Political Corruption Trial Kicks off in Dallas

February 28, 2017
By David Lee

DALLAS (CN) – Federal jurors heard sharply different portrayals of Dallas County Commissioner John Wiley Price on Monday during opening statements in his highly anticipated government corruption trial.

Assistant U.S. Attorney Nicholas Bunch portrayed Price, 66, as a self-interested crook who took more than $1 million in bribes for his influence and votes on the powerful Commissioners Court. He accused Price of hiding the bribes and failing to report them on state-mandated financial disclosure statements or in his federal tax returns.

Prosecutors say Price took more than $950,000 in cash, cars and real estate from political consultant Kathy Nealy in exchange for support for her clients, and more than $200,000 in cash from a clothing store operated by Price’s assistant Dapheny Fain and an art gallery operated by his friend Karen Manning.

Price was charged in July 2014 with conspiracy to commit bribery concerning a local government receiving federal benefits, conspiracy to defraud the IRS, six counts of deprivation of honest services by mail fraud, and three counts of subscribing to a false and fraudulent income tax return.

Manning and political consultant Christian Campbell pleaded guilty in 2015 and will testify against Price. Nealy will be tried separately. Fain is being tried alongside Price. Her attorneys elected to give an opening statement later in the trial.

Prosecutor Bunch repeatedly told the jury to “follow the money,” accusing Price of feeling “entitled to something more” than his $100,000 annual salary.

“When you strip away the details, the evidence is simple,” Bunch said. “Follow the money – all of it points to greed, corruption and lies.”

Defense attorney Shirley Baccus-Lobel, of Dallas, rejected the bribery accusations as “ludicrous” and “preposterous,” describing Price as fiscally conservative in spending public money.

She said Price has made many political enemies during his 30 years in office and is being targeted for that. Price is well known for leading protests against Parkland Hospital and the Dallas Police Department regarding dissatisfaction with minority hiring. He made headlines last year for a shoving match at a gospel radio station during a debate with other Democratic nominees for his job that devolved into personal attacks.

“He is not extravagant … he is flamboyant. That is his schtick,” Baccus-Lobel told the jury. “Behind that persona is the most diligent, devoted public servant you will ever see in your life.”

She downplayed the alleged exchanges of money with the three women, acknowledging that the unmarried Price “has a fondness” for women, with whom he acts much like a husband.

“We are not going to hide that,” she said.

Baccus-Lobel denied that Price “belongs to anyone,” describing his relationship with Nealy as the same as any other between a lobbyist and elected official.

“Whether you like it or not, lobbying and political consulting are legitimate businesses in the United States,” Baccus-Lobel said.

She described Price as a loyal friend who accepted calls for help from many people, not just Nealy.

Baccus-Lobel criticized the years-long gap between the alleged crimes and the prosecution,  saying it makes presenting a defense harder due to passage of time. She said many of the alleged crimes in the indictment are “old stuff” that are excluded by statutes of limitations.

Prosecutors called their first witness after opening statements.

County Administrator Darryl Martin testified that Price is one of the “hardest working” people on the five-member administrative body. He described the county’s process for soliciting and selecting outside bids for contracts, saying that no county official is to give information to a bidder about a competitor’s bid. Prosecutors say Price fed such restricted bid information to Nealy for her clients’ benefit.

The lone Republican member of the Commissioners Court tried to have Price suspended immediately after his indictment, but the measure died for lack of a second. Price was reelected comfortably in 2012 after the FBI investigation became public, and was reelected again in 2016 as he awaited trial.

Former BearingPoint executive Helen Tantillo, of Austin, was sentenced to six months in federal prison in April 2016 for lying to federal officials in the Price investigation.

A federal jury in Austin concluded that Tantillo falsely told FBI agents that a temporary $10,000 increase in consulting fees paid to Campbell “was to make a charitable donation to the favorite charity” of an unidentified Dallas County commissioner. Prosecutors said Tantillo knew the money was, in part, to pay Nealy.

Opening statements in Price’s trial were originally set to begin last Thursday, but were delayed several hours due to a juror becoming ill and needing hospitalization. A second juror requested Friday off to care for an ill relative.

The trial is expected to last for more than four months.

From Courthouse News.


ZeniMax Software Wants $1 Billion From Facebook

February 27, 2016
By David Lee

DALLAS (CN) – Emboldened by a $500 million judgment against Facebook’s Oculus VR subsidiary, software publisher ZeniMax asked a federal judge for $1 billion in damages and a halt to sales of Oculus Rift virtual reality headsets that use its code.

The maneuver puts more pressure on Facebook to enter into a licensing agreement with Rockville, Md.-based ZeniMax to keep selling Rift.

ZeniMax asked for $4 billion in damages at trial in January. A federal jury concluded that Oculus did not steal trade secrets, but awarded $500 million for breach of contract and trademark and copyright infringement.

ZeniMax and subsidiary id Software, of Richardson, Texas, sued Oculus and co-founders Palmer Lucky and Brendan Iribe in May 2013, two months after Facebook purchased Oculus for $2 billion. ZeniMax claims Oculus violated a nondisclosure agreement to create Rift and that Luckey relied on the help of id Software employees during Rift’s development.

ZeniMax wants an additional $100 million from Oculus, $100 million from Luckey and $300 million from Iribe in enhanced damages for false designation of origin, according to its proposed final judgment and permanent injunction.

Luckey faced intense criticism during direct examination, with ZeniMax’s attorneys suggesting he was just a hobbyist tinkering in his garage who lacked the technical ability to develop Rift on his own.

Luckey testified that when he demonstrated his headset to investors in 2014, he executed the plaintiffs’ code through the headset but did not take the source code itself.

ZeniMax said its request for a permanent injunction blocking sales of Rift was “expressly authorized by defendants in the NDA [nondisclosure agreement] that Luckey signed.” and which they violated, according to a 31-page memorandum of law in support of the motion for a permanent injunction.

ZeniMax said that while the jury award is “substantial,” it is not enough incentive for the defendants to stop infringing. It added that Facebook COO Sheryl Sandberg said the $500 million verdict is “not material” to the company’s finances.

ZeniMax argues in the alternative that if the court does not grant a permanent injunction, it should grant it an “ongoing royalty” for the defendants’ continuing use of its intellectual property.

“The only alternative would be for ZeniMax to file a new action each time defendants renew their infringing behavior going forward, which would be an inefficient use of the parties’ and the court’s resources,” the memorandum states. “The court would be free to determine an appropriate royalty rate and period based on equitable principles, with or without input from the parties.”

Oculus spokeswoman Tera Randall told Reuters on Thursday that the company is planning to ask the judge to set aside the “legally flawed and factually unwarranted” verdict.

During the three-week trial, Facebook CEO Mark Zuckerberg testified that the purchase price for Oculus was closer to $3 billion due to additional payments to keep workers, and that the owners valued the company at $4 billion.

From Courthouse News.

Oklahoma Town Repeals ‘Footloose’ Ordinance

February 24, 2017
By David Lee

(CN) – A small Oklahoma town repealed a long-standing “Footloose” ordinance on Wednesday that banned public dancing within 500 feet of a church or public school.

In a 5-0 vote, the Henryetta City Council unanimously repealed the 1970s-era ordinance during its regular meeting.

“Dancing is legal again in Henryetta, Oklahoma,” Mayor Jennifer Clason proclaimed as the capacity crowd applauded. Several people in the audience wore pink t-shirts proclaiming, “Keep calm because dancing is not a crime.”

Reminiscent of a fictitious town portrayed in the 1984 Kevin Bacon film “Footloose” in which dancing was banned, the ordinance caused the cancellation of a Valentine’s Day dance at Rose LaVon’s Marketplace this year because the business is 300 feet from a church.

Marketplace owner Joni Insabella said the ordinance was brought to her attention by a “party pooper.” She thought it was a joke.

“I didn’t think she was serious about it because she then said we were lawbreakers and breaking the law and some other not-very-nice things,” she told the Tulsa World newspaper. “We are kind of expecting Kevin Bacon to show up at any time and we are just going to get footloose with him if he does.”

Insabella said she “can’t imagine” why so many members of the media from out of town have been interested in the ban.

“The only thing I can think of is there’s probably very few towns left in the U.S. that have an ordinance like this,” she said.

Clason, 45, said that the dance ordinance has not been enforced during her lifetime.

“We had proms, we had dances, we actually had Teen Town here in the civic center which is less than 100 feet from the church,” she said.

Henryetta is 60 miles south of Tulsa, in Okmulgee County. Its most famous residents include Dallas Cowboy quarterback Troy Aikman, who went to high school there, and professional cowboy Jim Shoulders.

From Courthouse News.

Oil Fortune Heir Says Fmr. District Attorney Ordered Break-In

February 23, 2017
By David Lee

DALLAS (CN) – An heir to the Hunt oil fortune sued former Dallas County District Attorney Craig Watkins on Tuesday, claiming he used his office’s investigators as an “armed goon squad to solve a burgeoning legal and political problem.”

Albert G. Hill III says Watkins had him indicted in March 2011 on “bogus charges” of mortgage fraud after being bribed by Hill’s family members and others to frame him and to “ensure his defeat in various civil lawsuits in state and federal court.”

“But that scheme was beginning to unravel and Mr. Watkins was desperate to cover his tracks,” the 10-page complaint, filed in Dallas Federal Court, continues.

Hill is the great-grandson of Texas oil tycoon H.L. Hunt. He sued several of his relatives in county court in 2007 for fraud, claiming he received no benefits from trusts Hunt set up for his children.

“Mr. and Mrs. Hill moved to Atlanta to get away from the harassment and political corruption in Dallas, but the reign of terror continues to this day, so Mr. Hill has filed this case to put an end to it,” Tuesday’s complaint states.

Hill says the criminal case against him was “falling apart” and alleges Watkins sent investigators to his Highland Park home in February 2013 “in a desperate (but unsuccessful) attempt to gain leverage” before a hearing the next month.

According to the complaint, “The local police did not intervene because the investigators said they entered the home pursuant to a search warrant, but in reality the investigators had no search warrant. Instead, the investigators entered the home at the personal direction of then-District Attorney Craig Watkins.”

Hill says all charges against him were dropped during the March 2013 hearing “because of egregious misconduct” by Watkins and his staff.

“Mr. Watkins’ former chief investigator [Anthony L. Robinson], meanwhile, was wiretapped by the FBI and pleaded guilty to accepting a $200,000 bribe in another case,” the complaint states.

At that hearing, the trial judge wanted Watkins to answer questions under oath about the alleged prosecutorial misconduct. Watkins took the stand but declined to answer questions, citing attorney-client and work-product privileges.

The state’s highest criminal appeals court, the Texas Court of Criminal Appeals, ruled in Sept. 2016 that the trial judge did not abuse her authority when she forced Watkins to answer the questions under oath.

Now in private practice, Watkins did not immediately respond to an email message requesting comment Wednesday afternoon.

Along with Watkins, Hill sued the Albert Hill Trust and Branch Banking & Trust Company, as well as 17 others – including family members – he claims were involved in the misconduct.

Hill seeks actual and punitive damages for breach of fiduciary duty and tortuous interference. He is represented by Ty Clevenger in New York.

One of Hunt’s 15 children, Lamar Hunt, helped found the American Football League and owned the Dallas Texans, which later became the Kansas City Chiefs of the National Football League. He also helped found Major League Soccer and owned the Columbus Crew and FC Dallas.

A Santiago Calatrava-designed bridge spanning the Trinity River west of downtown Dallas is named after another of Hunt’s children, heiress and philanthropist Margaret Hunt Hill.

From Courthouse News.

Texas Doctor Gets Life in Prison for Botched Surgery

February 21, 2017
By David Lee

DALLAS (CN) – A Dallas County jury deliberated for one hour Monday before sentencing neurosurgeon Christopher Duntsch to life in state prison for maiming an elderly patient in a botched surgery.

The 12-member jury convicted Duntsch, of Plano, on Feb. 14 of injury to an elderly person – an exceptionally rare conviction of a medical doctor for substandard care. He was arrested in July 2015 and indicted on five counts of aggravated assault causing serious bodily injury.

Dallas County District Attorney Faith Johnson said after sentencing that her prosecutors “have done something historic” and that she is “so elated” with the life sentence. She said it was the first conviction of its kind in Dallas County.

“We hope [the victims] will just have a little joy to know that the person that did this thing to them will be serving a life sentence,” Johnson said.

On Friday, a surgeon who turned in Duntsch to state regulators for maiming several patients testified that the Texas Medical Board was unable to stop him.

Dr. Randall Kirby told jurors he sent information to the state agency about at least five of Duntsch’s botched surgeries. Kirby filed the complaint after he witnessed the spinal surgery of Jeff Glidewell in 2013. He testified that it looked like Duntsch “tried to decapitate” Glidewell.

“The Texas Medical Board is not set up to stop someone like Christopher Duntsch,” an exasperated Kirby testified. “It is inconceivable that someone like this would get out into practice.”

Kirby said Glidewell would have become quadriplegic had doctors not done another operation to stabilize his spine. They also had to repair his esophagus and remove a sponge left inside him.

“This has not happened in the United States of America, where you can do such a procedure and have such complications: leave a sponge, knock a hole in his esophagus, take out the recurrent laryngeal nerve, take out the vertebral artery and just leave him there without any attempt to transfer,” Kirby testified.

Jurors wept during the three-day sentencing phase as they heard emotional testimony from Duntsch’s patients. Photographs of several of Duntsch’s maimed and killed patients were displayed in the courtroom next to large sheets of paper listing each of their post-surgery ailments.

Patient Jacqueline Troy testified Friday that she nearly died after Duntsch operated on her in 2012 to relieve back pain from a car collision. She said her esophagus was pinned under a surgical plate implanted near her spine, her trachea was punctured and a feeding tube allowed food to get into her lungs.

Her husband, Tom Troy, testified that he feared she would die after the surgery.

“She did not know what was going on,” he said. “She did not know what was happening to her.”

Dr. Martin Lazar, a neurosurgeon testifying for the prosecution, said Troy’s surgery was a “disaster, an unmitigated disaster.” Lazar said he suspects the surgeries were performed by someone “who has no conscience, no empathy” and that Troy’s surgery was unnecessary to begin with.

“This has the appearance that the patients were treated like cannon fodder. They were just there to be operated on,” Lazar testified Friday.

Lazar said Duntsch apparently thought he had found a tumor in Glidewell’s neck, though it was really a muscle.

Lead prosecutor Michelle Shughart thanked the Dallas-area medical community for their assistance.

“We want to thank them so much for teaching us everything we needed to know on how to prosecute this case,” Shugart told reporters. “We did this for the victims, for what they have suffered, and we want everyone to know this will not be tolerated.”

Shughart said the list of victims “went on and on,” and that if had been only a few patients, it would be a civil malpractice matter instead criminal.

When asked if other parties are responsible for not having stopped Duntsch, Johnson said several civil cases filed by his victims are pending against four area hospitals.

In one case, against Baylor Health Care System, a patient claims fellow doctors called Duntsch “dangerous” and “the worst surgeon they had ever seen.” That patient claims Duntsch operated on his incorrect body part. Patients also have claimed that Duntsch operated after drinking alcohol and taking cocaine.

“The defendant was not the only one that was a part of this,” Johnson said. “He has taken the criminal blame.”

From Courthouse News.

Texas Law Blamed for Racial Segregation

February 17, 2017
By David Lee

DALLAS (CN) – A Texas law preventing cities from banning federal housing voucher bias discriminates against black people by keeping them out of white neighborhoods, a low-income housing advocacy group claims in court.

Dallas-based Inclusive Communities Project sued Texas Gov. Greg Abbott on Wednesday in Dallas federal court, claiming a section of state law passed in 2015 violates minorities’ civil rights.

Texas Local Government Code 250.007 states, “A municipality or county may not adopt or enforce an ordinance or regulation that prohibits an owner, lessee, sublessee, assignee, managing agent, or other person having the right to lease, sublease, or rent a housing accommodation from refusing to lease or rent the housing accommodation to a person because the person’s lawful source of income to pay rent includes funding from a federal housing assistance program.”

ICP says federal housing vouchers are used most heavily in minority areas in Dallas.

“Most of the multifamily landlords with units that can be rented at voucher program rents in white non-Hispanic areas refuse to rent to voucher households,” the 31-page complaint states. “There is an unmet demand by voucher households for dwelling units in these areas. The multifamily landlords with units that can be rented at voucher program rents and that rent to voucher households are disproportionately located in predominantly minority areas.”

ICP argues the law allows landlords to deny housing to voucher families who can pay the rent and “for whom there are no legitimate business reasons not to accept” as tenants.

“By permitting the multifamily landlords in white areas to discriminate solely on the basis of participation in the voucher program, the statute excludes the predominantly black voucher households from white areas,” the complaint states. “The statute segregates those households in minority concentrated areas that are marked by conditions unequal to the conditions in the areas from which they are excluded. The statute has the intent and the effect of perpetuating racial segregation.”

About 86 percent of voucher participants in Dallas are black, according to ICP.

The group said that before the law was enacted, Dallas passed an ordinance in 2014 that banned discrimination against voucher households, making more units in white neighborhoods available to ICP’s clients.

Earlier that year, city officials entered into a settlement with the U.S. Department of Housing and Urban Development to enact the ordinance after the agency investigated segregation claims regarding the redevelopment of 1600 Pacific, a proposed apartment development in the downtown central business district.

Gov. Abbott’s office did not immediately respond to an email message requesting comment Friday.

ICP seeks declaratory judgment for alleged violations of the 14th Amendment and the Fair Housing Act. It is represented by Michael M. Daniel with Daniel & Beshara in Dallas.

The lawsuit comes six months after a federal judge dismissed the nonprofit’s federal lawsuit against Texas’ Low Income Housing Tax Credit program. Filed in 2008, that lawsuit claimed a law giving the state discretion in awarding housing credits was ultimately discriminatory. It cited a study by the Texas Department of Housing and Community Affairs that found a disproportionate allocation of credits to areas of “above average minority concentration and below average income levels.”

U.S. District Judge Sidney Fitzwater found that “ICP has not isolated and identified the specific practice that caused the disparity in the location of low-income housing.”

From Courthouse News.

Attorney General Paxton to Face Two Felony Trials

February 17, 2017
By David Lee

McKINNEY, Texas (CN) – Texas Attorney General Ken Paxton will face two criminal trials on felony charges of securities fraud and failing to register with state securities regulators, prosecutors said Thursday at a pre-trial hearing. He faces up to 99 years in state prison if convicted.

Paxton’s attorneys appeared surprised by the announcement before state District Judge George Gallagher.

Defense attorney Dan Cogdell, of Houston, shook his head as he complained that a second trial will “either double or triple” the cost to Collin County taxpayers.

“I think from a judicial resources standpoint, given the fee structure that is in place, that is absurd,” Cogdell told the judge. “We are not opposed, and we request that he be tried together.”

Special prosecutors Kent Schaffer and Brian Wice said they want to try Paxton on a third-degree felony count of failing to register with the Texas State Securities Board first, then on two first-degree felony counts of securities fraud. He was indicted by a Collin County grand jury on August 2015.

Schaffer said the failure to register charge will make for a “straightforward, simple case.” He said the other trial will be “much, much longer” with several witnesses and transactions for to a jury to contemplate.

“There is nothing in common except the defendant,” Schaffer told reporters after the hearing. “So for people sitting on the jury, it’s a much more confusing situation.”

Paxton is accused of failing to tell investors in McKinney-based technology firm Servergy that he would earn commissions on their money, and of lying to them that he was investing in the company.

Judge Gallagher declined to rule immediately on the prosecutors’ request to change venue for trial, saying he will “at least try to choose a jury” in Collin County.

Prosecutors called several witnesses to support their claims that Paxton has engaged in a 22-month long “crusade” to taint the jury pool and discredit his accusers and the prosecution.

“The state of Texas cannot get a fair and impartial trial in Collin County. Neither can the victims it represents. This issue is simply not in doubt,” the 57-page motion to change venue states. “Paxton’s posse of spokesmen, supporters and surrogates – a clique herein collectively referred to as ‘Team Paxton’ – has embarked on a crusade clearly calculated to taint the Collin County jury pool.”

Prosecutors called J.D. Miles, a reporter with CBS-affiliate KTVT, who conducted an interview with former U.S. Senator Rick Santorum, R-Penn., who was critical of the case against Paxton. Miles denied being a part of a conspiracy to taint the jury pool.

Prosecutors also called Paxton consultant Wayne Dolcefino, a former reporter with ABC-affiliate KRTK-TV in Houston. Dolcefino denied that Paxton’s defense attorneys asked him to leak confidential Texas Rangers reports to a blogger. Dolcefino denied that he would have leaked the reports had he known it was illegal, stating he thought the reports were public record.

Paxton’s first trial is set to begin on May 1, with jury selection beginning on April 20.

Paxton tried and failed to get the cases thrown out, arguing the failure to register charge is from a “vague” and invalid state law.

He argued the securities fraud charges should have been voided when a judge presiding over the grand jury asked for “volunteers” who were “willing to serve” on the grand jury.

Gallagher rejected those arguments. Subsequent appeals to the Fifth Court of Appeals and the Texas Court of Criminal Appeals were unsuccessful.

From Courthouse News.