Pens and Needles

A case that involved millions of dollars in fraud, undercover operatives and culprits-turned-snitches could expect testimony tinged with sometimes bitter recriminations.

And that was the situation in a sentencing hearing played out in an El Paso courtroom in 2000. El Paso attorney Victor Bieganowski had been convicted of massive medical and legal fraud.

That kind of acrimony underscored the unusual twists that ultimately produced the September racketeering indictments of United Transportation Union officials for allegedly shaking down lawyers for lucrative union-endorsed business. The formal case, only in its infancy, is already revealing a lengthy probe that wound its way through colorful personalities: an acupuncturist shrink, his opportunistic lawyer brother and a former train engineer-turned-supervisor of a Houston AIDS program. Along with those were the internal clashes among prosecutors themselves competing for -- and against -- deals for informants.

In 1998, the good karma finally ended for the brothers Bieganowski of El Paso.

Dr. Arthur Bieganowski told of his belief in chi, the magical energy that could be unleashed in the body through his acupuncture sessions. The neurologist and psychiatrist had parlayed his pin practice into huge profits over the past decade. Evidence from his billing office in nearby Juárez showed he'd charged about $43 million and collected $31 million, primarily from federal health programs and Texas workers' comp funds, as well as private insurers.

Brother Victor conveniently maintained a law office upstairs from Arthur's clinic, and was a part of keeping the operation successful -- or too successful, in the opinion of a legion of investigators.

To penetrate the long-running scheme, two FBI agents posed as auto accident "victims" who were solicited and processed for treatments despite claiming no injuries. Reviews of clinic records showed systematic overbilling of health agencies and private insurers. A jury convicted the doctor of fraud and money laundering after an eight-week trial in 2000. He was described as blowing kisses to his friends before being sentenced to 14 years in prison and ordered to pay $23 million in restitution.

Arthur had already served about two years in custody before his sentencing, although brother Victor fared considerably better, thanks to his considerable resourcefulness. Both were indicted in 1998, and Victor had quietly pleaded guilty to fraud more than a year before Arthur's conviction. But Victor would remain free for more than four years after his indictment -- even gaining the government's permission to travel to the Cayman Islands, where the Bieganowskis had stashed millions of dollars in offshore accounts.

Some of the insight into the special handling of Victor recently surfaced in a Houston federal perjury case, a quiet precursor to the high-profile indictments of the United Transportation Union officials.

Neal F. Babineaux had been out of the railroads and organized labor for about four years when he received his summons to appear before a federal grand jury in Houston in 2001.

The questioning began innocently enough, as he was asked to recount his background. The Katy-area man had gone to work for Southern Pacific in 1977, two years after graduating with a business degree from the University of Louisiana at Lafayette. He became a locomotive engineer making runs between Houston and Lafayette and gravitated into rail union activities by the early 1980s, when UTU's Local 83 elected him its chairman.

After rising through the labor ranks, he backed Charlie Little of Leander, just northeast of Austin, in his winning 1995 run for president of the international union. That took Babineaux to UTU's headquarters in the Cleveland area, but he was back home and out of the union after several months. He said the long hours and extensive travel, coupled with his wife's illness and a teenage daughter, led to the decision to quit the $66,000-a-year position as an executive staffer and return to Katy.

The nonprofit River Oaks Health Association, contractor for a HUD-funded program for homeless people with HIV, hired him as its executive director six years ago.

In the grand jury proceedings, prosecutors soon revealed their real interest: Did he know about union officials soliciting bribes from lawyers to get on their lucrative designated counsel list to represent injured workers?

"No," he replied. "And to this day I don't think it exists."

The questions became more precise: Wasn't he a go-between in funneling lawyers' payoffs to union president Little? Hadn't his wife, a title company employee, forwarded those bribe payments to him from Katy to Cleveland? No.

And didn't he once confide that he'd take his knowledge about such secret payments "to the grave"?

Babineaux's denials dug himself into only deeper problems. A sealed indictment accused him of obstructing justice by lying to grand jurors. He had been secretly recorded earlier making the disputed remarks and outlining the system of payoffs from lawyers.