. Reyes denied on the stand that he passed the FBI money to Peavy, and claimed he pocketed it himself.

If Peavy were to admit Reyes gave him money at the Warwick, it would go a long way toward breaching the collective defense of Reyes, Castillo and Yarbrough that Ben only talked bribery but never actually carried it out. Since Peavy did the best of any of the defendants with the first jury, the pressure will be on him to ride out a second trial rather than compromise the positions of his courtroom colleagues.

Reyes's attorney, Ramsey, figures the defense team came through the first trial without a conviction by guarding each others' backs, and that now is no time to stop.

"We need to find out how we can do it better, and how we can do it quicker, if possible," he told the post-trial news conference. "We've been together all the way through this, and we're going to hang together."

At least, he hopes so.

 

Houston Press intern Tobias R. Coleman contributed to this story.


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