By Bennett R. Dodson & Elliot Clark Beatty
Assistant Criminal District Attorneys in Waller County
The story was simple: small town Texas, blatant government corruption, and a paper trail a mile long to prove it. The prosecution of the case, however, was anything but.
When we were assigned this case just a few weeks before the prospective trial date with instructions to “figure out what’s going on and if we can actually prove this,” we had no idea what we were stepping into. Our hope is that if you encounter a similar situation, this article will give you a better idea of how to handle it.
Background
Hempstead is a small town an hour northwest of Houston, nestled at the juncture of Highways 6 and 290. Hempstead has a population of less than 8,000 people; it’s the seat of Waller County (and home to the criminal district attorney’s office), and the county’s population is approaching 60,000 people.
Michael Shayne Wolfe was elected mayor of Hempstead in 2004. Previously, the Hempstead city charter distinguished between a city manager and the mayor, with administrative duties and powers split between the two. Wolfe ran on a platform to amend the city charter and fire the city manager, who was regarded as tight-fisted, and that’s exactly what Wolfe did when he won the election. This left Mayor Wolfe the sole authority to hire, fire, and approve payroll, along with many other nebulous, undefined oversight duties.
While Hempstead has a five-member city council that ostensibly provides oversight, the mayor has final say over the formulation of agenda and what items are presented to the city council. By 2018, at least three members of the council habitually voted with the mayor, and items he proposed were virtually always passed by a 3–2 vote. Mayor Wolfe regularly made decisions that were never put before the city council, such as approving invoices for road work. He had few in the way of political challengers, and as a Hempstead native, former teacher, and current pastor, he enjoyed broad support in the community.
If you asked a wide spectrum of Hempstead citizens in 2018, probably at least a few would have opined that something stunk at city hall. It was well known that some people did not pay their utility bills, and citizens would frequently appear at commissioners court (located in Hempstead) to complain about the quality of the roads. They always received the same answer: They should complain to the city. Road repair and maintenance occupied a large portion of the city’s budget, yet there was little improvement to the roads.
In 2018, the city ordered an audit in accordance with Local Government Code Chapter 103,[1] as it had every year prior. The firm they had formerly hired had raised its rates, and in an ironic twist, Wolfe decided to hire accounting firm Belt Harris Pechacek LLP instead. Following its usual auditing practices, the firm asked for random utility receipts from the city and immediately raised red flags when one of the accounts was marked as $5,000 in arrears but still active. This caused the firm to ask for a register of all utility accounts, which revealed hundreds of delinquent but active accounts, some thousands of dollars in the red. The mayor and his daughter themselves each owned nearly $10,000. Digging further, the firm uncovered numerous other issues involving repeated transactions with a single vendor for roadwork—in violation of state bidding law—and the use of city credit cards for what clearly seemed to be personal transactions, such as payments to Netflix, Dave & Busters, and Best Buy. The firm calculated that for the amount the mayor’s card was being used for gas, despite receiving a car allowance, he had to have been driving nearly 1,000 miles a week on “city business.” The discrepancies were so alarming that employees at the firm issued a draft audit and informed the city council in April 2019.
This was when our office and the Texas Rangers got involved—and where things started go sideways.
Investigation and trial
Shortly afterwards, our office’s then-district attorney requested that the Rangers investigate. By October of that year, a Ranger had completed what he considered to be his investigation, drafted a warrant, and submitted a case to our office for Theft of Services regarding the utilities. The DA assigned a staff prosecutor from our office and a special prosecutor, the former first assistant (now defense attorney) to prosecute the case.
Then COVID struck, and the case languished for nearly two years. We won’t bore you with the procedural specifics, but by 2024 the staff prosecutor had resigned in lieu of termination for unethical conduct, the mayor had been additionally indicted by our office for Misapplication of Fiduciary Property (Greater than $300,000), and trial was nowhere in sight. The case had twice been continued from special trial dates, a significant investment in scheduling, as we have a part-time district court and one felony setting a month, due to various health ailments and issues of the defense attorney and special prosecutor. Finally, in January 2024, our newly appointed DA removed the special prosecutor from the case and assigned it to us.
With trial set for the second week of February, figuring out exactly what evidence we had of what offenses was our top priority. After finding the electronic files incomplete and getting conflicting information about the location of additional evidence we were sure existed, we finally located a box of evidence and trial materials—two weeks before the trial date—in a rarely used ancillary room at the sheriff’s office. The box contained only seven marked exhibits; by the time of trial, we had compiled more than 200. We had, at a minimum, two professional audits, several years’ worth of bank statements, and seven years’ worth of construction invoices to review. After review, we decided we had three major items we could prove.[2]
First, utility violations. One of Mayor Wolfe’s enumerated duties was to collect utility payments for the city; they are the city’s primary source of revenue. In city hall, there is a utility department, and the head utility clerk works directly under the mayor. The utility department generated a “cutoff” list for delinquent accounts; customers on that list would have their electricity shut off. Customers could ask the utility department for one extension and receive a five-day grace period to pay their bills. If the customer was experiencing serious health or financial constraints, he could approach the mayor for additional or larger extensions. This was not provided for anywhere in city policy, but it was accepted as common practice as a way to help people out.
Mayor Wolfe eventually began highlighting names on the list to be removed (and thus keep these customers’ utilities on). At some point, he began regularly highlighting several names: his daughter’s, the economic development chair’s, that of a local apartment complex, and his own name. These four accounts continued to accrue a massive negative balance and by 2018, Wolfe’s daughter had a balance of over $9,000, the economic development chair owed over $50,000, the apartment complex had a balance of over $40,000, and the mayor himself owed over $10,000. Other delinquent accounts, which numbered in the hundreds, ranged from several hundred to several thousand dollars in arrears. Most of this money had to be written off as uncollectable. The mayor ultimately admitted in an interview with the Texas Ranger that he “knew it wasn’t right” in regard to this violation; in fact, when the audit and subsequent investigation arose, he paid his $10,000 balance immediately.
Second, bidding law violations. According to Texas law, municipalities must competitively bid any outsourced job that will cost more than $50,000 with procedures prescribed by the Government Code.[3] It is a Class B misdemeanor to award a job without bidding or to break up a job to avoid the $50,000 threshold.[4] Before around 2015 or so, Mayor Wolfe followed the bidding laws as set out by the code and city charter. At some point, however, he deemed this process unnecessary and started planning and paying out the jobs himself directly. Wolfe had no background in construction or construction management. He would receive invoices from Glover’s Concrete and Construction, approve the invoices the day they were received, and direct an accounts payable clerk to write a check. The invoices were unconscionably vague, especially when compared to industry standard invoices. A standard invoice is heavily itemized and prices individual materials by the cubic yard, how much a machine costs to operate per hour, and so on. Prices might be rounded to the nearest dollar or nearest increment of 10 to simplify accounting, but the Glover invoices typically said something along the lines of, “Road work at 19th, leveling and grading, $10,000.00.” Nearly every invoice read this way, and there were more than 100 of them.
Many of the roads clearly did not require the work that was being done, for example, grading (or leveling the dirt of) an already paved asphalt road, which would do nothing other than damage the grader. As another example, Glover provided invoices and was paid for over $100,000 of work in one year on a dirt road that had two houses on the street. Our expert, the current road supervisor, told us short of a hurricane completely washing out the road multiple times, there was no way to justify that expense on that road.[5] The Ranger’s report did not include information on bidding violations, and most of the investigation on this issue was actually submitted to us by private citizens who had utilized public information requests to assemble it. City councilmembers and a local private investigator who were aware of the mayor’s practices had been stockpiling the data for years through public information requests to the city, waiting for the moment they could get law enforcement to act on it.
Finally, use of the city credit card. While less egregious than the other offenses in terms of dollar amount, bank records made it clear that Wolfe’s city credit card, for which there were very few use policies laid down by the city, was employed frequently and regularly for personal expenses. The dollar amounts he spent at gas stations were inconsistent with what he claimed he was doing. He told the Ranger in an interview that he was simply trying to “help people out” (a frequent excuse he used) by filling up their cars with gas, but he could never identify any specific times he did it or whom he had “helped out.”
Pre-trial and trial
Besides desperately attempting to marshal our paper trail, most of our pre-trial preparation consisted of meeting with witness after witness. If there is one thing we took away from this case, it’s that you need to talk to everyone. In a small town, everyone knew something about what was going on, and many people knew more than most. Most city employees were more than willing to talk about who they’d seen doing what, how they’d been wronged, and whom they suspected at city hall. Every witness we met with changed our theory of the case, and every time we looked at our indictments, we found something new wrong with them or we decided to approach the case differently based on the new information.
The primary offense on which we proceeded at trial was Penal Code §32.45 (Misapplication of Fiduciary Property). For those unfamiliar with this statute, it criminalizes a fiduciary intentionally, knowingly, or recklessly using property contrary to the agreement under which the fiduciary holds it and in a manner that exposes the money to a substantial risk of loss. We had several reasons for feeling that this charge was our best shot: It offered the greatest possible exposure to the defendant based on the offense level;[6] the availability of a reckless mental state;[7] various procedural issues with other offenses; that the money was actually lost to the beneficiary (taxpayers) so the money necessarily must have been exposed to loss; and that the mayor’s repeated and egregious violations of bidding laws were far more offensive in scope than just the utilities. The violation of an applicable law, here the bidding violations, is an available manner and means of violating the agreement, and a broad definition of fiduciary was available in the caselaw, which we felt most people would agree an elected office qualified for: a relationship “holding, held, or founded in trust or confidence.”[8] All of this together served to negate the most likely defense at trial: “I’m just a simple small town guy, I didn’t know what I was getting into, I was just trying to help people,” and so on.
In the courtroom
Ultimately, trial was a simple, if stressful, ordeal. We called nine witnesses: the accountant who had performed the audit, the former city secretary, the former assistant city secretary (now city secretary), two former city council members, a second Texas Ranger who had assisted in the interrogation,[9] an account payables clerk who had issued most of the checks to Glover’s Concrete and Construction, and the current road supervisor. The courtroom was packed with interested Hempstead citizens and Wolfe’s allies. We were permitted to introduce the entire audit as a business record, and defense counsel went hard enough on the accountant about the credit cards and utility billings that we could introduce that evidence in full in the case-in-chief. The former city secretary changed her story on the stand and insisted she had never witnessed any wrongdoing by the mayor,[10] but not before we introduced all the invoices as business records, as well as maps (under Rule 1006) detailing every job and where it was performed.
When viewed in this manner, the offense almost seemed obvious: four or five jobs conducted on the same out-of-the-way road in one year; another year, when the violations were especially egregious, several roads each had two jobs, each one billed at $48,000 or $49,000, and each of the two jobs done a week apart. The aforementioned dirt road is on the outskirts of town, which Glover’s always found a reason to work on and which was described at trial as “Glover’s Folly.” Some invoices were paid to build roads that still do not exist, which is visible (or not, as the case may be) on satellite photos. Every single invoice, all 135 of them, had the mayor’s initials on it, and fewer than 10 actually went before city council for approval.
On the third day of trial, our star witness, the new road supervisor for the city who had decades of experience with TxDOT and road construction contractors, detailed the flaws with dozens of invoices, from billing methods and irregularities in work Glover’s claimed they did, to the work supposedly done on nonexistent streets. The road supervisor had commissioned a survey of the city streets, which indicated that nearly every single street was either of “very poor” quality or had outright failed and needed to be redone from scratch.[11] After he completed his testimony, we rested.
Defense counsel, who had previously proclaimed they would produce multiple witnesses to exonerate their client, quietly approached us and asked if there was a plea bargain on the table.
Michael Wolfe ultimately pled mid-trial to six years in prison. We considered this an enormous victory given his popularity in the community and his lack of criminal history. Every juror after the fact told us they would have voted to convict. Wolfe’s motion for shock probation, filed a month after his conviction, was denied.
The owner of Glover’s Concrete and Construction, Robert Glover, now stands charged with first degree Theft by Government Contractor (his first court date was in June 2024). We never did determine why Wolfe was so dedicated to giving Glover a free ride.
Conclusion
This was a unique case with unique stressors, as every case has, but it is our strong belief that this sort of small-town corruption may be more common than we think. The primary impediment to our cases had far more to do with the early handling of the case and some potential witnesses’ unwillingness to take the stand than the strength of the evidence or legal arguments. However, if given the proper encouragement and the belief that something will be done with the information they give you, there are far more people willing to do something about it than you might think.
Endnotes
[1] Tex. Loc. Gov’t Code §54.004.
[2] There was other wrongdoing we discovered in the material that we could have pursued, but it was never charged by the special prosecutor and had not been provided as discovery, and we were very concerned about losing our trial date.
[3] Tex. Gov’t Code §252.021.
[4] Tex. Gov’t Code §252.062.
[5] The specific phrasing he used was, “Paying these invoices would be like putting a bulletproof vest on and shooting yourself in the head.”
[6] Our final tabulation for the roadwork done without bidding was in excess of $2 million since 2014. Section 32.45 utilizes the same value ladder as in §31.03(e) (Theft) and §32.21(e-1) (Forgery), among others.
[7] The utilities indictment was horribly drafted, and we didn’t have enough time to correct it without losing our trial date.
[8] “Fiduciary” is defined self-referentially in the statute as “any other person acting in a fiduciary capacity.” Caselaw has interpreted this to mean that the common-sense dictionary definition is available in addition to the statutory definitions. Talamantez v. State, 790 S.W.2d 33, 35 (Tex. App.—San Antonio 1990, pet. ref’d).
[9] The Ranger who was lead on the original investigation did not appear for trial and did not respond to our attempts to communicate with or subpoena him.
[10] She also called Mr. Beatty, one of this article’s co-authors, the night before to say she had contracted COVID-19. The judge ordered that she testify wearing a mask behind a shield.
[11] The process involved utilizing a van with seismographs on the wheels and an X-ray machine mounted on the floor which produced objective measurements as to how rough the roads were to drive on and just how much material was on the surface. On a scale of 100, with 60 being ”very poor,” most of the city streets averaged a score of 40.