Attack of the Killer Gadflies (Part I)

You don't take Rick Finlan and Don Venable seriously? That could be a mistake you live to regret.

The two troublemakers claimed what the report found was just "the tip of the iceberg." Although the auditors found no ongoing scheme to defraud the bond fund, Finlan and Venable had, in part, been vindicated.

By September 1992, the DISD trustees had endured about all they could stomach of Finlan and Venable. "We just wanted them to stop asking questions and go away," recalls Rene Castilla, then school board president. "They seemed to be addicted to going after us."

Not satisfied with attacking the district as perennial outsiders, Venable wanted to infiltrate the board. He ran for the school board against incumbent Ed Grant in 1992. "I was tired of being criticized for not doing anything constructive," says Venable. "I figured my presence on the board would be enough to stop a lot of things from going on."

Grant turned Venable's lawsuits into a campaign issue, claiming they were a waste of taxpayer dollars, a costly publicity stunt calculated to advance Venable's political ambitions. Venable, denying selfish motives, ran on a platform of "traditional values." He was thumped.

Venable and Finlan had managed to unite the board: hatred for the pair transcended all racial and ideological lines. Black trustees viewed them as vindictive racists. White trustees considered them wasteful gadflies. "The group-think was that these guys were taking away the children's money," says Ed Grant. "The board wanted them stopped."

But the attorneys seemed powerless to end the litigation. The board had paid over $70,000 in legal fees since the case's inception. Marvin Edwards and Kathlyn Gilliam were fined $500 for failing to respond to discovery requests. Don Hicks withdrew from the case.

Two new lawyers, Dennis Eichelbaum and Leonard Schwartz, entered the picture. The board had originally hired the school-law specialists from private practice as in-house counsel to represent the district in personnel matters. Now the trustees placed them in charge of all pending litigation, figuring the move would save the district money on outside counsel.

They were wrong.
Eichelbaum, 30, was a frisky lawyer with limited experience in complex litigation. The board put him under tremendous pressure to "play hardball" with Finlan and Venable. He quickly became the object of their wrath.

"There was something chemical between them," recalls Judge John Marshall, who inherited the case. "He thought they were gadflies and misperceived their determination."

Finlan would chide Eichelbaum with his caustic wit, while Venable would attack with procedural abandon. So frequently were the three in court on motions for sanctions and contempt that Judge Marshall began calling them "my little dysfunctional family."

The trustees were relieved that Eichelbaum was running interference for them. They had more pressing matters to attend to: schools had grown dangerously overcrowded; white flight was draining the tax base; student test scores were drastically down; teacher morale was at an all-time low. The trustees saw the upcoming $195 million bond election as a cure-all for DISD's problems. The money would build new schools and repair old ones. The board believed that its passage even would allow U.S. District Judge Barefoot Sanders to declare the district desegregated, ending 21 troubled years of federal intervention. There was so much for the district to gain--so much at stake.

No one seemed against the bond issue--except Finlan and Venable. Their logic: Why float a new bond issue when you were still drowning from the old one?

To placate the pair and settle the case, the trustees reluctantly agreed to a second independent audit by the Texas Education Agency (TEA), at a cost of $250,000. Still, Finlan and Venable felt they weren't being taken seriously.

In September 1992, the district had failed to even mention their lawsuit in a disclosure statement filed with Goldman Sachs & Co. The investment bank was about to underwrite $60 million of DISD notes. These notes had nothing to do with the bond election but provided the district with operating capital while it awaited its tax collections.

On September 14, 1992, Finlan and Venable faxed a letter to Goldman Sachs putting the firm on notice that their lawsuit was pending against the district, alleging "fraud, misapplication of bond funds and falsification of government documents... Proceed at your own risk."

"We did a little bit of stick-in-the-eye by going to their bond buyer," admits Venable. "It was a guerrilla tactic to raise havoc and get them to take our situation seriously."

It was also all the justification Eichelbaum needed to go on the offensive. On October 5, 1992, the district sued Finlan and Venable, alleging that they had defamed the district's reputation in the Goldman Sachs letter and interfered with its business affairs. The suit asked for $10 million in actual damages, $3 million in punitive damages--and an additional $270 million "should the bond package scheduled for December of 1992 fail due, in part, to the actions of the defendants." Stranger still, the district sued David Venable, whose only association with the case, apart from being Don Venable's brother, was that his law office owned the fax machine used to send the "tortious letter."

Finlan and Venable hardly needed another plot to fuel their passion and sense of persecution. But the district now had played right into their hands. To them, DISD's suit was a bid to deprive them of their First Amendment rights--harassment of the highest order.

They wanted $10 million for it. They filed a federal civil-rights suit, alleging that the district had conspired to silence its critics. Venable was so outraged, he took an unprecedented step: he hired his own attorney.


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