By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
By Anna Merlan
By Lee Escobedo
Lipscomb, a councilman since 1984, started the company with partner Roger Hoffman in 1993 when term limits forced him to leave public office for a two-year hiatus. Although Lipscomb's two-man operation experienced numerous financial troubles, he managed to secure contracts with many major local businesses including The Dallas Morning News, Minyard Food Stores, Texas Utilities, Lone Star Gas, DART, Dallas County, and the University of Texas Southwestern Medical Center.
This became a problem when Lipscomb won re-election to his old seat in 1995--because while his partner sat slitting open envelopes in their offices in a city-owned building downtown, Lipscomb was just across the street at City Hall voting on issues benefiting his chemical clients:
* He was one of only two council members who voted against hiring a consultant to see whether Lone Star Gas' rate hike was warranted.
* He voted to renew The Dallas Morning News' license to operate hundreds of news boxes on public property at token rent to the city.
* He voted to give the Morning News a $4.5 million tax abatement on its property.
* He voted to give lucrative contracts to Dallas County.
* He voted to give DART $147,472 in city bond money to shore up its rail projects.
In a 12-month period, in spite of the fact he was voting on zoning applications, right-of-way designations, and countless other issues of importance to his clients, Lipscomb never once abstained from voting on an issue involving one of his clients.
By the summer of 1996, when Miller's story appeared in the Observer, Lipscomb Industries was defunct, having mismanaged its way into bankruptcy in spite of Lipscomb's special connections. But even in abject failure, the company seemed to lead a charmed life.
Bob Lane, CEO of NationsBank of Texas, agreed to eat half of a $65,000 debt Lipscomb Industries owed his bank. Pete Schenkel, CEO of Schepps Dairies and Lipscomb's longtime political handler, helped Lipscomb start a new chemical company.
The new company was run by Lipscomb's daughter, Lavette, and her husband, Rod Dudley, an ex-convict with no experience in the chemical business. While Schenkel was helping the Dudleys get into the chemical biz, they were in the process of their own bankruptcy and were being sued by three former partners who claimed the Dudleys had looted their fitness business.
Unable to buy products from wholesalers because of their bad credit, the Dudley-Lipscombs were mixing up their own chemical brews in milk tanks given to them by Schenkel. Dudley told Miller he had assembled a work gang of homeless people and labor-pool workers toiling in round-the-clock shifts to mix up batches of product for his many clients.
But there were significant quality control issues in this approach to chemical manufacturing. DISD canceled contracts with Lipscomb's new company after discovering he was shipping them substandard disinfectant. Dallas County officials found that the watered-down floor wax he was selling them was all walking out the door on the soles of people's shoes after it was applied.
Law enforcement officials and Lipscomb's colleagues on the council continued to look the other way for months, in spite of Miller's continuing coverage, until January of last year, when Miller reported the transaction that is now at the heart of an ongoing FBI investigation.
In the course of his daughter's bankruptcy case, creditors discovered that Dudley, the councilman's ne'er-do-well son-in-law, had received a cash "gift" in 1995 of $20,000 from Yellow Cab owner Floyd Richards. According to Dudley's testimony in a September 1996 bankruptcy hearing, $12,000 of the $20,000 was passed on to Lipscomb.
Dudley's luck was running out on a number of fronts. In August 1996, he was indicted for allegedly stealing more than $100,000 from the county's bail-bond coffers. Lipscomb expressed shock not only at his son-in-law's indictment but at information--which he said he read for the first time in the Observer--that Dudley was an ex-con who had spent eight years behind bars for armed robbery.
During the period when these gifts were made, Lipscomb voted on Yellow Cab's behalf on four key issues. One was a motion to allow Yellow to increase its fleet by 175 vehicles--enough to crowd out some competitors. He voted three times unsuccessfully to make insurance requirements for cab companies more rigorous in a way that would have crippled many smaller companies.
By then, Lipscomb had shown up in tapes made by the FBI in its investigation of former Councilman Paul Fielding, now in prison on a federal public corruption charge. In what sounded like a chat about setting up fake minority-front companies, Lipscomb was overheard saying he was "the 800-pound gorilla" who could serve as the front man for such scams in the future.
Even after Fielding had been convicted on unrelated corruption charges, Lipscomb continued to elude the federal dragnet. But at some point after Miller's piece on the cab company payments appeared, the feds apparently decided they needed to make a move.