Dallas County

Political Consultant Didn't Think She Needed Federal Immunity. Wrong.

The upcoming trial of Dallas County Commissioner John Wiley Price will be haunted by ghosts of previous Dallas corruption trials
The upcoming trial of Dallas County Commissioner John Wiley Price will be haunted by ghosts of previous Dallas corruption trials Alex Scott
Documents released this week in the trials slated to begin next month in the federal conspiracy case against Dallas County Commissioner John Wiley Price expose a bizarre little window on the history of corruption, Dallas-style.

Charges against Price, his political consultant, Kathy Nealy, and his administrative assistant, Dapheny Fain, are a complicated witch’s brew of bribery, “deprivation of services” and IRS stuff.

Both defense and government lawyers are arguing this week about the kind of immunity from prosecution that federal authorities granted Nealy in exchange for her role as a snitch in the prosecution of former Dallas City Council member Don Hill in an unrelated corruption case seven years ago. Did the grant cover her only narrowly, for crimes she might have confessed to in snitching on Hill, or did the grant reach forward in time and cover her for the crimes she is accused of now, which involve charges of funneling bribes from contractors bidding on county contracts to Price.

Going back to the Hill trial, what has struck me is that Nealy has always seemed to be the last one to know. In some of her testimony back then, she seemed to deny that she had been granted immunity, that any deal had been struck at all or promises made.

How can that be? If you have a deal not to get sent to the pen, are you not keenly aware of it? This week’s release of previously sealed documents may offer a clue.

I think Nealy really didn’t know she had immunity. She testified against Hill anyway, because she didn’t think she needed immunity. Like Hill, like the late former City Council member Al Lipscomb tried for bribery 16 years ago, Nealy didn’t think she had broken the law.

She didn’t think so because many very persuasive and impressive people told her she had not. I’m not offering that as an excuse or as legally exculpatory, but I sat through Lipscomb’s trial in Amarillo. I sat through Hill’s trial here. And I can’t stop the ghosts of those trials from invading my awareness of these new ones about to begin.

So, what was Nealy, stupid? I can tell you that she didn’t think she had broken the law, because government lawyers told her she had not broken the law. I can tell you that prominent powerful white people who were involved in the same facts and relied on the same advice were never even insulted with a subpoena.

I can tell you that a majority of the Dallas City Council thought she hadn’t broken the law and made the sign of the cross over her deal. And I’d have to say that if you put me in exactly the same spot, I guess I’d be stupid, too.

Former Dallas City Council member Don Hill, now in federal prison, diagnosed with cancer.
Danny Fulgencio
The issue of immunity for Nealy in the Hill trial had to do with one deal she helped cut to win a much-needed approval from a certain council member for a certain development project. If former Dallas City council member James Fantroy, now dead, gave his thumbs up, Nealy’s client, developer Bill Fisher, who later was a government witness, stood to score millions of dollars in federal tax subsidies.

Fantroy was black. Nealy is black. Nealy was working for Carol Reed, a powerful white political consultant hired by Fisher, who is white. In Dallas, Reed had to hire a black go-between, because … Dallas.

Fantroy sent everybody else out of his office one day and held Nealy back. He told Nealy he wanted Fisher to hire security guards to use on his multiple job sites from a company owned by Fantroy and his son. Nealy, with Reed’s eventual blessing, agreed to the deal.

In the court docs released this week, I found a reference to what happened next, which I found to be unintentionally hilarious. In real life, which I remember, my former colleague, then Mayor Laura Miller, found out about the deal the day the City Council was to vote on it. Federal prosecutors say in their document released this week that Miller, “… became upset and caused a scene.”

Caused a scene? She blew up the joint. A verbal mushroom cloud rose six miles into the sky over City Hall. Miller considered the security guard deal to be bribery. A crime. Corruption. When she got done blistering them, the rest of the council looked like Wile E. Coyote after a bomb blast.

But whoever wrote that motion for the U.S. attorney was correct. In Dallas, that’s what is called “causing a scene.” Miller caused such a scene that City Attorney Madeleine Johnson rushed forward and herded them all into a locked room for an executive session so the rest of the scene could be acted out away from public view.

When they came out, they had a deal. Fisher could hire the guards, and it wasn’t bribery. The FBI demonstrated later that Fantroy had been lobbying for this project for weeks, but on that day before the vote, he agreed to recuse himself and go to another room during the actual voting.

I don’t remember if this was one of them, but I do recall other occasions when Fantroy supposedly removed himself from votes by going into the back room, where he could follow the proceedings on a public address system.

Whenever he heard things possibly not going his way, he sneaked back into the chamber and glowered at the council from the wings until they got back on track. I still call that a “Jim Fantroy recusal.”

The feds called it bribery. They said the entire body of Fantroy’s efforts to get the development deal done and get his guards hired was so corrupt that the recusal at the end was lipstick on a pig.

But apparently no one ever said that explicitly to Carol Reed or Kathy Nealy. When I talked to Reed about the Fantroy deal right after the Hill trial, she said: "All I know is the city attorney ruled on those contracts. Whatever the city attorney said, that would be my advice.

“It's been too long ago,” she added. “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.”

Long before the indictments went down, eh? And by the way, Reed was not suffered to “get in the middle of it.” When the Hill trial opened, she was on a trip out of the country for several weeks.

But Nealy, the second banana on the deal, was called to testify. When the government began to question her about Fantroy, U.S. District Judge Barbara Lynn, who is also the judge in the upcoming trials, stopped the questioning to ask the government if Nealy had been granted immunity. Otherwise, the judge had to warn her that she had a Fifth Amendment right not to incriminate herself.

Lynn never got a straight answer and seemed oddly willing, I thought, to accept a weak one. She never asked the assistant U.S. attorneys if they could produce the precise terms of an immunity grant, preferably written, as required by the national manual of procedure for assistant U.S. attorneys.

The problem now is this: The FBI case against Price and his associates is like a set of encyclopedias. The first volumes were about Lipscomb. The middle ones were about Hill. The new ones now are about Price. But all of it grows out of the same 25-year-old campaign by the same small cadre of agents in the Dallas FBI field office to crack down on political corruption in Dallas.

The late Dallas City Council member Al Lipscomb, convicted of bribery, acquitted on appeal.
Sam Merten
Nealy is in the middle of the whole set of encyclopedias. If she was granted immunity at some point and no bright line was drawn to show when and where her immunity ended, the feds have a big problem prosecuting her now for much of anything in the Price case.

Nealy’s lawyers argue in their own documents released this week that the case law is clear: Ambiguities in an immunity grant are the government’s fault and must be resolved in the defendant’s favor. That’s why the government should put it on paper, which they did not do in this case. And why?

In its own document this week, the government quotes from the Hill trial transcript to show that Nealy knew she had engaged in a crime in the Fantroy deal and that the only immunity she had was for that particular crime, not for all the new ones in the Price indictments.

“I had some exposure,” Nealy says in the transcript. “Because we continued to — after we found out that there was a contract and continuing to talk to Mr. Fantroy, because you’re not supposed to be talking to him, and that’s what he exposed.”

But Nealy wasn’t saying that anybody ever told her she had engaged in a federal bribery count. She was talking about the stupid city of Dallas code of ethics, which is worth about two cents anyway and has always been used basically as Kleenex. The city ethics code says there’s supposed to be a “quiet period” when a contract is close to a vote, during which lobbyists can’t talk to council members. No one obeys it, and, if you do get caught breaking it, the penalty is that you have to say you are somewhat sorry.

Using that passage now to prove Nealy knew what she was getting into is disingenuous. Nealy says eight ways to Sunday in the rest of the transcript that nobody ever told her she had engaged in a federal bribery offense. In fact she’s sitting right there in court under oath with a federal judge staring down on her, and still nobody tells her.

When I read that passage in the document this week, I remembered that not only did nobody tell Nealy it was bribery, but the mayor, the city attorney and a majority of the City Council told her and Carol Reed it was not bribery, and then they all acted like the only federal offense was Laura Miller making a scene.

Nealy didn’t think she needed immunity because she didn’t think she had committed a crime. Reed didn’t either, and she got to go on vacation.

The feds thought it was a crime. The FBI did. The U.S. attorney did. So why didn’t they tell Nealy? Why didn’t they put it on paper, the way their own manual says they are required to? Why didn’t the judge close this loop at the Hill trial?

Apparently she plans to now. Judge Lynn has severed the Nealy trial from the Price and Fain trials, throwing the whole business for a loop. We’ve talked about that here already.

By the way, also in the documents this week are multiple references to our stories in the Dallas Observer about the inland port scandal. It’s all of a piece — one very long, very sad, very ugly piece reaching into the past and still hobbling us today. I will talk about the inland port tomorrow.
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Jim Schutze has been the city columnist for the Dallas Observer since 1998. He has been a recipient of the Association of Alternative Newsweeklies’ national award for best commentary and Lincoln University’s national Unity Award for writing on civil rights and racial issues. In 2011 he was admitted to the Texas Institute of Letters.
Contact: Jim Schutze