By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
By Anna Merlan
By Lee Escobedo
By Eric Nicholson
But then, according to a transcript of the official tape of the meeting, Schwartz lays out a little side-plot. (Picture everybody rubbing their hands and cackling.)
The NationsBank guy will call Goldman Sachs first thing in the morning and tell them all about the Finlan-Venable litigation. So the board will have tattled on itself, and it will be covered.
Then the NationsBank guy will tell Goldman Sachs that Finlan may call. He will ask Goldman Sachs to listen to Finlan but not let on that they already know all about it. (As in, "Oh, no kidding! This is sooooo terrible!") The banker asks Goldman Sachs to send the board a salty letter demanding an explanation. Then the board will use this basically fake letter as grounds to sue Finlan and Venable for making Goldman Sachs mad at them.
It's an ambush. Aren't they clever?
"Jerry [the banker] is going to call them [Goldman Sachs] tomorrow and explain to them that they might get this phone call and explain what it's about," Schwartz tells the board in the transcript. "He'll tell them not to act as if they knew anything about it.
"When the board decides they finally want to take the gloves off, I want to turn around and sue Mr. Finlan...I want to start making things expensive and get him to realize what he's getting into."
There it is, the macho lawyer thing. And the board falls for it. The lawyer has found the secret button that opens the vault: It isn't about teaching kids to read. It's about putting the board's critics in the financial hospital.
Schwartz confirms the details of the 1992 school board meeting but characterizes his advice to the board as good lawyering, not trickery. "That's just being a good lawyer, anticipating an adversary and knowing what he's capable of doing," Schwartz said Monday.
He contends that Finlan injured the district not merely by informing Goldman Sachs of his lawsuit but by also threatening to sue the company if it issued bonds.
A reading of Finlan's letter to Goldman Sachs doesn't bear that out. In his letter, Finlan tells the company exactly what Dan Peavy and even the NationsBank official had said to the school board: If they don't alert potential investors to the Finlan-Venable litigation, the investors could sue later.
There's a reason I called Dan Peavy about that meeting. Peavy is a political persona non grata today. When he was on the board, he was caught using racial slurs in wiretapped personal phone conversations. Later the feds accused him of bribery but lost their case.
But I noticed in my reading of the transcript that Dan Peavy was the one board member who did not get sucked one inch into the macho-lawyer stuff.
First, Peavy tells Schwartz, the lawyer, that he's full of it if he thinks the Finlan-Venable litigation is "frivolous."
Peavy tells Schwartz the gadflies have uncovered "management problems, possible bookkeeping problems, problems that aren't going to play out well in the public.
"There's nothing frivolous about that," he says in the transcript. "Let me tell you, that dog won't hunt. They're beginning to develop some credibility. We continue to sit here and say this is a frivolous matter and everything's going to be fine, but the track record of this case doesn't indicate that. They keep seeking higher ground, and they keep getting there somehow."
In the end, the board rolls right over Peavy's reservations as if he hadn't even spoken. Goldman Sachs sends the letter, as requested. Schwartz convinces the board to sue Finlan and Venable for what becomes $280 million in damages.
Eventually that suit gets thrown out. Finlan and Venable sue the district in return, this time demanding damages, for violating their civil right of free speech.
Neither of these guys is a lawyer. They always represent themselves. The district hires huge law firms to fight them. The estimates for what the district has paid to fight Finlan and Venable are all over the map but all in the millions. Last year, the district acknowledged it had paid the firm of Friedman and Associates $1.25 million to handle the Finlan-Venable litigation. But that's only one of several firms that have fed at this trough.
Finlan insists the district has spent upward of $8 million on the case. Peavy still sees much of the paperwork in the cases because he is still a defendant, and he believes he has a fairly good ballpark idea what it has cost. He thinks the Finlan estimate is way high, but he says, "I'd have to say it's $3 million to $4 million at a minimum."
The board itself has fought viciously against every attempt to discover these numbers. The one board member who has tried to force the numbers out, Lois Parrott, is now a pariah on the board largely for that reason.
Peavy says he asked the board to offer Finlan and Venable a settlement of $100,000 several years ago. "But the rest of the board said they wouldn't give them a nickel."
People talk as if the big thievery at DISD is going to be about some middle-management officials building castles in Spain with money from the coffers. But that's not the game at all. The real castles being built with our school tax dollars belong to the lawyers, and most of them are probably in Highland Park.
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