Mistrial declared in Cleveland corruption trial related to Houston criminal investigation

MayorBrown3.jpgNot only are a couple of former officials in the administration of former Houston Mayor Lee P. Brown admitted crooks (earlier posts here, here and here), they are apparently not very persuasive witnesses, either.
The Chronicle’s Dan Feldstein has been doing a good job of connecting the dots in this developing story, the latest chapter of which has been playing out in a public corruption trial in Cleveland, Ohio. In his latest article, Mr. Feldstein reports that a federal judge in Cleveland declared a mistrial Tuesday after a jury deadlocked on most bribery charges against Cleveland area entreprenuer Nate Gray, who is the person from whom two former Houston officials — former Brown administration chief of staff Oliver Spellman and building services director Monique McGilbra — testified that they took cash and gifts. The retrial of the case will begin on August 8.
During the trial, an F.B.I. agent testified that Justice Department officials in Houston are continuing to pursue an investigation that is related to the Cleveland prosecution. It is not known at this time whether any other former Brown administation officials have been named as targets of that investigation.

Amegy Bank is a takeover target

Amegy logo.gifHouston-based independent bank Amegy Bancorporation, Inc. — known until recently as Southwest Bank of Texas — is the subject of a takeover battle between Birmingham, Ala.-based Compass Bancshares Inc. and Salt Lake City-based Zions Bancorp, according to the Houston Business Journal (article not yet online). The competition for Amegy will likely be decided within the next week.
Amegy is a relatively small bank holding company with a market capitalization of $1.6 billion and first quarter net income of $about $17 million, but it is one of the few remaining independent banks in the growing and attractive Texas retail banking market. Amegy has about 75 branches in Texas that are located primarily in the the Houston and Dallas metro areas.
The Amegy is the latest in a series of big bank acquisitions in the Texas banking market. Those acquisitions have included Wachovia Corp.’s $13.7 billion acquisition of SouthTrust Corp. and Citigroup, Inc.’s purchase of First American Bank SSB.
Compass is better known in Texas than Zions, but is actually a slightly smaller bank holding company. Compass has about 400 branches in six states in the South and Southwest, about a third of which are in in Texas. Compass has a market capitalization of about $5.6 billion on reported assets of $28.8 billion and reported first quarter net income of just under $100 million. Zions has roughly the same number of branches as Compass, but they are based in eight Western states. Zions has a market cap of $6.6 billion on assets of about $32 billion, and reported first quarter net income first-quarter net income of $110.2 million.
Update: Zions appears to the winner.

The Talented Mr. Munitz

munitz1.jpgAlmost thirty years ago, the University of Houston Board of Regents was faced with a difficult decision — replacing longtime UH president Philip G. Hoffman.
President Hoffman was the quintessential tough act to follow. The unusual administrator who was respected by faculty, administrators, and regents alike, President Hoffman sheparded UH during the era from early 1960’s to the late 1970’s as the university transformed from a sleepy city college into Texas’ first dynamic urban university. An example of President Hoffman’s influence is the fact that, when he took office in 1962, UH was admitting its first minority student and, when he retired as UH president in 1977, UH had become Texas’ most fully-integrated state university by far. Other accomplishments during his tenure included reorganization of UH’s administration into that of a major university, completion of the university’s first real master plan for campus development, implementation of the initial stages of the University of Houston System of campuses, and overseeing the rise of UH’s athletic teams into national powers.
munitz2.jpgSo, given President Hoffman’s accomplishments and stature, the UH Board really needed to make a splash in naming his replacement. Their choice? 35 year-old wunderkind, Barry A. Munitz.
Mr. Munitz was an interesting choice. Hired a year or so earlier as Vice-President and Dean of Faculties at UH’s central campus, the young Mr. Munitz and his glamorous wife cut a sophisticated and trendy swath through UH social circles. The theory behind Mr. Munitz’s appointment was that he represented the new wave of college administrator who encouraged ties between the business and university communities.

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More on the black hole that is Metro

metroraillogo4.gifIn the “could-it-possibly-be-any-worse” department, this Rad Sadlee/Chronicle article reports on the just-released external audit of Houston’s Metropolitan Transit Authority. It’s not a pretty picture:

Comparing Metro’s numbers for fiscal years 2001 and 2004, the audit shows a 29 percent rise in operating costs, to $304 million, and a 36 percent increase per passenger boarding. On the income side, Metro’s annual report shows fare revenue has hovered around $46 million a year since 1995.
The report says ridership slipped 5 percent in the three years, from 100 million yearly boardings to 95 million, despite a one-year bump in 2004 when 5 million boardings on the new MetroRail line offset the loss of 3 million on buses. Most of the loss was on local and express routes, with Park & Ride numbers holding steady.

This less-than-inspiring performance is after Metro plunked down $325 million to construct the underutilized 7.5 mile Red Rail Line from downtown to Reliant Park and Metro’s announcement from a little over a month ago that the agency plans to spend another $104 million on the Red Line — less than three years after completion of the project — to double the number of trains and fix problems caused by construction errors. Then, as if to jolt into perspective the economic absurdity of all of this, Metro and public officials recently announced a modified public transit plan in which Metro puts up $676 million (in addition to the $325 million already spent on the Red Line) in return for an additional $1 billion in federal matching funds. Given how poorly Metro has invested public money to date makes the details of how Metro intends to spend that additional money almost an afterthought, but Anne Linehan over at blogHouston.net and Tory Gattis at Houston Strategies have done a good job of analyzing that issue. By the way, blogHouston.net’s compendium of Metro posts that Ms. Linehan and Kevin Whited have prepared is the flat-out best resource on the web to track what Metro is doing.

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Sometimes these things get overlooked on holiday weekends

TD3.gifInasmuch as my utterly unprofessional opinion is that the Houston area is going to be hammered by a hurricane this season, just a note to let you know that Tropical Depression 3 has just formed in the Atlantic. Current projections have the storm crossing the Yucatan of Mexico, entering the Gulf of Mexico, and heading towards the upper Texas coast, where current forecasts have it reaching the coast by Wednesday morning or so. While over the Gulf, the depression is likely to intensify into a tropical storm if it survives the journey. While satellite imagery and forecast models indicate weakening, upper level conditions over the Gulf support strengthening.
One thing to note during the hurricane season is that computer models do a better job of predicting the track of a storm than its intensity, where an experienced forecaster’s gut reaction often is better than the computer models.
Frankly, a not-too-powerful storm would be welcomed in the Houston area right now as the area is suffering from a combination of typical hot summer tempuratures and a mini-drought over about the past 45 days.

Houston attorney pleads guilty in kickback scheme

burd.jpgHouston personal injury lawyer Gene Burd pleaded guilty Friday to a charge of making a false statement on his 1997 Federal Income Tax Return in connection with a kickback scheme that Mr. Burd engaged in with a local chiropractor, Paul Samson Christie. Here is the Justice Department’s press release on Mr. Burd’s guilty plea (as well of that of his co-defendant, Mr. Christie), and the earlier press releases on the indictment and superceding indictment are here and here.
According to the DOJ press release, Mr. Burd employed runners to bring him auto accident victims. After signing the victims up to a contingency fee contract, Mr. Burd would refer the clients to Mr. Samson’s chiropractic clinics for physical therapy. Subsequently, Mr. Burd would pay the clinics for the chiropratic services provided to the clients out of a portion of the insurance settlement that he would negotiate on behalf of his clients. Mr. Samson would then turn around and kickback to Mr. Burd in cash 40-50% of the payment that Mr. Burd would make to the clinics. Mr. Burd did not report the cash kickbacks as income on his tax returns.
Mr. Burd faces a maximum of three years in federal prison, without parole, a $100,000 fine, and civil monetary penalties. Sentencing is scheduled for September 30 before U.S. District Judge Melinda Harmon.

More on the City of Houston’s troubled hotel investments

Magnolia.jpgAnne Linehan over at blogHouston.net alerts us to this Chronicle article that updates the situation facing the City of Houston in regard to its investment in two downtown Houston hotels, The Magnolia and the Crowne Plaza. This earlier post examined the City’s problem investments in the hotels, while this post addressed the soft market for hotel rooms in downtown Houston.
As Anne notes, not much has changed in regard to the situation since the prior report on the hotels’ financial problems. The hotels are still not generating enough revenue to service the City’s subordinated debt on the hotels, and it is not at all clear from the article that the hotels are even generating positive cash flow from operations exclusive of debt service. Thankfully, the City’s total investment in both hotels is under $15 million, which is a drop in the bucket compared to this other dubious investment.
Nevertheless, after throwing a few $15 millions around, you could be talking about some real money, so the City needs to address the situation responsibly. As noted in the earlier post, despite its notes on the properties, the City is really just a preferred equity investor in these hotels. Consequently, the main issue at this point is whether the hotels are being managed properly and whether there is a reasonable chance that they can generate enough revenue to break even from an operations standpoint. Assuming a “yes” answer to those two questions, then the City simply needs to look at these properties as long-term (make that very long-term) investments that need to be monitored as a part of its long-term investment portfolio. The hotels could also be productively used as poster children from time to time whenever some City official floats the idea that it is good economically for the City to loan money on a project that private financing will not support.
On the other hand, if either of the answers to the foregoing questions is “no,” that raises additional issues that a City government is institutionally incapable of handling well. In that event, some second or third buyer of one of these hotels might just be able to turn a profit on the City’s dime.

Remembering a Special Father

Inasmuch as I am one of ten children of the marriage of Walter M. and Margaret Kirkendall, I have a large number of family members (over 30 nieces and nephews at last count), many of whom are regular readers of this blog.

This particular blog post is primarily for those family members and our family friends, but even if you are not a member of those groups, feel free to read on and learn about a special father and a remarkable Houstonian.

The memory of where I was when my father died remains indelibly etched on my mind.

Shortly after 8:00 a.m. on Saturday morning, July 13, 1991, I was preparing to play golf in Iowa City, Iowa at Finkbine Golf Course during my 20th high school reunion. Unexpectedly, the pro shop summoned me from the first tee that I had a telephone call. When I reached the phone, my brother Matt was on the line with terrible news.

Our father, Walter M. Kirkendall had suffered a serious heart attack moments earlier in a Chicago-area hotel room while preparing to attend our cousin and his niece Sarah’s wedding with our mother.

At the time of the call, Matt did not know whether our father had survived the attack. Minutes later, after I had quickly returned to my hotel room to gather my things for a hurried trip to Chicago, Matt called again. Our father had died that morning in Chicago at the age of 74, probably before I had left the golf course in Iowa City.

Consequently, my memories of Walter Kirkendall’s death are inextricably intertwined with golf. To a large degree, that is utterly appropriate because, over the final 15 years of his life, Walter and I spent countless hours together golfing.

These regular golf games began in 1976 when I entered law school at the University of Houston. Back then, we would rise early most weekend and holiday mornings to play the back nine at the venerable Memorial Park Golf Course in Houston.

In 1982, we transferred those weekly games at Memorial to several Houston-area clubs, concluding at Lochinvar Golf Club. The final time I saw Walter alive was the Sunday morning before his death when we played golf together at Lochinvar. Inasmuch as he played quite well that day, one of my enduring memories of Walter is his chortling in the clubhouse as he collected his golf bets from me.

Thus, my golfing memories of Walter are surrounded by an aura of good fortune and warm appreciation. Good fortune because golf allowed me to enjoy many hours of Walter’s wisdom, insight, and humor. Warm appreciation because golf allowed me to give something back to this man who premised his life on giving to others.

You see, despite his love of golf, Walter never became an active member of a private golf club. Walter gladly sacrificed something that would have been primarily for his enjoyment — that is, golf on a private course — for what he considered the more important needs of his large (ten children!) family.

Accordingly, as I joined several golf clubs over the final decade of Walter’s life, I made a point to give Walter an opportunity to play golf at those clubs as much as he wanted. His pure enjoyment of our golf outings is one of my life’s greatest satisfactions.

In addition to being a special father, Walter Kirkendall was a remarkable doctor and teacher.

Born in 1917 and raised in Louisville, Kentucky, Walter graduated from the University of Louisville Medical School in 1941 and then went to the University of Iowa in Iowa City for an internship the following year.

As with many men of his generation, Walter finished his internship and residency at Iowa just in time to serve three years as an Army medical officer in North Africa and Italy during World War II, after which he returned to Iowa City to complete his training in medicine.

In 1949, Walter joined the University of Iowa Medical School Faculty and — along with esteemed colleagues such as Jack Eckstein, William Bean, Lew January, Frank Abboud and many others — proceeded to play a major role in the development of the University of Iowa’s fine medical school over the next 23 years.

Walter and his colleagues were at the forefront of the post-WWII doctors who embraced the optimistic view of therapeutic intervention in the practice of medicine, which was a fundamental change from the sense of therapeutic powerlessness that pre-WWII medical professors widely taught to medical students.

Several of Walter’s colleagues have told me that Walter’s attitude of therapeutic optimism was his greatest contribution to the education of his students.

Over his 40+ year academic career, Walter developed a program of teaching and research in hypertension and renal disease for which he received national and international recognition.

His first professional publications were on renal disease, but by the mid-1950’s, he was publishing papers on hypertension and the effects of drugs in patients. After 1960, almost all of his 85 abstracts and 72 papers involved research on the clinical pharmacology of hypertension.

In addition to his teaching, research, and service on multiple professional committees, Walter also directed the Cardiovascular Research Laboratories at the University of Iowa from 1958-70 and the Renal-Hypertension Division from 1970-72. Iowa honored Walter for his contributions to the University by awarding him the Distinguished Achievement Award in 1986.

Perhaps most remarkably, however, is that Walter in 1972 — at the age of 55 when most other academics are settling into comfortable surroundings while preparing to retire — decided to uproot his large family and move to Houston where he became the first Chairman of the Department of Medicine at the then-new University of Texas Medical School in Houston’s famed Texas Medical Center.

In Houston, Walter continued his professional passions — teaching, research and clinical medicine — for the remainder of his life at UT-Houston. In addition to being the first Chairman of the Department of Medicine, Walter was director of UT-Houston’s Hypertension Unit from 1976 and director of the General Medicine Division from 1982 until his death.

During his 20 years at UT-Houston, Walter became the patriarch of UT-Houston’s faculty and student body, reflected by the UT-Houston alumni awarding him the first Benjy F. Brooks Medal in 1991 as the outstanding clinical faculty member, the school’s naming of it’s internal medicine library and suite in Walter’s honor, and the Walter M. Kirkendall Endowed Lecture Series that UT-Houston sponsors each year.

So, the foregoing outlines Walter’s remarkable professional legacy — two institutions served for over 20 years each while teaching and pursuing cutting edge research in a key area of medicine throughout his career. The late James T. Willerson, M.D., former president and medical director of the Texas Heart Institute, observed the following in his eulogy at UT-Houston’s memorial service for Walter:

Dr. Frank Abboud called me two days ago, wanted to come join me yesterday, early in the morning to visit and talk about Dr. Kirkendall, and then go to his funeral with me. . . Dr. Abboud told me that people in Iowa at the Medical School had never felt that Dr. Kirkendall had left. He was still there.

What he had given, what he represented, what he continued to give was part of Iowa. Can you imagine having that impact on an institution, and people years after you’ve left? Dr. Kirkendall did. How many of us could claim the same thing, ever?

But the foregoing doesn’t adequately convey Walter’s truly endearing qualities. He was a devoted teacher to his medical students and residents, and was constantly interested in the development of their careers. Patients appreciated his thoroughness, fairness and profound concern for them and their families. Many conversations with Walter invariably turned to stories about his aversion to wastefulness, the clutter in his office, his sense of humor, his competitiveness, and his suspicion that the sodium ion is bad for one’s health.

The following eulogies that were given at Walter’s funeral and memorial service elaborate on these qualities: the eulogy of my brother Bud, who is a district judge in Seguin, TX; my eulogy; the eulogy of my brother Matt, who is an internist in Dubuque, Iowa; the memorial service closing of my sister Mary, who is a pediatric emergency room physician in San Antonio; the eulogy of Dr. Willerson; the eulogy of the late Dr. Chevis M. Smythe, and the eulogy of Dr. Philip Johnson.

I close with two of my favorite stories about Walter. One is recounted by Tom S. McHorse, M.D., former president of the Travis County, Texas (Austin) Medical Association. Dr. McHorse recalls vividly his experience with Walter in examining a patient while in medical school:

The setting is the University of Iowa Hospital staff service ward one February morning.

For physicians who graduated after 1980, ward is defined as a large room with eight to ten patient beds separated by curtains, as many emergency rooms currently have.

As medicine was practiced in 1968, acute MIs, bacterial endocarditis, and other illnesses were treated in hospital for six weeks or more. The patient in bed four was such an extended stay patient.Dr. Kirkendall was rounding with his entourage of residents and nurses.

As we approached this frequently examined patient, a distinct change was obvious from the day before. The patient truly had the worst “soup bowl” haircut you can imagine. At bedside, Dr. Kirkendall addressed his first question to the patient:

“Who cut your hair?”

“The hospital barber,” replied the patient, somewhat taken aback.

Dr. Kirkendall was clearly not pleased as he turned to his residents and declared:

“Incompetence at any level should not be tolerated.”

I have no memory of the patient’s diagnosis or anything else Dr. Kirkendall taught us that week, but I have long remembered that statement of Dr. Kirkendall.

The second story was passed along by Dr. Smythe in his eulogy during UT-Houston’s memorial service for Walter, in which he recounted a particularly personal experience with Walter:

Now, at this time, I want to skip ahead to something very personal.

1975-76 was also not a bed of roses at this institution. And, when I was bounced out of the Dean’s Office, I was profoundly hurt, very profoundly hurt, and, I was also puzzled. Since those who were relatively active in my demise had been the people to whom I was closest, I was also alone and considerably puzzled as to whom to turn.

Now, Dr. Kirkendall himself was under no mean pressure at that same time. And indeed, the forces that were playing on us were pretty much identical.

But Walter is the person who said “Cheves, come to my office every Thursday at 11:00 o’clock.” And, he was a person who said “I will help you retrain yourself as a physician.”

And, he did. And that episode illustrated this man’s extraordinary generosity of spirit more than anything that I’ve ever seen. I will be grateful to him for the rest of my life.

Walter’s understanding of the importance of service to others is the thread that binds the fabric of families, friendships, schools, professions, communities, and, ultimately, societies.

In his quiet and confident manner, Walter understood the importance of his life’s work, and this understanding formed the cornerstone of his unshakable sense of fulfillment and contentment in his personal and professional life.

In my book, that’s quite a fine legacy, and I am taking this Father’s Day to appreciate my blessing to have been touched by it.

Local Judge News

werlein2.jpgThe morning brings us news on several judges with local ties who are entering new phases of their lives.
First, U.S. District Judge Ewing Werlein, Jr. announced yesterday that he would be taking senior status on December 31. Although he will continue to hear cases, Judge Werlein’s election to take senior status opens up a vacancy on the local District Court bench. As readers of this blog know, Judge Werlein has been in the news over the past year for his handling of the Enron-related Nigerian Barge trial.
tom phillips.jpgMeanwhile, former Texas Supreme Court Chief Justice Tom Phillips, who resigned in September, 2004 to become a law professor at South Texas College of Law in Houston, announced yesterday that he would be joining the Houston-based firm of Baker & Botts, LLP in September, 2005 as an appellate specialist in the firm’s Austin office. Mr. Phillips previously practiced trial law in the Houston office of Baker Botts from 1975 until 1981 before becoming a Harris County District Judge and eventually a Texas Supreme Court Justice.
Linda Motheral.jpgFinally, longtime State District Family Court Judge Linda Motheral announced that she is stepping down from the bench to continue her recovery from temporal lobe epilepsy, an affliction that forced her to take a leave of absence from the bench last year. Judge Motheral Motheral was appointed to the family law bench in 1993 and won re-election twice.

The legacy of Lee Brown?

MayorBrown.jpgThis Dan Feldstein/Chronicle article reports that the brother of former Houston mayor Lee P. Brown was implicated this morning during the opening stages of the federal corruption trial of Cleveland, Ohio businessman Nate Gray:

[O]n the first day of a major bribery trial here of three other men, prosecutors played a wiretapped cell phone conversation in which Cleveland businessman Nate Gray brags that “the mayor’s brother and I are like this.”
“I can go into Houston and have more juice than a local guy,” Gray told a young attorney who wanted to learn the ropes of Gray’s consulting business.
“Greasing palms” was how to get things done, said Gray, who faces 44 counts of bribery-related charges.
Two other people Gray allegedly gave cash and gifts were Houston city officials ? former Brown chief of staff Oliver Spellman and building services director Monique McGilbra.
Both pleaded guilty to accepting bribes and are expected to testify against Gray. . .
Prosecutors said Brown got monthly payments totaling thousands of dollars and even a payment specifically for promising to talk to his mayoral brother about a pending contract.

Here is a previous post regarding Ms. McGilbra’s plea deal, and Kevin Whited over at blogHouston.net (more here) has been covering these developments from the beginning.
Where there is smoke in such matters, there is often fire. Stay tuned on this one.