By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
By Anna Merlan
By Lee Escobedo
By Eric Nicholson
Investigation on ice
A major investigative project by The Dallas Morning News' top guns--now slated for imminent publication--has been sitting on ice for months, producing a slow burn in the paper's newsroom, BeloWatch has learned.
The project reportedly probes the banking and real-estate dealings of U.S. congressman Ralph Hall, a Rockwall Democrat, and Dallas attorney Paul E. Lokey, husband of grocery-chain heiress Liz Minyard.
The News team digging into the story includes assistant managing editor for projects Howard Swindle, who has presided over three Pulitzer Prize-winning projects; veteran investigative reporter Alan Pusey; researcher-reporter Tim Wyatt; and Jayne Noble, a reporter in the paper's Garland bureau.
According to News sources, the group produced a multi-part series--five separate stories--on their findings, described by one News staffer as "exceedingly complicated stuff." The leaders of the project, Swindle and Pusey, have built their considerable reputations as investigative journalists on just such stories.
This series, BeloWatch sources say, was pieced together from deed records, reports by bank auditors, financial statements, court documents, and dozens of interviews. The investigation focused, in part, on the Meadows Apartments, a 36-unit Rockwall complex financed by Independent Bank Rockwall, which Lokey controlled. The bank failed in 1989, and the FDIC was threatening to foreclose on the Meadows when the non-profit Rockwall Housing Development Corp., with Hall's support, purchased the property in 1994 and converted it to Section 8 housing. Lokey told BeloWatch that his wife had invested personally in the Meadows, and lost $100,000.
As they worked toward completion of their series, the projects team was excited about the investigation, producing a stir of anticipation in the paper's newsroom.
Then, BeloWatch is told, News publisher-editor Burl Osborne took the series home to read--and concluded it wasn't close to being ready. Known to dislike voluminous investigative projects, Osborne offered a barrage of criticisms and questions, eventually prompting the unpublished series' contraction from five stories to a single installment.
Meanwhile, the publisher also sat in on a key meeting with Hall. The congressman's Dallas real-estate attorney, J. Michael Tibbals, accompanied him to the meeting. Held in a conference room at the paper, the session lasted more than an hour. Osborne served as "moderator," Tibbals tells BeloWatch, while Swindle--accompanied by Pusey and Wyatt--asked most of the questions. The News taped the session, and later provided a copy of the tape to Hall and his attorney.
Tibbals says it was clear to him during the meeting that the News staffers didn't fully understand the transactions they were investigating--or were viewing them in an unfair light. Several questions involved whether Hall, a banker himself, had acted improperly to aid the troubled Meadows complex.
"I haven't done anything wrong," the 72-year-old congressman told BeloWatch. "Let me tell you what they found out: Paul Lokey was chairman of a competitor's bank. I was nice to Paul Lokey, and I would be again, basically to show that I wasn't unfair" to a competitor. "Lokey and Liz Minyard," added Hall, "are very solid citizens."
Lokey told BeloWatch that News staffers had interviewed him once in early summer about the Meadows, and he expressed his belief that he had done nothing wrong. "No one made any money on it," says Lokey. "If you didn't know all the details, I suppose you might think there was something sinister, and there certainly was not."
Added Tibbals: "When the proper explanation and the truth of the matter was explained, our contention was: what's news?"
That meeting at the News took place in the spring. As the series remained on ice--nothing Swindle's team did seemed to resolve all of Osborne's concerns--unhappiness about the situation rippled across the newsroom.
The view held by many rank-and-file reporters: Osborne had put the series on hold out of deference to a pair of powerful men--a veteran congressman and the husband of a major News advertiser who is also a fixture in Dallas society. After all, reporters reasoned, if Swindle and Pusey--with all their reporting skill, prizes, and in-house clout--couldn't get a controversial series published, there must be a sinister explanation.
"Certainly Swindle and Pusey know how to get their ducks in a row--and in the pages of the Morning News," one reporter told BeloWatch. "For chrissakes, if Swindle can't get a story in the paper, what do you want?
"It was a very frustrating moment for Howard. He was really, really sad--dispirited--which is something I hadn't seen before," says the same reporter.
Swindle, Pusey, Wyatt, and Noble all declined comment to BeloWatch, citing the News' Osborne-imposed gag policy barring reporters from speaking to the press.
Osborne and executive editor Ralph Langer did not return BeloWatch calls.
In May, during a staff meeting where Langer and managing editor Bob Mong were presiding, reporter Craig Flournoy--a 1986 Pulitzer Prize winner for co-authoring a News series on public housing--posed the question on everyone's lips: "When is the Ralph Hall story going to run? And what are the reasons for it being held up?"
According to several staffers present who described the exchange, Langer responded: "It is going to run. Basically, there is more reporting to do on the story."
That was more than four months ago.
News sources say there had been little urgency about getting the project into print--until BeloWatch began asking questions.