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Reese and his father both set up several "spendthrift trusts" for Reese's children, an arrangement that makes the kids beneficiaries of the assets but puts control in the hands of a trustee, ostensibly so the young owners don't squander their fortunes. Deed records show that dozens of properties owned by Reese or his web of companies found their way into trust funds set up for his wife or children, or newly formed family-owned companies in which Reese held no ownership.

Take, for instance, 2900 Greenville Ave., a block-long commercial building housing Stan's Blue Note jazz club and several other businesses. It's valued on current tax rolls at $887,000. Deed records show that Harold Shuler bought the property in 1979 and sold it to Louis Reese Inc. in 1985. Reese Inc. in turn sold it two years later to Hammersmith Development Co., another Reese entity. That same year, as creditors filed lawsuits against Reese for sums in the tens of millions, he sold it again, this time to a Reese family trust. In 1994, it was sold to Madison Pacific Development, owned by Reese's wife, which still holds the property.

If anything, the Reese empire as it is currently structured depends much on Susan B. Reese, whom Reese described in the Milan tape as "a very good, loyal person." But, he added, "I would not call Susan a businesswoman."

During his prison stretch, Reese recounted on the tape, his wife developed 1,500 lots while he directed the business over the telephone. "It was very interesting. I'd be on the telephone, and there'd be a line, a line of guys...So pretty soon I feel this tap on my shoulder, and this guy would say, 'Hey motherfucker--get off the phone.'"

As Advantage Capital has pursued Reese into federal court and now bankruptcy court, Reese, his wife, and several close business associates all draw a picture under oath of Susan Reese as the hands-on owner and controller of Madison Pacific, which develops subdivisions, and other Reese businesses. One of Advantage Capital's lawyers, Chris Weil, refers to her sarcastically as "the Renaissance woman."

"I'm just a consultant," Lou Reese says during his coffee-shop interview. "If my wife ran off with the trustee, I'd be left holding nothing."

On the sting tape, Reese said Madison Pacific is his company, he picks the projects, and a partner, Jim Douglas, is cut in to do the day-to-day work, "with the bulldozers, with the builders."

In court, where it really matters, there are people who back up his alternative story under oath. In a 1998 hearing, Douglas, the developer, testified that he and Susan Reese make all the business decisions in their lot-development business. He said he talks to Lou Reese from time to time, but mostly about shrubs and plants. "Lou would ask questions primarily about the landscaping, things like that, and that is all. None of the day-to-day business items," Douglas testified.

Under oath, his wife also says she is the major player, and Lou an occasional advisor in the business.

Several Deep Ellum real estate agents say Susan Reese is very much involved in renting and maintaining family properties from her funky Commerce Street office above Sol's Taco Lounge. A former housewife with no experience in business, she began going into the office in 1992, when her husband went to jail. "I deal with Susan all the time," says Jeff Swaney, a rental agent.

But when it comes to the big picture, the major items, it's not hard to find Lou Reese's hands on the controls. At a mid-May meeting in the Dallas city manager's office, for instance, a steering committee met behind closed doors to talk with city planners about a new land-use proposal for Greenville Avenue. Residents and landowners have been at odds over parking, bar noise, and other issues, and the future of the area is about to be reshaped. The group's sign-in sheet indicated that Susan Reese had been appointed to the panel by Dallas City Council member Veletta Lill. At the meeting, however, Lou Reese signed in next to his wife's name and fairly dominated the discussion in his push to set up public financing for new parking garages. It wasn't his first appearance either, several other members of the panel say. City officials were so familiar with him, they called him "Lou." (As this article was going to press, Councilwoman Lill revoked Susan Reese's appointment to the steering committee, citing "concerns raised about the Reeses.")

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Thomas Korosec
Contact: Thomas Korosec