Last month, Southern District U.S. Marshal H.A. "Art" Contreras crooned Sinatra's "My Way" to Betti on the stage at a birthday party-fundraiser at the Spotlight Karaoke club, attracting a federal law enforcement audience he hadn't anticipated. And it wasn't because of the quality of his quavery singing voice.

Now the Insider has learned that the refusal of another old Betti friend, co-defendant John Peavy, to join the chorus line for a plea bargain with the feds derailed a no-jail deal for Maldonado. After the talks between the defense and prosecution faltered, Maldonado and Ben Reyes went to trial and were convicted on bribery and conspiracy charges. (Read on for the details.)

With Maldonado now facing a possible two-year prison term at her February 24 sentencing by Judge David Hittner, who could blame her for finally succumbing to the blues?

The 58-year-old Contreras is a $101,321-a-year appointee of President Bill Clinton. He would likely be Betti's temporary jailer after she's sentenced. That caused some of his colleagues in the federal bureaucracy to smell a conflict between Contreras's high-profile position and his public stance as a supporter of a freshly minted felon. Given Maldonado's oft-repeated defense that she is a victim of a racially tinged federal prosecution, sources involved in the government's side of the trial saw his attendance at the party as a slap at his employer, the Justice Department.

The former Houston assistant police chief and Democratic candidate for sheriff in 1996 has put himself on administrative leave during the controversy. He was tightlipped when asked whether he regretted showing up at the Betti bash.

"I can't comment," replied Contreras. "I've been instructed not to even discuss it."

Pressed on the issue of whether it was inappropriate to publicly honor a convicted felon that he may be responsible for jailing next month, Contreras replied, "Haven't you done enough already?" That's an apparent reference to the fact that Justice Department officials found out about Contreras's party appearance by reading the Houston Press account by Russell Contreras (who is no relation to the marshal). No other media reported on the event.

"As I understand," continued the marshal, "it was a birthday celebration. If it was something other than that, I don't know anything else."

A source on the federal side of the Sting called the marshal's decision to go to the party "stunning in its lack of judgment for a federal law enforcement official."

Federal sources said the matter has been relayed to U.S. Attorney Janet Reno as well as the appointments staff of President Clinton. According to the same sources, several Houston federal judges also expressed concern.

Asked her reaction to Contreras's difficulties, Maldonado had a rather expansive no comment. In a voice-mail message, she stated, "I feel very saddened, shocked and horrified, but because of the nature of the matter, my attorney won't allow me to comment."

KTRK-Channel 13 reporter Minerva Perez provided a forum for the marshal's defenders in a news segment. It cited anger by Hispanic leaders over both the Press story's characterization of Maldonado's birthday bash as a fundraiser and the subsequent federal review of Contreras. "The Hispanic community is pissed off; they're upset," Perez said off camera while she videotaped an interview at the Press last week. "I've talked to quite a few Hispanic leaders who are outraged."

In her 6 p.m. report last Wednesday, Perez used only two interviews with so-called outraged leaders, who turned out to be Betti's defenders throughout the Sting trial. They are businesswoman Olga Soliz and attorney and former city councilwoman Gracie Saenz. Soliz later lashed out at reporter Contreras at a meeting of the Houston Association of Hispanic Media Professionals, accusing him of "knocking down one of our own."

Reporter Contreras confirms that appeals were made for money at the party to ease Betti's legal tribulations and that Saenz herself took the mike and pleaded for leniency in Maldonado's sentencing. Houston Press editor Margaret Downing reiterates that the paper stands by its account of the party.

Maldonado lawyer Dick DeGuerin warned that any Justice Department disciplinary action against marshal Contreras "would be pure retaliation if it happened." "I would think it wouldn't be inappropriate at all for someone with a personal friendship ... to appear at a fundraiser," he added.

The lawyer characterized Maldonado and Contreras and the marshal's wife as close personal friends who served together on boards. "For the Marshal's Service to control who the marshal's friends happen to be, or try to, or to retaliate against him for showing friendship to someone is just way beyond what they ought to do."

According to DeGuerin, "It would be inappropriate for the marshal or chief of police or the mayor to take an official position on the outcome of a case, but that's certainly not what I understand happened. Art Contreras was there as a friend of Betti, not as a United States marshal."

DeGuerin also threatened to launch his own investigation if Contreras suffers because of his friendship with Maldonado. "I'd feel as strong about that as if someone tried to retaliate if we had chosen to use Art Contreras as one of our character witnesses." The attorney compared the investigation of Contreras to "a situation a couple of years ago where the IRS started auditing people we had called as witnesses, and that's pure retaliation, and that's illegal."

As for the question of inappropriate behavior, DeGuerin retorts, "If I got up on stage and dropped my trousers, that would be inappropriate behavior for me just as a person. [But] you've got to draw the line somewhere, and at a private party for friends, I just don't think it's anybody's business."

While Maldonado may regret causing trouble for a friend, she undoubtedly wishes another old associate, former judge and city councilman John Peavy, had been willing to sing for her during a last-minute attempt to negotiate a plea bargain and avert the second trial of Maldonado and former councilman Ben Reyes. The three remaining defendants, Houston City Councilmen John Castillo, Michael Yarbrough and Peavy, are tentatively scheduled to be tried in the spring.

According to sources close to the lawyers and defendants in the case, Reyes attorney Mike Ramsey and federal prosecutor Mike Attanasio met repeatedly to try to negotiate a plea bargain encompassing all five defendants. The feds insisted that all defendants be involved in any possible deal.

On the defendants' side, the effort stopped cold when Peavy's wife Diane Peavy adamantly refused to consider that her husband should admit to anything. Prosecutors offered a package deal with minimal charges for Maldonado and no jail time. Neither Ramsey nor Peavy attorney Dan Cogdell returned Insider inquiries.

Sources say there were other roadblocks to a deal. Justice Department officials were extremely reluctant to let Reyes off with a light jail sentence. But because of Peavy's refusal, the talks ended. Reyes and Maldonado were tried and convicted.

Maldonado attorney DeGuerin refused to specifically confirm or deny that Maldonado had a deal within her grasp to avoid jail. "I will say that in any case there's always a duty lawyers on both sides owe their clients, whether it's the government or the defendants, to find out what's on the table." Attanasio declined to comment.

DeGuerin, who was not a source for this story, is concerned that the column might be seen as an effort to influence Judge Hittner to let his client off with a lighter sentence.

"I'm not trying to tell you how to do your business," says the lawyer. "But I'm concerned about how Hittner's going to see this, thinking it's coming from me or from Ramsey ... and what he's going to do to Betti as a result of it."

Given the way things have been going for her lately, a get-out-of-jail card is probably the last thing Maldonado should expect the judge to deal her.

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