Cheating death | Dallas Observer

Cheating death

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.

Crowder acknowledges that he, Waldhauser, and Wauhob all met while serving their sentences at the TDC's diagnostic unit in Huntsville in the late 1980s, but claims that he left Southwest Viatical before Waldhauser/Davis became involved with the company.

Waldhauser/Davis has apparently terminated his association with Southwest Viatical. A woman who answered the phone at Southwest Viatical last week stated that Waldhauser/Davis no longer works for the company. Instead, Waldhauser/Davis is now involved with something called First American Fidelity Corporation of Dallas.

By state law, parole officials are prevented from releasing the name of a parolee's place of employment. (Parole officials do confirm that Waldhauser/Davis no longer lives on Galena in Dallas. Instead, he now resides at 3336 Langston in Plano.)

However, according to documents filed with the Texas Secretary of State's Office, Waldhauser/Davis is the agent of record of First American, which was incorporated in April 1997. According to Crowder, Waldhauser/Davis' new company is a viatical "funder"--a company that puts viatical brokers together with investors. Waldhauser/Davis declined to be interviewed for this story.

Like Waldhauser/Davis, both Wauhob and Crowder are both on annual report, also known as post-card parole, as are hundreds of other ex-cons--some of them violent offenders. Although the practice of placing parolees on annual report ended in 1995, the ban was not retroactive. Today, those parolees, including at least 16 former death-row inmates, are only required to touch base with the parole board once a year via the mail. It's a program that one critic calls the "ultimate trust-me syndrome."

Andy Kahan, director of the Houston Crime Victim Assistance Office, thinks everyone still on annual report should be brought back to monthly reporting--especially violent offenders like Waldhauser.

"It's my opinion that the parole board has discretion to bring these people back under supervision at its whim," says Kahan, "because even though they are on annual report, they are still on parole. They are still under state custody. And obviously in Waldhauser's case, there's no doubt in my mind that at the very least, he should be brought back under monthly, in-person reporting status."

Parole board chairman Rodrigues, however, is uncertain whether the board does in fact have such authority. He is also unsure whether the board has the power to act on Kahan's recent request for the board to force Waldhauser/Davis to go back to using the name Waldhauser. In a November 9 letter to the chairman, Kahan cited the portion of the Dallas Observer article that discussed how a Garland police officer, whom the ex-con had befriended, had difficulty determining Waldhauser/Davis' true identity.

"If law-enforcement officers can be duped into not knowing they were dealing with a triple-murderer," wrote Kahan, "imagine how vulnerable the rest of us must be.