Should Paul Fielding go to jail?

He's violated the public trust and betrayed his own ethical standards. But is Dallas' perpetually annoying councilman guilty of fraud, perjury, and extortion?

"The biggest risk of the business is fraud," says Harold Goodman, owner of Goodman Factors, Inc., a 24-year-old Dallas-based company that is the largest privately held factoring business in the Southwest. "For everyone who calls up here saying how wonderful the factoring business is--what wonderful yields there are on the money, and how they're going to go into it--I say, 'There's one word I have for you, and that's fraud--F-R-A-U-D.'"

Paul Fielding knows that better than anyone. It was a giant factoring fraud--and how Fielding and his partner chose to deal with it--that ultimately led to financial doom and a federal indictment for the councilman.

"The difference between the factoring companies that are successful and survive and all the rest--the NBA versus the sandlot players--is how they deal with the frauds when they find them," says the owner of one of the city's oldest, most successful factoring companies who asked that his name not be used for fear the feds will come trolling around him. "It's what you do with the problem when you find it."

In Fielding's case, it's a story of what not to do.

Paul Fielding and Sam Feldman could never have foreseen that their new business venture would lead to the door of the FBI.

They had teamed up in 1988--two old college friends from UT-Austin, both of whom were from well-respected families with deep Dallas roots. Both had entered the real estate market after school, both had tasted success in the heady real estate heyday of the '80s, both had lost everything in the crash. Like other Dallas businessmen who had taken that rollercoaster ride, Fielding and Feldman were attracted by the odds in yet another highly profitable--and equally risky--business venture. Though there were eight other factoring companies operating in the Metroplex at the time, the two men had what they believed was a novel approach.

"They wanted to specifically go after business in the black community," recalls the factor who doesn't want his name used. "They both felt they had an 'in' with the black community because of their family histories and Jewish heritage. Because historically, Jews and blacks have been on the same side of the table together. No one was lending money to the black community, and Paul was going to be the white knight--that's the way he viewed this--loaning money to these poor people who couldn't get it."

Three years later, Fielding and Feldman had a staff of three, an office in a high-rise on Preston Road at Belt Line, and a small stable of regular clients. One new client, as luck would have it, was Walter Lee McGruder--of soon-to-be Operation Cobra Nest disrepute.

On August 8, 1991, the feds taped a phone conversation between McGruder and a man named Mike Jamison, one of the two men nailed in the Arizona kickback scheme who was now working undercover for the feds. Jamison had been courting McGruder for months--promising to jumpstart McGruder's dismal career as an electrical parts distributor. The feds' plan was to get McGruder in the door of the big defense companies by making him the authorized distributor of some high-quality electrical parts. Then he'd be in the position to offer kickbacks to the defense companies' buyers in return for preferential treatment.

McGruder was eager to take the feds' bait and break into the contracting big time--but didn't have the cash flow to deliver on a major contract. The only way he could do it, he told Jamison, was to factor his business--with a guy he knew named Paul Fielding.

"OK, what's the name of Paul's company?" Jamison asks McGruder in the August 8 conversation.

"OK, Mason Rich," McGruder says.
"Mason Rich," Jamison says.
"Yeah," says McGruder. "As a matter of fact, uh, he's runnin' for city councilor, I think in your district." (He laughs.)

"Is that right?" Jamison asks.
"Yeah, I'm serious," McGruder says. "He's got flyers out now."
"God dang, gonna get him and, uh, Steve Bartlett--everybody on there, huh?" Jamison says.

That brief, bumbling conversation marks the beginning of Paul Fielding's five-year waltz across North Texas with the FBI.

Three months after that call, when Fielding was elected to the city council, the feds clearly liked the potential new criminal possibilities. So what if they couldn't bring down the defense industry--what if, instead, they tracked corruption right into Dallas City Hall?

So the FBI started orchestrating meetings, meals, and phone calls between Fielding and some of the Cobra Nest targets--two of whom were already Mason Rich factoring clients. The feds' matchmaking got pretty elaborate--a phone transcript from April 3, 1992 shows that the feds put McGruder, Fielding, and Bell Helicopter buyer Billy Joe Hodge together for lunch. The next day, agents called Hodge to ask him all about the lunch--and taped his response.

"What's going on, dude?" Jamison said to Hodge, whom he called at work that day.

"Well hell, I've been, uh, trying to catch up with a damn few orders that I've had to place and..." Hodge said.

"Well, I wanna know if you're gonna work for the City of Dallas," Jamison said.

Hodge laughed.
"How was your dinner?" Jamison asked.
Hodge said Fielding had talked extensively about his disgust with DART and was critical of some games that were going on in procurement. DART purchasing agents were supposedly buying items from their buddies, Fielding said, while failing to obtain competitive bids as required by law.

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