Bonds says he'll continue to track Davis, even inside state prison.
Bonds says he'll continue to track Davis, even inside state prison.
Steve McVicker

Payback Time

Convicted contract killer and insurance swindler Michael Lee Davis has a gift for making money off other people's mortality. Now someone finally might make some from his death.

Davis, who was Walter Waldhauser Jr. when he took part in a triple murder in Houston 21 years ago, was sentenced last week to six concurrent 60-year sentences for his role in a scheme to bilk life insurance companies and investors of millions of dollars. He was convicted of five counts of third-degree money laundering and one count of securing documents by deception. In addition to prison time, state District Judge Harold Entz ordered Davis to pay $60,000 in fines and more than $5.5 million in restitution to his victims.

The fines and restitution are aimed at the heart of Davis's criminal motive: cash.

"The only time his veneer was ever cracked was when we found his money," says assistant District Attorney Brian Flood, who prosecuted the case. "He was agitated when he saw that we spread-sheeted his money. I don't think he believed that would ever happen."

Flood says Davis shifted more than a million dollars to one offshore account the day after Houston Press reporter Steve McVicker tracked the convicted killer to his Dallas office, surprised him and sought an interview (see "Making a Killing," by Steve McVicker, October 22, 1998).

Davis had a chance of leniency from Judge Entz if he returned some of the loot he made through fraudulently obtaining life insurance for terminally ill patients. But the defendant "made no effort" to return any cash to his victims, Flood says.

Defense attorney Kevin Clancy says Davis is not hoarding the amount of money claimed by the district attorney. Much of it was in the hands of others in Davis's company who, Clancy says, received immunity in the case. "The $5.6 million figure is puffed. It's not accurate," he says, refusing to elaborate. "They're blaming every bit of it on him."

Those Davis swindled must wait until his death to receive their restitution, which is stashed in several foreign accounts in places such as the Bahamas and Switzerland. International law bars U.S. authorities from seizing the money, but his victims can file claims against Davis's estate after his death.

"It's ironic," Flood says. "Abstracted, it is as if they have an insurance policy on his life."

In 1979 the business of Michael Lee Davis, then Walter Waldhauser Jr., also came with a human price tag.

Police found the bodies of John and Diana Wanstrath and their adopted infant son, Kevin, in July 1979, shot to death in their home. Initially ruled a murder-suicide, the crime would have likely remained unsolved if not for a relentless cop.

Houston homicide detective Johnny Bonds didn't accept the initial finding, in part because no weapon was found at the scene. His obsession with the crime led to many things: a demotion, a ruined marriage and, in 1981, cracking the case.

Bonds watched as Davis confessed to being the middleman who put Diana Wanstrath's adoptive brother, Markham Duff-Smith, in touch with hit man Allen Wayne Janecka in a bid to collect life insurance proceeds. The contract killer also had slain Duff-Smith's adoptive mother four years earlier.

The news of Davis's latest sentence elated Bonds. "I'm a happy man. Probably for the rest of my life he'll be behind bars," Bonds says. "Now it's up to the Board of Pardons and Paroles. He caused them a lot of embarrassment, and I hope they remember that."

On parole for the murder conviction, Davis failed to make his annual reporting deadlines and was fitted with an electronic monitoring device. After about three months, however, parole officials dropped the electronic monitoring requirement. That gave him the opportunity to flee when police tried to arrest him on charges of money laundering. A SWAT team raided his home in Plano and came away empty, but he turned himself in three months later. Prosecutors are uncertain why he surrendered, but overconfidence is high on the list of possible reasons.

"Look at his history. Every time he fights, he wins," Flood says. "He's got this air that he's better than everyone, and it sticks."

He fared much better in the murder case than his accomplices. The state executed Duff-Smith in 1993. Janecka remains on death row. Davis made a deal with prosecutors that earned him three concurrent 30-year prison sentences. He was paroled after serving nine years.

After relocating to the Dallas area, Davis became a viatical broker. Such brokers buy life insurance policies of the terminally ill for a fraction of their full value. Then they sell the policies at discounts to investors who collect the full policy amount after the deaths of those insured.

In most cases, such deals are legal. Witnesses testified that Davis headed a scheme in which he enlisted clients of the AIDS Resource Center in Dallas to take out life policies by lying to insurers about their HIV-positive status. Davis sent his clients to Sammy Squyres II, an insurance agent who helped them apply to several life insurance companies he represented.

Davis bought the insurance policies of his recruits and resold them to investors at a hefty profit. The elderly investors who purchased the policies from Davis found themselves holding an empty bag.

Squyres was sentenced to ten years' probation after pleading guilty to charges of forgery and securing the execution of a document by deception. More than 20 others involved in Davis's scheme already had pleaded guilty to the same charges.

It took the cumulative resources of the district attorney, the Texas Department of Insurance and the Texas Securities Board to nail Davis. The crimes were uncovered by investigators after a series of articles in the Houston Press on Davis and his criminal past.

Bonds, who testified in the trial's sentencing phase, says his pursuit of Davis is not yet over.

"I'll find out what unit he's in and talk to the warden about who he is," Bonds says. "I've kept up with him before. As long as he draws breath, I'll know where he is and what he's up to."

Bonds testified that Davis would likely have received the death penalty in the murder case if he hadn't ducked behind a plea bargain. Bonds and other prosecution witnesses made no effort to hide their revulsion for Davis.

"The testimony they gave was devastating," Flood says. "They were able to put a real face on the defendant, probably one [the defense] did not want to be seen."

Those who view Davis as a mercenary criminal motivated by naked greed find the court-ordered restitution fitting. Bonds uses an anecdote from Davis's prior nine years in prison to illustrate the point.

A prison system lieutenant told Bonds about overhearing Davis respond to another inmate who asked, "What are you doing in here?"

"He said it was a business deal gone bad," Bonds says. "The guy's just cold-blooded. If he has to kill babies, he willŠ.That's really what he is. He's a businessman."


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