Category Archives: News – Houston Local

The future of the death penalty

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Dow_ University of Houston Law Professor David Dowís book — The Autobiography of an Execution (Twelve 2010) ñ prompted Time to ask Dow several questions about the death penalty. A couple of his answers are particularly interesting:

.  .  . I tell people that if you’re going to commit murder, you want to be white, and you want to be wealthy ó so that you can hire a first-class lawyer ó and you want to kill a black person. And if [you are], the odds of your being sentenced to death are basically zero. It’s one thing to say that rich people should be able to drive Ferraris and poor people should have to take the bus. It’s very different to say that rich people should get treated one way by the state’s criminal-justice system and poor people should get treated another way. But that is the system that we have.

And what about the future of the death penalty?

My prediction is that we’re going to get rid of it for economic reasons. We spend at least a million dollars more on a death penalty case than on a non-death-penalty case. In the U.S., where we’ve executed 1,200 people since the death penalty [was reinstated in 1976], that’s $1.2 billion. I just think, gosh, with $1.2 billion, you could hire a lot of policemen. You could have a lot of educational programs inside of prisons so that when people come out of prison they know how to do something besides rob convenience stores and sell drugs. There are already counties in Texas, of all places, that have said, this is just not worth it: let’s fix the schools and fill the potholes in the streets instead of squandering this money on a death-penalty case. You don’t need to be a bleeding heart to make that argument.

Supporters of the death penalty reason that there is nothing morally wrong about the state killing a person as punishment for murder where that person was lawfully convicted in a fair and accurate criminal justice process. But in making that moral justification the central tenet of their support, death penalty supporters are ignoring the glaring defects in the process that undermine their moral justification.

Winter Golf in The Woodlands

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The following are recent photos of the Tournament Course at The Woodlands that I recently took during a brilliant Texas morning in January with my buddies, Jerry Sagehorn and John Stevenson.

The Tournament Course is still known to most Houstonians as “the TPC” from the days when the course was known as the Tournament Players Course at The Woodlands.

Opened as The Woodlands East Course in 1978, the TPC is a wonderful design from the collaboration of Robert Von Hagge and Bruce Devlin from their time together in the late 70’s and early 80’s.

In the mid-1980’s, the Houston Golf Association and the PGA Tour arranged a licensing arrangement with The Woodlands Corporation and The Woodlands Country Club in which the East Course was transformed into a Tournament Players Course with the typical spectator mounds found on such courses. After that, the HGA moved the Houston Open golf tournament to the TPC and, for the following 18 years, the tournament enjoyed its most successful run in its long history. As a result, Shell Oil Corporation decided to become the tournament’s title sponsor, which solidified the Houston Open as one of the top second-tier tournaments on the PGA Tour.

When the HGA decided to move the Houston Open to Redstone in 2002, the license deal with the PGA Tour was terminated and the TPC reverted to The Woodlands Country Club, where it is now one of that club’s three courses and one of the seven courses in The Woodlands. A couple of years ago, the Champions Tour moved its Houston tournament to the TPC, a move that has catapulted that tournament into one of the top Champions Tour events because of the popularity of the TPC among the senior players.

The TPC is a joy to play and one of the best courses in the Houston area. From the men’s tees, it’s a pleasant 6600 yards (131 slope rating; 7000 yards and 138 slope from the tips) and is a great course to walk.  It has a wonderful variety of holes, punctuated by the final two holes — 17 (nicknamed “the Devil’s Bathtub”) and 18 – a long par 4 over water – are two of the two finest finishing holes that you will find anywhere.

I love the contrast in the photos between the light brown of the dormant Bermuda grass with the various shades of greens of the trees, winter rye-seeded tee areas and the lightly overseeded greens. Enjoy!

Update: Another slideshow of the course, this time on a cool Autumn morning with the course in full bloom, is here.

Did Rice blow it?

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RiceU_BaylorCollegeMedicine So, Rice University last week finally decided to pass on the proposed merger with Baylor College of Medicine.

In theory, the deal makes sense. Both are top-notch academic institutions with campuses within a stoneís throw of each other. Each institution would have given the other something that it needs. Baylor would have gotten the financial support of Riceís multi-billion dollar endowment, while Rice would have landed a strong scientific research and clinical care center in one of the nationís leading medical institutions, the Texas Medical Center.

Although Rice President David Leebron supported the merger, large segments of the Rice faculty and alumni opposed the deal, primarily on financial and cultural grounds. Indeed, my sense is that Leebron quit pushing the Rice Board of Trustees to approve the deal when it became apparent that a consensus of Rice constituencies were opposed to the marriage.

And Baylor clearly finds itself in precarious financial condition, not completely of its own doing. After its 54-year teaching hospital relationship with Methodist Hospital soured in 2004, and a subsequent deal with St. Lukeís Episcopal Hospital did not work out, BCM decided on a plan to go it alone and build its own teaching hospital.

However, the ambitious deal has been pretty much a disaster from the start. After floating almost $900 million in bonds to finance construction of the hospital, Baylor announced last year that it was temporarily suspending construction of the hospitalís interior as it works through its financial problems.

Meanwhile, BCM has lost over $300 million since the split with Methodist. Inasmuch as Baylorís endowment is less than a billion, those kinds of losses have placed BCMís financial condition at risk. Already in in technical default on multiple bond covenants, BCM is now facing the prospect of hiring a bondholder-required ìchief implementation officerî to oversee an overall financial reorganization. That would have been avoided if the Rice merger had succeeded.

Thus, Rice certainly had understandable reasons for passing on the deal.

Nevertheless, I wonder ñ did Rice make the right decision?

Despite its financial woes, BCM remains one of the elite medical and research institutions in the U.S. The merger would have undoubtedly brought a substantial increase in research funds in such fields as bioengineering, neurobiology, nano-biotechnology, stem cell biology and gene therapy. Although Rice would have been subsidizing BCMís financial problems in the short term, my sense is that the increase in research resources flowing to Rice over the years would ultimately make that bailout well worth it.

But even more importantly, Rice passed on an opportunity to take a calculated risk that could well have elevated Rice, BCM, the Texas Medical Center and Houston to the forefront of medical and scientific research in the world.

Despite the risks, that kind of upside doesnít come around very often. Failing to realize that is one of the key reasons why Texas has lagged badly behind states such as California and New York in the development of Tier 1 research institutions and all the benefits that such institutions provide to the state and its communities.

Thus, Rice is keeping its chips and betting that it can develop its scientific research just fine without BCM. But if I were to place a bet on which institution is closer to the cutting edge of such research after the next 25 years, Iím still putting my chips on Baylor.

Why bother?

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texas-bowl-logo-295 After enduring another holiday season of mostly bad college football bowl games, Iíve been thinking about Houstonís own Texas Bowl.

Frankly, why bother with it?

As this recent University of Missouri release notes, Mizzou not only got its collective ass kicked by a feisty Navy team in the game, but the university also lost money in participating in the game even after cutting corners.

That Missouri lost money is not surprising given that the Texas Bowlís payout is among the most paltry of any of college footballís post-season bowl games.

The Texas Bowl pays out a total of $1.250 million, which puts the bowl game in the bottom third among the 34 bowl games in terms of payout (ìTier 3î in bowl genre). That compares to the $2.2 million and $3 million payouts that Tier 2 bowls such as the Alamo and Cotton Bowls pay to its participants and the $17 million that each of the BCS Bowl games pays to its participants.

Due to its limited payout, the Texas Bowl has no negotiating leverage in attempting to persuade conferences to send one of their better teams. Accordingly, they usually get the sixth or seventh best team from one of the major conferences.

Houstonís bowl game has always struggled for funding. Even back during the days of the Astro-Bluebonnet Bowl in the Astrodome, the folks running the bowl game have never been able to snare the big-fish title sponsor necessary to elevate the bowlís stature. The Houston Open golf tournament found itself in a similar position for years until it persuaded Shell to become the tournamentís title sponsor. Despite a few blips, the Shell Houston Open has become a solid second tier tournament on the PGA Tour schedule.

Whatís too bad about the Texas Bowlís problems is that it really could be a good bowl experience, at least on par with San Antonioís Alamo Bowl or Dallasí Cotton Bowl.

My old friend Dan McCarney, who currently is one of Urban Meyerís top assistants at Florida, coached Iowa State in the Texas Bowl several years ago. He said that the Reliant Park facilities were as good as any bowl game that he had ever seen ñ the teams used one locker room the entire week for their practices and the game. The teams loved not having to practice at a different site and then move to the stadium on gameday.

Moreover, the Houston business community routinely buys large blocks of tickets to the game (even if most of those tickets go unused). Finally, with the Johnson Space Center, the Medical Center, the Museum District, the Theater District and many fine restaurants and clubs, Houston certainly fits the bill of a place that would be a fun destination for a bowl game.

But whatís the purpose of promoting a bowl game that has mostly second-rate participants who view the game as a booby prize?

If the Texas Bowl canít find a title sponsor that would elevate the game at least to the second tier of bowl games, then itís time to pack it in.

There is nothing wrong with declining to waste time on being an afterthought. 

Update: Kevin Whited passes along this Chronicle article from several years ago on Houstonís bowl history.

Game, Set, Match — Houston

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mcgrady-dunk O.K., so the Cowboys are doing alright so far in this seasonís NFL playoffs and the Texans, as usual, are in their annual ìwait until next seasonî mode.

But there are other areas in which Houston simply throttles Dallas, hands down.

For example, in connection with its mandate to promote Houston, the Greater Houston Convention and Visitorís Bureau released the video below late last year. Featuring the edgy local band The TonTons, the video does a very nice job of providing an attractive introduction to Houston:

But I didnít realize just how good the GHCVBís video was until I came across the abominable video below that the City of Dallas recently produced for the Professional Convention Management Association:

Key tip to Dallas ñ you are trying way too hard.

That wild Landry’s ride continues

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Fertitta2 Owning shares of stock in Houston-based Landry’s Restaurants, Inc. has never been for the faint-hearted.

First, Landry’s board of directors failed to obtain a standstill agreement from Landry’s chairman and CEO, Tilman Fertitta, as his failed take-private offers over the past couple of years that would have prevented Fertitta from acquiring majority stock ownership in the company while its stock tanked.

Then, the Pershing Square Capital hedge fund entered the picture, bought up a bunch of Landry’s shares and announced that it opposed Fertitta’s most recent buyout offer.

Now, as Steve Davidoff explains, it appears that Fertitta has not been complying with his board’s instructions in making public disclosures about his buyout offers.

At least partly as a result, counsel for a special committee of Landry’s board that was created to negotiate Fertitta’s buyout offers resigned, apparently in protest.

As a result of this disclosure and other developments, don’t be surprised if the Securities and Exchange Commission comes knocking on Landry’s door to look into these developments.

And Tilman Fertitta’s firm grip on Landry’s from its inception may be slowly slipping away.

They got how much? For doing what?

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elpaso Just when it looked as if progress was being made, the harsh reality of the severe trial penalty and the absurd severity of punishment parameters in white collar criminal cases reared its ugly head.

This time its the harsh sentences that U.S. District Judge Melinda Harmon handed down on Thursday to three former El Paso Natural Gas Company natural gas traders — 14 years to one defendant and 11 years and 3 months to the other two. They were convicted of multiple counts fraud and false reporting in connection with what has become known in Houston as "the trader cases."

The severity of the sentences is mind-boggling when compared with the nature of the alleged "crime."

The government alleged that the three traders provided false information to natural gas industry publications such as the Inside FERC Gas Market Report, which use data from traders to calculate an index price of natural gas.

Inasmuch as movement in index prices can theoretically affect the level of profits that traders can generate, the government’s theory was that the defendants provided false information so that they and El Paso could reap higher profits on their trades.

However, the government never proved that the magazines actually used the false information that the defendants provided to them or that the information actually affected the natural gas markets at all. Indeed, a myriad of market factors affect natural gas prices, as with the price of any commodity.

That was no problem for prosecutors, though. The government contended that the market effect of providing the false information was irrelevant and that the prosecution needed only to prove that false information was reported to the magazines in order to make a gain a conviction of the defendants. And they got away with it.

So, key point to all businesspeople — don’t ever provide any information to a publication about your business that could be construed to be false. It really doesn’t make any difference whether the false information affects your company. The government contends that the mere transmittal of the false information is the crime.

Meanwhile, three relatively young men (the oldest is 49) with families and promising careers are now facing over a decade of imprisonment for the "crime" of reporting false price information to a magazine.

Just what is the purpose of this?

Noticing Injustice

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Following on a point made in earlier posts, the Chron’s Mary Flood reports on the indefensible conditions that the federal government has imposed on R. Allen Stanford as he awaits trial on criminal fraud charges arising from the demise of Stanford Financial Group.

Sort of reminds you of the way in which certain other countries handle the prosecution of business executives, doesn’t it?

Ironically, while rightfully questioning whether Stanford is being given a fair shake, the Chron continues to avoid examining its equally dubious record in creating a presumption of community prejudice against Jeff Skilling.

Witch hunts do not reflect well on the participants.

Fertitta gets squeezed this time

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Looks as if Tilman Fertitta is about to endure a bit of his own medicine.

As this post from a couple of months ago explains in detail, Landry’s Restaurants, Inc. shareholders have had a wild — and mostly bad — ride over the past several years as Fertitta (who is the company’s founder, CEO and chairman) tried to figure out a way to finance taking the company private.

Because Landry’s board failed to obtain a standstill agreement from Fertitta while he put shareholders through a series of failed buyout offers, Fertitta increased his ownership stake in Landry’s from approximately 39% to 55% as the company’s stock fell as low as $5 per share. As you might expect, Fertitta and the Landry’s board are defendants in a shareholder lawsuit in connection with that oversight.

Finally, after shareholders and the markets widely panned Fertitta’s Saltgrass Steakhouse spinoff proposal in September, the Landry’s board tentatively approved an offer from Fertitta to buy the balance of Landry’s shares for $14.75 per share. Compared to the spinoff proposal, Fertitta’s cash offer looked relatively good.

There is just one small problem with Fertitta’s proposal this time — under Delaware corporate law, Fertitta had to agree that his proposal is subject to a requirement that a majority of the Landry’s shares that Fertitta does not control have to approve the deal.

Enter William Ackman and his Pershing Square Capital Management hedge fund.

In an Schedule 13D filed with the SEC this past Friday, Pershing and its partner William McGuire (the Borders Group chairman) announced that they had purchased just under 10% of Landry’s outstanding shares and that they hold derivatives contracts that could hike the share to almost 14% of the oustanding shares.

And while they were at it, Pershing and McGuire announced that they opposed Fertitta’s $14.75 per share buyout offer.

So, Fertitta would appear to have only two choices. Either pull his proposal off the table — and risk a wholesale shareholder revolt of his actions that have depressed the company’s stock price over the past several years– or raise his offer to satisfy Pershing.

And even if he decides to meet Pershing’s asking price, where is Fertitta going to find the financing for his proposal? It’s not as if the financing markets have been particularly bullish on the company over the past couple of years.

Hold on tight, Landry’s shareholders. Your wild ride is not over yet.

The NY Times Steve Davidoff has more.

John O’Quinn, R.I.P.

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The Houston legal community remains in shock over the death yesterday in a car accident of famed trial lawyer, John O’Quinn. He was 68 years old at the time of his death.

O’Quinn was a remarkably talented plaintiff’s lawyer and became one of the wealthiest attorneys in the country as a result. And a controversial one at times, too.

But those who only knew John through news reports never knew the man.

John had a heart as big as Texas, as reflected by his generous donations over the years to the University of Houston and its Law Center, Texas Medical Center institutions, and numerous other charitable organizations.

Moreover, John’s big heart extended into legal cases, too. Most recently, John took on the case of former mid-level Dynegy executive Jamie Olis, whose criminal case epitomizes the brutal nature of the government’s criminalization of business in the aftermath of Enron’s demise.

After taking on the case, John told me that his review of many of my blog posts on the Olis case was one of the reasons that he decided to take on the case. He never received a dime for the work he did on the case, but he didn’t care a lick. He simply was appalled by what the government had done to a decent young man and his family, and he was intent on doing something about it.

My most recent contact with John was at University of Houston Law Foundation board meetings, which he attended faithfully for many years (he was the law school’s largest benefactor). John was a delight to work with at such meetings, intensely interested in what was going on at the law school, but always wonderfully good-natured about the inherent limitations of such boards to do much more than raise money and encourage the Dean to hire good people.

My lasting memory of John will be leaving our last such meeting together, talking about the Olis case as we walked to our cars. We observed to each other on just how difficult it had become to be a wealthy businessperson in America. He cracked that it was almost enough to turn him into a criminal defense attorney.

Make no doubt about it, John O’Quinn was one of the most talented trial lawyers of his time. His preparation regimen for trial was legendary, and his ability to connect with jurors was the best that I have ever seen in the courtroom.

I will miss John very much.

Funeral arrangements for John O’Quinn:

Viewing Tuesday, November 3, 4:00pm to 8:00pm
George H. Lewis Funeral Home
1010 Bering Drive
Houston, Texas 77057
(713) 789-3005

Funeral Wednesday, November 4, 11:00am
Second Baptist Church
6400 Woodway
Houston, Texas 77057
(713) 465-3408

Update: Links on Q’Quinn’s life and death:

John Council and Brenda Sapino Jeffreys

Rick Casey

Observations of colleagues

O’Quinn and the medical community (see also here)

Q’Quinn’s environmental legacy

Q’Quinn’s real estate investments

O’Quinn’s car collection with Tim Spell’s anecdotes

O’Quinn’s obituary

Mary Flood on O’Quinn’s funeral