The Insider

Summer Reservations at the ReBates Hotel
The federal grand jury that has been eyeing the FBI's City Hall sting finally cleared its decks after last week's climactic session, and those long-awaited indictments are now scheduled to come down in early August. The roster of witnesses who appeared for the panel's July 1 gathering offered a few tantalizing clues about the final shape of the Justice Department probe, which is expected to result in charges against two incumbent councilmembers, two former councilmembers and two lobbyist types. Swirling in the alphabet soup are the letters C, R, A, M, P and Y.

The star witness at the July 1 session was none other than Dan Morales. The state attorney general was quizzed on his contacts with then-Councilman Ben Reyes in December of 1995, when the city was awaiting an opinion from Morales's office on whether developer Wayne Duddlesten's proposal for the taxpayer-subsidized convention center hotel was eligible for tax rebates under the state legislation designed to facilitate financing of such a facility.

At that time, Reyes -- a vigorous backer of Duddlesten's bid -- was preparing to hand over his Council seat to successor John Castillo and was anxious to participate in the Council vote determining who would get the hotel contract -- Duddlesten or competitor JMB/Urban Development.

Reyes had already entered into a relationship with two FBI agents disguised as bogus Latin American investors of the Cayman Group and had been paid a hefty sum to help secure the contract for Duddlesten. Reyes leaned on Morales to speed up the issuance of his opinion, but when a ruling favorable to Duddlesten finally arrived in mid-December, there was only one Council meeting remaining before Reyes relinquished his post. Alas, the ordinance awarding the contract was tagged, pushing the awarding of the deal on into 1996 and ultimately involving Castillo.

Also appearing before the grand jury was state Representative Dawnna Dukes of Austin, who does consulting work for minority-owned businesses. Reyes introduced Dukes to the Cayman Group imposters in late 1995, but the state lawmaker demanded totally aboveboard behavior from the "investors"and at one point upbraided them for acting like drug dealers. Through her testimony, prosecutors attempted to demonstrate for the jurors how ethical elected officials should behave when confronted by stingsters.

Perhaps most intriguing was the appearance of Councilman Felix Fraga, who had initially been a target of the investigation for accepting illegal cash contributions to his losing congressional campaign from the undercover agents. Fraga voluntarily testified for about an hour, an indication that he is now cooperating with the feds in exchange for assurances he is no longer on the hit list.

That's bad news for former port commissioner Betti Maldonado and her lawyer Dick DeGuerin, because Fraga's testimony likely will be used to firm up government claims that Maldonado was trying to buy Council votes for the Duddlesten deal by arranging meetings between the phony Cayman Group investors and councilmembers such as Fraga.

"Betti invited me to this meeting, gave me the donations, and I didn't know [it was illegal]," Fraga told The Insider, summarizing his grand jury testimony. "[I thought] it was just like any other donation."

Fraga said he hopes the government is "happy with what I told them and my presentation" and expressed relief that the federal twister seems to have bypassed his barn. He added that he's given up waiting for the indictments to come down.

"I don't know why it's taken this long," he said, "and I have stopped trying to figure out what's going to happen."

In his case, the answer is apparently nothing.

Dan the Man
It's been a busy summer for Dan Morales: In addition to his appearance before the Houston grand jury, the 41-year-old bachelor is engaged and scheduled to be joined in matrimony shortly to one Christi Glenn, a 28-year-old mother of two from Abilene whom Dan-o ran into at a luncheon in that city only three months ago.

When a high-profile but non-married male politician gets ready to jump the broom, you can bet that he and his handlers want the public to know about it. But Morales's flack wants you to know things you probably don't even want to know about the attorney general's intended -- right down to the navel ring she's said to sport.

Danny Boy's unlikely betrothal to Ms. Glenn was the subject of a recent fawning profile in Morales's hometown paper, the San Antonio Express-News. Headlined "Attorney General, fiancee in fairy-tale romance," reporter Susan Yerkes's article reveals that, among other things, Glenn is a former topless dancer and victim of pre-Dan spousal abuse. Ron Dusek, Morales's press secretary at the AG's office, apparently was so enamored of the article that he's been faxing copies to news outlets across the state while explaining that the AG and his beloved are declining further interviews.

In addition to that pierced navel, Christi has a real hard-luck story, according to Yerkes: As a youth, she was farmed out by her family to an orphanage, her first husband abused her and she had to take that job dancing in an Abilene topless club to make ends meet for her two young children (hand us a hankie, please). By contrast, writes Yerkes, Morales grew up in a "Beaver Cleaver" household, went to Harvard and has the reputation of a "choirboy."

We hate to inject a note of cynicism into such a touching romantic tale, but is it possible that the choirboy's imminent hitching could have the tiniest bit to do with the fact that he'll be facing stiff opposition in his 1998 re-election bid, starting with a Democratic primary challenge from Court of Criminal Appeals Judge Morris Overstreet and then a likely general election contest against some roughhouse Republican like Tom Pauken?

Nah, of course not.

Letter from the Harris County Jail
Our item of two weeks past ["Father of the Year"] on the jailhouse tenure of City Councilman John Kelley's son Shaun drew a letter to the editor, of sorts, from inmate David Lihalakha. He's the prisoner who claims he was assaulted by Shaun Kelley in a group cell and was then sent to solitary confinement while the younger Kelley was put on probation and transferred to a better cellblock.

"I was not a threat to anybody," writes Lihalakha, who was on solitary for 30 days following the altercation with Kelley. "So why then was I victimized by the powerful son of a councilman ... why the double standard?"

The answer would seem to be that Lihalakha's father isn't on City Council.
Although Shaun Kelley tested positive for an illegal substance (the prescription drug codeine) while in the slammer, it seems likely he will be out of the facility by the end of July. He has a hearing slated later this month on a probated sentence for possession of cocaine, a case that was reopened after former Judge Lupe Salinas improperly dismissed the ten-year deferred adjudication of the sentence. With the agreement of the district attorney, Judge Mark Kent Ellis, Salinas's successor, is expected to order a year's stint in a tightly supervised drug treatment program for Kelley, including a three-month enforced stay at a halfway house.

Shaun Kelley's current troubles began when the district attorney questioned the dismissal of his deferred adjudication by Salinas. Councilman Kelley has indicated that he was approached by a lawyer who told him he could get his son's case dismissed by Salinas, for a fee.

"This attorney calls and says they could handle the case, says what the fee is," said the councilman, "and then all at once you get the call that 'we think we've got this case dismissed.' And then the papers come out, and the papers say 'dismissed.' " Kelley declined to identify the attorney who secured that dismissal, and Shaun Kelley's current attorney, Richard "Racehorse" Haynes, has not returned calls from reporters.

A source in the district attorney's office says Councilman Kelley has not been questioned by investigators, nor does the D.A.'s office know the identity of the lawyer who supposedly secured the dismissal of the Kelley case from Salinas.

In Pharaoh's Chamber
What's a staff meeting like with Mayor Bob Lanier? Well, judging by the summit at the mayor's office last week to rectify the city's summertime swimming pool shortage, the formula seems to be this: Bring him what he wants, don't offer any back talk and remember that the best antidote to his anecdotes is a loud, appreciative chuckle and a quick nodding of the head.

Lanier's invitation to attend the session -- the first and probably the last The Insider will receive from a mayor of Houston -- initially struck us as odd. We weren't alone in that impression, if the quizzical looks of the other participants -- mostly nodding heads from the city's Parks and Recreation, Legal and Public Works and Engineering departments -- were any indication. The group also included factotums from the mayor's office and envoys from HISD, who came bearing the requested tribute from Superintendent Rod Paige -- six school pools that the city will use this summer to compensate for the 12 the parks department put out of service for rehab under the mayor's vaunted, if somewhat uncoordinated, Parks to Standard program.

As the crowd was ushered into the mayor's personal office, everyone disposed themselves into a horseshoe of chairs in front of the mayor's desk. Lucky us got the comfy seat off to the mayor's left, "the Elyse seat," as Lanier mouthpiece Sarah Turner termed it. We felt positively underdressed for that position, but at least we had shampooed our hair that morning, albeit in the shower and not in our own in-house shampoo bowl.

The mayor looked sharp as well, his thinning curls waving healthily from that daily hair-poof and summer-sensibly clad in a green sports shirt, slacks and black loafers. The loafers spent most of their time where his boots do in cooler seasons, up on his desk, as he slouched back in his favorite ruminating position. And he ruminated a lot. Lanier seems given to long, grandfatherly digressions that lead listeners over, under and around the subject in question. He did most of the talking, between occasional unnerving pauses as he gathered his thoughts.

The Insider soon figured out that he had been invited as one more prod with which to poke the mayor's fumbling parks and rec crew, described by a Lanier aide as "the gang that couldn't shoot straight." Lanier made no bones about the reason for the assembly, quickly ticking off the first problem on his list: "We got bad press shutting down pools where youngsters like to swim," intoned the mayor, as assistant parks directors Susan Christian and Sara Culbreth nodded solemnly.

After the media heavily publicized the pool closures, the mayor decided to take personal charge of the snafu and began looking into what he termed "a scheduling problem" with the rehab work. He also appointed agenda director Dan Jones as his "pools point man" and spent an afternoon getting up to speed on the closures.

His research, the mayor explained, revealed that the scheduling problem was really a maintenance problem created by the decades-long neglect of the city's older swimming pools. In fact, opined Lanier, the city for the most part had stopped building new pools in the 1950s, perhaps because integration had made them less desirable from the city fathers' and mothers' point of view.

That was a point nobody else in the room cared to expand upon.
After digressing to describe his own problems with an aging swimming pool at his former residence in River Oaks, Lanier told the parks minions they had "pools operating at a level that would be shut down at an apartment complex -- or like the one in my back yard."

Lanier then turned to Bill Surber, the appropriately sun-and-chlorine-bleached director of city pools. Surber seemed somewhat dazed to find his small corner of the municipal world suddenly under the microscope of Lanier's temporary focus. He fervently agreed with Lanier that the closed pools desperately needed renovation. The mayor asked Surber whether pool hours could be expanded, and when Surber observed that such a move would cost more money for salaries, Lanier waved the concern away with assurances that he could find the cash.

"We got a big capital investment in these pools," Lanier lectured the assemblage. "It's like a store -- you gotta keep a store open to sell enough merchandise to get a good return."

The mayor then proclaimed his intention to get Council approval of a Pools to Standard program before he leaves office at the end of the year. Like his proposals to have his Neighborhoods to Standard program written into the city charter and to guarantee the Metro funds transfer for the next decade, it was another sign that Lanier is determined to have the city on automatic pilot before he leaves office. Maybe we won't even need a mayor or Council after that.

As the group filed out with its marching orders, Lanier was positively beaming. "Now this is fun," he enthused.

So much fun you wonder what he's going to do with himself when it all comes to a end on January 2.

Racetrack Change
Last week's item ["Free Money at the Track"] concerning the potential collection of an additional city admission fee from the Sam Houston Race Park was a bit behind the curve. After securing both a Houston City Council resolution and similar declarations by 24 of 37 Harris County municipalities as mandated by state law, city finance and administration director Richard Lewis wrote county officials on June 18 asking them to begin collecting a 15 cents per customer assessment from Sam Houston Race Park, which would be divvied up among the county's municipalities. The county already collects a similar fee for itself.

According to county budget officer Dick Raycraft, the authorization for the city fee is currently being processed by the county auditor's office and will likely be voted on by Commissioners Court in several weeks. No opposition is expected, so the city will soon be getting an estimated $44,000 annually from the track as its share of the haul. That's after missing out on three years of income it could have enjoyed had the action been taken earlier. But hey, what would we have done with $132,000, anyway?

Call The Insider at 624-1483 or 624-1496 (fax), or e-mail him at


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