By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
By Anna Merlan
By Lee Escobedo
By Eric Nicholson
This terrible City Hall corruption trial we just went through—11 people either found guilty of federal crimes or pleading guilty to them—wasn't about black Dallas. It was about Dallas. To see the real story, try to focus on this one small chapter. This little play within the play, about events that transpired six years ago, tells the tale.
According to sworn testimony in the three-month-long trial, two top Dallas political consultants were trying in 2003 to get support for their client, Bill Fisher, from the late James Fantroy, a city council member. Fisher wanted to build government-supported affordable housing in Fantroy's district.
The real game for Fisher was to win lucrative tax credits awarded by the state as an incentive for building this type of housing—credits worth tens of millions of dollars that made affordable housing more affordable to developers. But the state would not award the credits unless local officials gave their blessing—a wrinkle adopted by the Legislature after some communities said they didn't want this type of housing.
At Dallas City Hall, the behind-the-scenes understanding was that these tax credit deals were the sole province of city council members in whose districts they were proposed. So if a city council member gave someone like Fisher a thumbs-down, Fisher was out of luck in that district. If he got a thumbs-up, millions of dollars flowed into his pocket.
The thumb was worth a lot of money. Some council members were selling the thumb. That's why we have 11 guilty verdicts and pleas in the City Hall corruption case.
In the Dallas way of doing things, Fisher hired two consultants—a white one to handle white people on the council and a black one to handle persons of color. The white one, Carol Reed, today is the chief fund-raiser and political advisor to Dallas Mayor Tom Leppert.
Reed runs the white side of all the big political campaigns in Dallas—bond projects, Trinity River project, convention center hotel—usually backed by the Dallas Citizens Council, an elite business group with roots deep in the city's troubled past.
The black consultant, Kathy Nealy, is a nationally active political lobbyist, best known here as a representative of the Perot family interests and for being Reed's chief operative in black southern Dallas on many major campaigns.
Reed and Nealy were to get city council approval for Fisher's projects. Nealy had the important job of winning Fantroy's support.
Fantroy was elected to the council in District 8 in far southeastern Dallas in 2000, the same year his political mentor, former councilman Al Lipscomb, was convicted on all 65 counts in a federal bribery indictment. Fantroy died last year of kidney cancer after serving time in prison for stealing $20,000 from the city's impoverished black college, Paul Quinn.
I dredge through all of this unpleasant detail for a reason. It's important to know what kind of world Bill Fisher was paying his emissaries, Reed and Nealy, to enter and do business in.
This would all be simple if it were a story about Reed and Nealy tricking good people into doing bad things. But that would be a very naïve take. As a matter of fact, I have talked to Reed for decades and have never once known her to tell me anything but the truth. I don't know Nealy as well, but am aware that she is respected at high levels nationally, up to and including past White House regimes.
They are two very smart, hard-knuckled women with their own brand of street-wise integrity, sent to do business in a swamp, often by men who don't have the balls to go there themselves.
Fantroy ran for office in 2000 on a pledge to defend his district from new multifamily housing developments. District 8 voters wanted new single-family residential development. But in 2003 when Nealy brought Fisher and his partner in to see him at Dallas City Hall, Fantroy, who owned a small security guard company, was ready to do some typical City Hall business.
Nealy testified at trial that Fantroy told her to have her clients step into the corridor—but she should stay behind. When they were alone, Fantroy told her he wanted her clients to give his company contracts for security work at the housing developments they wanted to build in his district. The deal included a $5,000 signing bonus for Fantroy and $160,000 worth of work for his struggling security company.
But here we come to a turning point in the saga. During a September 24, 2003, meeting of the Dallas City Council, then-Mayor Laura Miller learned of the security guard contract deal. And she went ballistic.
Miller insisted the council go into executive session to talk about the contracts. The rest of the council and the city attorney decided the contract deal was acceptable. Miller, still furious, contacted Sarah Dodd, then a KTVT-Channel 11 news reporter, and told her the part of the contracts story that had occurred in the public meeting.
According to testimony and to people close to the government's case, Dodd's story was how the FBI caught wind of the problems at City Hall. It's why the FBI launched its investigation. (By the way, we can officially retire the myth that Miller never got anything big done in her years as a council member and mayor.)
The important thing here is this: While all of this was unfolding, Bill Fisher balked. He didn't want to do the contracts with Fantroy. Nealy testified that Carol Reed had to intervene, telling Fisher to get over it and give Fantroy his pound of flesh.
So Reed, who represents the very pinnacles of establishment political power in Dallas, tells Fisher to keep giving Fantroy his juice. We're halfway to my point.
Reed was out of the country during the first half of the trial. But as soon as she got back, she took my call and confirmed she had told Fisher to keep giving Fantroy the contracts.
"All I know is the city attorney ruled on those contracts," she said. "Whatever the city attorney said, that would be my advice."
She said she didn't remember details. "It's been too long ago. I talked to the FBI long before the indictments were even brought down. And I am just not even close to it. I have no desire to get in the middle of it now."
Reed was not subpoenaed to testify in the trial, but for some reason Nealy, whose role seems more passive than Reed's, had to come put her hand on the book. It emerged from her testimony that the government, at first, had believed Nealy might have some legal "exposure"—meaning she could be in trouble over the security guard contracts.
She took care of her exposure by hiring Billy Ravkind, one of Dallas' most experienced white-collar criminal attorneys, to negotiate an understanding with the government. Ravkind confirmed that he intervened on Nealy's behalf.
He said that the deal he won for her was not technically an immunity agreement but more of a meeting of the minds. When the minds met, the minds agreed that Nealy would not be prosecuted if she testified for the government.
All of this was laid out rather oddly and awkwardly by the government when Nealy took the stand. Assistant U.S. Attorney Chad Meacham asked her, "If you knew about these contracts and yet you continued to move forward, what were your concerns about being charged in a criminal case?"
Nealy explained Ravkind's role and said she'd been told she would not be prosecuted.
Who knows why the government brought out the agreement? Usually that's something the defense would do as a way of impeaching her testimony. But Al Lipscomb, a central figure in the city's last corruption trial, was down in the lobby of the federal building that day, telling reporters he had come to watch the "black snitches choir," so maybe Meacham was offering Nealy some cover in the community.
Thus far, we have Carol Reed and Kathy Nealy hip-deep in some kind of deal that has the FBI knocking on their doors. It's knock-knock-knock—that real bad knock nobody wants to hear, no matter what they tell you later.
At this point, the Reed/Nealy scenario goes to another depth having to do with the legal theory behind the government's case in the trial, one of the core concepts of which was a principle called "deprivation of honest services."
Deprivation of honest services is a federal offense that carries a 20-year prison term. James Jacks, the acting U.S. Attorney for the Northern District of Texas, explained to me that "deprivation" is a relatively new add-on to federal fraud laws, designed to patch a hole left by a Supreme Court decision.
If you are supposed to be working in the interest of the voters who elected you and instead work against those interests and for your own benefit, then you've committed fraud, whether you take any money or not. If you use the mail or a telephone to do it, the FBI may come knocking on your door.
Former councilman Don Hill; his wife, Sheila Farrington Hill; and Hill's appointee to the Plan Commission, D'Angelo Lee, all were convicted of deprivation or conspiracy to commit deprivation, among half a dozen other charges.
Jacks explained to me that the people who offer the bribes are just as culpable under this statute as the ones who take them. He wouldn't talk about Reed and Nealy. Ravkind told me he didn't think the government had enough on Nealy to make a charge stick.
But they did come knocking at Reed's and Nealy's doors. This is a key point. People in Dallas, white and black, rich and poor, pinheaded and round, can talk all they want about how this is the way things always have been done in Dallas. And they do talk.
A central theory and constant refrain of the defense was that the trading of favors and offering of inducements seen in this case was "politics as usual" at Dallas City Hall. I never heard the feds argue with that. They just said politics as usual, by this definition, amounts to fraud and extortion, and the jury agreed with them.
That's something people who do a lot of business at Dallas City Hall might want to ponder.
I have spent the last two weeks talking to people on both sides of the black/white racial divide in this city, and it's amazing how much bad blood there is. The other amazing thing is that the feelings are mostly legitimate on both sides.
White businessmen who know southern Dallas well told me story after story of loans they made to small businesses in the southern sector, which went unpaid without the slightest hint of regret, let alone shame. "When you try to collect, you're accused of racism," one said.
But people black and white also talked to me about the unabashed racism with which City Hall has apportioned the basic elements of civilized urban existence—sewers, roads, water, power, police and fire protection—virtually since Reconstruction. If some people in southern Dallas seem to have a culture apart from mainstream values, it's not an accident.
On the other hand, consider the verdict rendered in this case by a racially diverse jury. When I spoke with Ravkind, he talked about jury studies he had done in Dallas 10 years ago when he was representing Lipscomb. He said his research indicated that no black juror in Dallas ever would have voted to convict Al Lipscomb.
Then-Federal District Judge Joe Kendall, acting on his own volition, moved the Lipscomb trial to Amarillo, saying Lipscomb couldn't get a fair trial in Dallas because of heightened media attention. But people close to the trial suspect Kendall was aware of Ravkind's jury research. An appeals court later reversed Lipscomb's conviction based on Kendall's change of venue.
Ravkind said to me last week, "We had done some mock juries [in 1999]—three of them—and we found out that the jurors who were faithful [to Lipscomb], No. 1, were blacks. We never had a mock juror who was black who didn't vote for Al."
I repeated some of this to Jacks, who understood it but thought it might be wisdom from a bygone era. "That's kind of old school," he said. "I think it's noteworthy that this [the City Hall corruption case] was a diverse jury, and they didn't go down that path or didn't appear to."
Maybe Don Hill, who divorced his wife to marry his mistress, was no Al Lipscomb. But Ravkind believed race would have controlled the Lipscomb trial in Dallas no matter what. It did not control the Hill trial in Dallas.
The notion that things could be better, now that we don't have to play the ugly old game forever, is not just airy-fairy. It happens to be the basic business plan of the single biggest economic development that has ever dawned in southern Dallas: The Allen Group's inland port project. The Allen Group's basic modus operandi since coming here from California six years ago has been: Don't play the old game. Play a new game.
Richard Allen, the CEO, bought 6,000 acres in southern Dallas and Dallas County—a far bigger investment than any local investor ever had made south of the river. But he landed in hot water with The Dallas Morning News and the local business elite when he refused to hire a group of expensive black political consultants.
He now says there is still huge economic opportunity in the undeveloped reaches of southern Dallas. "The opportunity is not going away." But he says making it happen will require a culture change south as well as north of the river.
"The power of those that wish to extract a toll, for lack of a better word, is given to them by those that are willing to pay the toll and allow it to go on."
Leslie Jutzi, who up until recently was Allen's chief community liaison, is black, born and raised in Detroit and living now in southern Dallas. She told me last week that her years of fighting entrenched interests in Dallas, far from making her cynical, have made her more optimistic.
"I see the great things that people are doing in southern Dallas County with far fewer resources than others elsewhere," she told me in a note. "I know the amazing stories about the brilliant and honorable children and adults in southern Dallas County that are not reported. I also know of the unwavering support of southern Dallas County by those in North Dallas who never get mentioned during the discussions about the great divide between North and South Dallas."
So maybe this trial, rather than being only a depressing window on the past (which it is), is also a sunny window on a better era ahead. But for that better day to dawn, Dallas needs more people like Allen and Jutzi, those with the moral courage and business savvy not to play the old game. Everyone needs and deserves that.
The white guys who never got their loans paid back deserve it. The black people who went without storm sewers for half a century while Dallas splashed billions of tax dollars into new northern neighborhoods deserve it. Ethical members of the Dallas City Council and citizens who were deprived of honest services by crooked city officials—they all deserve better. But to get better, people have to do better. Dallas has to make that dawn happen.
And if Dallas can't do it or won't do it? Knock-knock, man. Knock-knock-knock.