The investigation into a $15 million insurance fraud, allegedly masterminded by a capital murderer from Houston, has spread to several other states.
"We're talking about a scheme that reaches across the entire United States," says Dale Barron, an investigator with the Texas Department of Insurance. "The part we took to the grand jury is just one small part of a big, big puzzle."
Last month a Dallas County grand jury returned 39 indictments against 32 people in connection with the state probe. That investigation was launched after a series of Houston Press articles about the former Walter Waldhauser Jr., a paroled Houston killer.
In 1981 Waldhauser was sentenced to 30 years in prison for his role in the contract slayings of four Houstonians, including a 14-month-old boy, in a murderous scheme to collect insurance money. He was released after serving less than ten years of that sentence. Last October the Press reported that Waldhauser had changed his name to Michael Lee Davis and had surfaced in Dallas as vice president of Southwest Viatical. Viatical companies buy the insurance policies of the terminally ill often AIDS and HIV patients for a fraction of their full value, then collect the full coverage amount after the death of the insured.
Waldhauser/Davis is alleged to be the mastermind behind a scheme to have AIDS and HIV patients take out life insurance policies while claiming to be disease-free referred to in the insurance industry as "clean-sheeting."
According to Barron, Waldhauser/Davis and the others indicted probably pocketed about $4 million in the alleged scam, which involved life insurance policies with face values of more than $15 million. He says the probe is far from over and extends far beyond the state.
"I don't want to get into the specifics of where this investigation is going at this time, or who we are going to be working with," says Barron. "But rest assured, we are working with securities people, insurance people, state insurance people in other states. And we are going to be working with the feds.
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"This thing is moving. And the train is picking up speed."
Just before the indictments were returned last month, investigators tried to arrest Waldhauser/Davis at his Plano home, but so far they have not been able to locate him. By the end of this week authorities hope to have a federal warrant issued for unlawful flight to avoid prosecution. Left holding the bag, says Barron, are several elderly people who unwittingly purchased the fraudulent life insurance policies as investments.
"I'm not going to use any names," says Barron, "but one couple that I learned of this week in East Texas purchased $400,000 worth of these policies.
"We've got a serious situation here, and nobody realizes how big it is."