By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
By Anna Merlan
By Lee Escobedo
"This broadsided me, this one did," he said uncomfortably. "It surely did."
He was, he said, very sad about this latest turn of events--specifically, that his son-in-law and business associate, Roderick Dudley, had just been indicted by a Dallas County grand jury for felony theft.
Dudley was charged with stealing more than $100,000 from the county coffers through a check scam that he and an employee of the Dallas County Clerk's Office had been running for the past 2 1/2 years or longer.
The Dallas County District Attorney's Office for weeks has been poring over dozens of canceled checks. Carol Jackson, the county employee, had been issuing checks to Dudley on a regular basis--none of which he was entitled to and all of which he endorsed and then either cashed or deposited in one of his bank accounts.
If there ever was a good, solid paper trail to prove a crime, this would appear to be it.
"He told me that it's defensible," Lipscomb said. "And, you know, I said, 'I don't even want to get involved.' I just hope it is defensible."
Not wanting to get involved in anything scandalous has been a strong--if unsuccessful--theme for Lipscomb in 1996.
In January, Lipscomb's business partner, Roger Hoffman, abruptly resigned from his and Lipscomb's chemical distribution company, Lipscomb Industries, which the two had managed to bleed on a regular basis, leaving a host of angry creditors in their wake.
In March, two of those creditors filed a petition in U.S. Bankruptcy Court in Dallas to force Lipscomb Industries--by then a shell of a company with no office, no employees, and no assets--into bankruptcy. In the process, they hoped to recover what they could of the $127,000 they were owed. As far as Lipscomb was concerned, he told the press at the time, it was all Hoffman's fault.
In May, former Lipscomb partner Hoffman was indicted--and then quickly pleaded guilty to--federal bribery charges in connection with a kickback scheme he'd been linked to involving a national defense contract. (The bribery incident took place just before the two men went into business together and was unrelated to Hoffman's involvement in Lipscomb Industries.)
A week after Hoffman's indictment, the Dallas Observer published a long, detailed story ("Clueless," May 30) about Lipscomb Industries--a so-called "disadvantaged minority-owned business"--and its well-known owner, who had started the business in 1993 as a result of being forced to retire from the city council because of the city's term-limitation provision.
In reality, Lipscomb "Industries" was never anything more than a white guy, a black guy, and a blue-ribbon address book. Hoffman had chemical expertise, and he did all the work. Lipscomb's contribution to the partnership was his connections and his unswerving belief that the city's biggest Anglo power brokers--some of whom had given him cash handouts over the years to keep him and his wife, Lovie, afloat while he served on the council--now owed him a livelihood in the private sector in gratitude for his nine years of unquestioned political support. True to form, Lipscomb's benefactors dutifully loaned Lipscomb and Hoffman the $60,000 to start up Lipscomb Industries, and promised to order enough chemicals--mostly janitorial supplies--to keep the company going.
Despite the handouts--and despite these two guys, who were nothing more than middlemen, having little overhead beyond rent and phones--Lipscomb and Hoffman managed to screw up a sweet deal. For three years, they ignored their bills, thumbed their noses at their creditors, and depleted the company checkbook, writing checks to themselves and their family members. Hoffman was especially shameless, writing dozens of checks to his barber, boot maker, and landscaper, among many others.
At one point, just a few weeks before Lipscomb was sworn in last June as a returning council member, Dallas city employees, including the city attorney were chasing Lipscomb around, trying to get him to pay long-overdue utility bills and back rent for his company office, located in a city-owned building.
Then, as soon as Lipscomb was again sworn in as a council member, he began voting--in his capacity as a public servant, beholden to uphold the public trust--in support of dozens of zoning changes, license renewals, and tax abatements on behalf of his chemical-business clients. He never once revealed his blatant conflict of interest or recused himself from voting.
Worse, when the Observer article ran--specifically pointing out, among other things, the 33 votes Lipscomb should not have participated in--Lipscomb still didn't see a problem.
Now, three months later, Lipscomb once again is trying to distance himself from controversy--to play the naive victim of people who would take advantage of his good name. This time, he'll find it harder to do.
Because this time the felonious behavior of one of his partners is hitting way too close to home.
The district attorney has absolutely no reason to believe that the 71-year-old councilman from Oak Cliff knew anything about the stinky, illegal activities that the councilman's son-in-law is alleged to have engaged in.
But, as it turns out, it's a pretty sure bet that Lipscomb has been living off some of that stolen money, seeing as how his son-in-law has been supporting him since last fall, when Lipscomb Industries fell apart.
Lipscomb and Hoffman owed so much money to so many people that they were unable to find any chemical manufacturers to fill orders for Lipscomb Industries customers, who provided all that cash for Hoffman and Lipscomb to live on.
Enter Rod Dudley, husband of Lipscomb's 38-year-old daughter, Lavette.
Dudley, like Hoffman, saw the largely untapped potential in Lipscomb--a man who has never been in a financial jam that a benevolent white business leader with a pet project on the City Hall agenda couldn't get him out of.
So Dudley decided to make the chemicals Lipscomb could no longer buy--even though he had absolutely no experience in doing so. Sure enough, Lipscomb's City Hall benefactors again chipped in to help. Schepps Dairy CEO Pete Schenkel donated several huge, stainless-steel storage tanks, formerly used for milk, to mix the chemicals in. He also dispatched one of the dairy company's engineers to help the Lipscomb family figure out which end was up, tankwise. When the Dudleys got the chemical production going, they took the company checkbook from Hoffman, who promptly quit the business.
One night this past May, I sat with Lipscomb, his daughter, and his son-in-law in the Dudleys' extremely spacious home in Oak Cliff. With a backyard that backed up to one of the golf greens of the Oak Cliff Country Club, the white brick home, which had once belonged to a Dallas Cowboys football player, had long been Lavette's dream home, she told me.
Lipscomb and the Dudleys were meeting with me that night, ironically, to try to prove to me what a crook Roger Hoffman had been. As far as they were concerned, all of Lipscomb's current problems stemmed from Hoffman's unethical--if not illegal--behavior.
"He just doesn't want to do right," Lavette said at one point. "I think he just wants to steal."
Dudley chimed right in: "He's a thief--that's all he is," he said, looking straight at his father-in-law. "He's taken advantage of you for years."
At that time, of course, Dudley was allegedly carrying out a much more complex and insidious thieving scheme of his own--one that makes Roger Hoffman look like a small-time snake-oil salesman. According to the District Attorney's Office, the way Dudley's alleged scheme worked was that Dudley, who some years back was in the bail-bond business with his mother and brother, was in cahoots with a county employee who began cutting him checks for bond refunds he didn't deserve.
The refunds were supposed to go to people who had long ago come down to the Lew Sterrett Justice Center to bail their friends or family members out of jail. They were cash bonds for misdemeanor crimes--mainly small bonds for $200 to $500--and the county employee, Carol Jackson, simply made the refund checks out to Dudley, got them signed by an unsuspecting clerk in a criminal court upstairs, and then mailed or handed the checks over to Dudley.
Jackson allegedly picked bonds that had been sitting around unredeemed for as long as 10 years, lessening the chances that the intended recipients--who either didn't know or simply forgot they were owed the money--would ever apply for the money. Since all the checks were made out to Dudley, it's unclear--at least to people outside the District Attorney's Office--what Jackson got out of the deal, though her fellow employees like to point out that she's the only clerk they know who drives a Lexus to work.
The district attorney apparently can prove that Dudley was getting about 20 checks a month, starting in January 1994--perhaps earlier--and continuing right up until the net dropped on Dudley and Jackson last month. So far, an investigation has uncovered checks totaling more than $140,000.
Dudley and Jackson both face prison time, if convicted, but Jackson, who has no prior record, would be eligible for probation. Not so for Dudley. He would be looking at a minimum of 15 years in the pen. Why? Because the 44-year-old served three years of a 10-year sentence for robbing someone at gunpoint 20 years ago back in his hometown of San Antonio.
Shortly after our evening interview at his house, I asked Dudley about his ignominious past, which I had uncovered in some Bexar County court documents. Those dark days were but a distant memory, Dudley assured me.
"I was a hard-headed little guy," he told me. "Nobody could tell me. I was the second-oldest. My oldest brother went to college--I didn't; I went into the service. Had trouble in the service...started rolling downhill. When I went to jail, and I had my freedom taken from me--and I had a son 3 years old, now 23--and I put my hand on the glass window, I couldn't touch them. My family said someone would come every two weeks to be with me, and they came. From Dallas, San Antonio, Houston. The guards at Huntsville said, 'Why the hell are you here?' It kind of touched me. After you miss enough Christmases, holidays, birthdays, and you're celebrating with inmates and not families, it makes a hell of an impression on you."
Clearly, with the Lipscomb family--a family filled with incredible charmers, most particularly "Big Daddy" Al Lipscomb, who is as sweet and nice a person as you'll meet down at Dallas City Hall--it's hard to know just who's spewing how much bullshit at you.
Besides telling me about his prison conversion--"through the grace of God" he did it, he told me--Dudley told me how he and his wife, Lavette, had just closed an extremely successful physical-therapy business in Oak Cliff. "I went out on my own and did it," he told me of the June 1994 start-up of Aggressive Professional Health Services. "I got a site at Polk and Camp Wisdom. I had only a few pieces of equipment and a dream. We made it work."
Pushed a bit further on how he put together the money for such a venture--he had little experience in the physical-therapy field--Dudley admitted to having a little help. "I had investors in it to begin with," he said casually. "Boy, that did real well. They got all their money back the first year. Yeah, they were happy. In fact, they still want to do a clinic over there. I just closed it down in May. I didn't have time for it."
About the only part of that statement that's true is that Dudley was busy in May. With Hoffman gone and Lipscomb Industries a company in name only--even the phones had been shut off long before then--Dudley, as CEO of RLD Chemical Manufacturing Co., was wearing a lot of hats. He was not only learning how to mix chemicals to supply Lipscomb Industries, he had become the point man for all of his father-in-law's contracts.
When Dudley's company, RLD, set out to fill its first big Lipscomb Industries order from the Dallas Independent School District--which had awarded Lipscomb a contract to provide floor cleaning products--the Dudleys recruited every family member and every down-and-outer from the downtown labor pools to chip in and get the product mixed and bottled. (The Dudleys hired a man to supervise the crew, who purports to be a chemist but wouldn't give me his qualifications, though I heard his background is in hair-care products.)
"I had everyone working around the clock, trying to get the order out," Dudley told me. "People slept in trucks, kids slept on the floor out at the plant--'round the clock. We had people from the labor pool come out and work 10 to 12 hours, then bring another shift in. I worked two days straight myself."
Although DISD officials certainly had no way of knowing that Al Lipscomb's son-in-law was using homeless people to make the district's floor wax in used milk tanks, they were able to figure out pretty quickly that the stuff wasn't any good.
Not long after delivery, DISD shot off a letter to Lipscomb, notifying him that 48,720 gallons of disinfectant did not meet specifications and were being summarily rejected by the school district, which wanted all of it picked up immediately. Lipscomb never picked up the disinfectant, and DISD has since canceled the contract for all his products, says DISD attorney Rebecca Zuniga.
Because of DISD's problem, another Lipscomb Industries customer, Dallas County, decided to test the products, too. When the floor wax came up short, the county froze any payments to the company and demanded that Lipscomb fix the problem. "We stopped payment to Lipscomb Industries on all the money we owed him and at one point we were holding more money of his than he had of ours," says Dallas County administrator Allen Clemson.
The problem has since been rectified--but not because the Lipscomb family chemists suddenly learned how to mix janitorial supplies.
Instead, one of Lipscomb Industries' frustrated creditors in the bankruptcy case, Imperial Industries, saw RLD's failure to fill orders properly as Imperial's only chance at recouping some of its money. As a result, Dallas County now gets its floor products directly from Imperial--a Dallas-based company owned by two guys who do actually make chemicals. At the insistence of Imperial, which is not about to be burned twice, Dallas County sends the checks directly to Imperial--though middleman Lipscomb does have to sign off on them--and for the most part, Lipscomb is no longer involved with his customer.
It's unclear what, if anything, RLD Chemical Manufacturing is still producing on behalf of Lipscomb Industries. (Despite the two highfalutin names, RLD and Lipscomb Industries are virtually interchangeable.) Lipscomb doesn't seem to know the status of his other clients, nor the viability of his son-in-law's company.
"I think he's in the process of changing it [the company] over," Lipscomb said, although Lipscomb never exactly explained what he meant by that. The recent indictment has clearly made it even more difficult to do business than it already was. "When this thing hit the paper the other day, it just doesn't look right--even perception will kill you," Lipscomb says.
Lipscomb knows that a twisted perception of his son-in-law rubs off negatively on him, too. "I want to have a meeting with Rod to get some things straight," Lipscomb told me. "I need to find out some things...to find out what direction we will take."
Lipscomb has more to worry about than he thinks.
Dallas County's Allen Clemson--who just made the connection between his jail's floor wax and his missing money over in the county clerk's office--is going to confer with the county auditor about the possibility of recouping some of that stolen money through that floor-wax contract.
And while Lipscomb may feel entirely confident that the public will never connect him with his son-in-law's dubious behavior--after all, The Dallas Morning News buried Dudley's link to Lipscomb in its token August 7 story about the indictments--tracking the money just might.
Last fall, when Lipscomb Industries began to fall apart, Hoffman told Lipscomb that there just wasn't enough money to keep giving Lipscomb his $2,000-a-month salary Lipscomb was accustomed to getting to cover his bills and those of his wife, Lovie. "He didn't give them any money," Dudley told me the evening we met at his home. "I gave them a couple of checks to cover things. In October I gave him money out of my personal account; since then out of RLD's account--whatever we can afford."
And if Dudley is guilty, chances are good that Dallas City Councilman Al Lipscomb has been living, at least in part, for the better part of a year on stolen county money.
Which brings us to the question of how far Dudley seems to be able to stretch his income. It's one of the great mysteries in town--one that a whole bunch of lawyers in two courthouses can't seem to figure out.
It turns out that Dudley's grandiose statements about his success in the physical-therapy business are as ludicrous as his criminal catharsis down in Huntsville. The Dudleys' investors were actually partners--three women who put up $100,000 to start up the business and who then, regrettably, turned it over to Dudley to run. They say they did not get their money back. Dudley fleeced the company, they say, for much more than his $50,000-a-year salary--using the company checkbook as his own to write checks to his family members, including Al and Lovie Lipscomb, Lipscomb Industries, and Lipscomb's 1995 city council campaign.
One allegation they make is that Dudley took an undetermined amount of money out of the physical-therapy clinic and invested it in RLD Chemical Manufacturing.
The partners began to suspect they were being duped when a company trip to Las Vegas--ostensibly to reward the company's hard-working employees--wound up including no employees: just Dudley, his wife, Lovie Lipscomb, a few extended family members, and the family attorney, Dallas City Councilman Don Hicks, and Hicks' wife. The bill came to $7,000.
The partners had had enough, but when they showed up to confront Dudley at the clinic, he cursed at them in front of clients. On another occasion, he locked them out of the building and called the cops, according to court records. In February 1995, the women sued in an attempt to recoup their investment on a business they claim was seeing 63 to 100 patients a day and generating $100,000 a month in income they never saw.
Dudley responded to the suit by immediately filing personal bankruptcy.
Although Dudley's angry partners declined to be quoted for this story, one of their lawyers--bankruptcy attorney Rosemary Zyne, who is trying to recover at least some of her clients' money through the Dudleys' bankruptcy case--says the Dudleys' lifestyle has always been, well, a mystery to her.
"What made my clients suspicious was that he was spending all this money and yet, according to his bankruptcy schedule, only making $50,000 a year, and it didn't fit," says Zyne. "So now the question is, how accurate were these bankruptcy schedules? I mean, that's bankruptcy fraud."
The Dudleys have always amazed people with their grand lifestyle. Shortly after the alleged check scam began, the Dudleys bought a big house and spent a lot of money renovating it. They own three rental houses, drive a 1991 Lexus and a 1994 Suburban and, at the time of their bankruptcy filing last February, had $28,000 in credit card debt, and many outstanding bills, including $3,414 to Circuit City and $2,108 to Linz Jewelers.
But that allegation of bankruptcy fraud could catch up with them. If a criminal charge were pursued for not reporting extraneous income--and it most likely will be--the result could put Dudley in a world of hurt. "We're going to have the creditors' meeting reopened to ask Mr. Dudley about this," says Charles Kennon, staff attorney for the Chapter 13 trustee for the U.S. Bankruptcy Court. "And after we have that meeting, we will be referring this to the U.S. Attorney's Office. I'm sure the Internal Revenue Service is on to it, too, but we'll be copying them on it also."
Still, the Lipscomb-Dudley family seems particularly adept at getting away with outrageous behavior. For example, in February 1995, Dudley got upset with an electronics salesman at the Foley's Department Store at Red Bird Mall. The Dudleys wanted to buy a big-screen TV and apparently didn't like how they were being treated. So Dudley hauled off and beat the crap out of the guy. Specifically, after pummeling the salesman, he grabbed the guy's portable radio and beat him over the head with it.
Dudley currently is on probation for that.
But even that is all news to councilman Lipscomb, who in our conversation last Saturday wanted me to know just how removed he is from his son-in-law and last remaining business associate.
"When you put in the paper that Rod was an ex-con, I thought perhaps it was a typo," Lipscomb said, referring to the May Observer story about Lipscomb's imploding chemical business. "I asked someone else whether it was true, and it was confirmed that it had been.
"You see, I had no idea.