By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
By Anna Merlan
By Lee Escobedo
By Eric Nicholson
Walter Waldhauser Jr., the middleman in one of Houston's most infamous greed-driven murder-for-hire plots who is apparently still attempting to make money off the deaths of others, could soon find himself behind bars again.
Following an October 22 article ("Death merchant") that appeared in the Dallas Observer and its sister paper, the Houston Press, officials with the state Board of Pardons and Paroles launched an investigation into the parole status of Waldhauser, who now lives in Dallas and goes by the name of Michael Lee Davis.
Board chairman Victor Rodrigues confirms that the investigation could lead to Waldhauser's return to prison.
"I have referred the matter to the parole division and am waiting on their appraisal of the situation so we can decide what to do with this," says Rodrigues. "But as far as I'm concerned, this could go all the way up to revocation" of Waldhauser's parole.
Waldhauser/Davis has been on parole since 1990, when he was released from prison after serving nine years of three concurrent 30-year sentences he'd received for his part as the middleman in an infamous murder-for-hire plot that resulted in the slayings of four Houston residents, including a 14-month-old boy shot to death in his crib.
In July 1979, police discovered the bodies of John and Diana Wanstrath and their adopted son Kevin. All had been shot to death in their home. Although no murder weapon was found at the scene, Harris County chief medical examiner Joseph Jachimczyk mistakenly ruled that Diana Wanstrath had killed her husband, her son, and herself in a double murder-suicide. It took two years, but Houston police eventually proved that the deaths were the result of a contract hit; that Markham Duff-Smith had not only arranged the deaths of his sister, Diana, and her husband and son, but had also had his adopted mother, Trudy Zobolio, killed four years earlier. The medical examiner's office also botched Zobolio's autopsy by ruling it a suicide.
In 1981, a Harris County jury convicted Duff-Smith of murdering his mother and sentenced him to death. He was executed in 1993. The trigger man, Allen Wayne Janecka, is currently on death row awaiting execution. Through a plea bargain, Waldhauser, who put Duff-Smith and Janecka together and was an active participant in the Wanstrath killings, avoided the death penalty by pleading guilty to three counts of capital murder in exchange for the three concurrent 30-year sentences.
Waldhauser was released from prison in 1990 and placed on parole until the year 2010. Almost immediately after his release, he legally changed his name to Michael Lee Davis. Most recently, Waldhauser/Davis has resided in the Dallas area, where he has been vice-president of Southwest Viatical. A viatical is a company that buys the life-insurance policies of the terminally ill, oftentimes people who are HIV-positive, for pennies on the dollar, then collects the full insurance benefit when the person dies.
According to its filings with the state Department of Insurance, Southwest Viatical listed itself as a viatical broker--a company that matches someone wanting to sell a policy with a viatical settlement company, which actually buys the policy and collects the benefits. An industry source says that, at times, Southwest has held itself out as both a broker and a settlement company. Since Waldhauser/Davis declined to be interviewed, and other employees of Southwest did not respond to inquiries from reporters, it's not clear whether Southwest has filled both roles. But if Waldhauser/Davis was in the position of standing to benefit from someone's death, the man most responsible for putting him in jail said last month that it would be a potentially dangerous situation.
"Walter is not a man who likes to wait on his money," said former Houston police homicide detective Johnny Bonds. "If I knew that this guy had a life-insurance policy on my life, I'd feel like a walking dead man."
There is no evidence to suggest that any of Southwest's deceased clients have died by anything other than natural or accidental causes. Dallas police have reviewed a list of the names of more than 200 HIV patients who have died in Dallas County over the past three years. However, the detective who did the review, Steve L'Huillier, says, "I've been told not to get real involved in this."
Meanwhile, the investigation into Waldhauser/Davis' parole status apparently centers on whether he violated the non-association clause of his parole. In 1990, when he was placed on parole, Waldhauser/Davis was required to appear before a parole officer once a month. One condition of his parole was that he not associate with any known felons. However, in July 1991, Waldhauser/Davis was placed on what is called annual reporting status, which only requires him to stay in touch with parole officials once a year through the mail. The terms of the annual report agreement do not specifically mention the non-association condition. Nevertheless, parole board chairman Rodrigues says it may still apply to Waldhauser/Davis.
"I don't give that up," Rodrigues says. "Not when we're talking about the greater public good."
If Waldhauser/Davis' non-association clause is still in effect, there seems little doubt that he has violated it. Indeed, Southwest Viatical appears to have been a magnet for ex-cons. In addition to Waldhauser/Davis, at least two other Southwest Viatical officials have served time in prison. According to the Texas Department of Criminal Justice, from January 1986 to August 1988, current Southwest Viatical president Hoyt Wauhob was incarcerated by the state after being convicted of operating a speed lab in Houston. Additionally, the founder of the company, Wes Crowder, is a two-time loser. In 1984, Crowder was convicted in Tarrant County on a charge of theft between $200 and $10,000 and served nine months in prison. In 1987 in Dallas County, Crowder was again convicted of theft--this time for more than $20,000--and served approximately two years in jail.