Texas Commission for Lawyer Discipline v. Ty Clevenger
The biggest backfire in the history of Booger County
In 2012, Rusty's son, Bryan F. “Trey” Russ, III, filed a bar grievance against me based on Judge Walter S. Smith, Jr.'s $25,000 sanctions order, as well as an unrelated sanctions order in D.C. (you can read more about the latter order on DirtyRottenJudges.com). As strange as it may sound, I encouraged the state bar to file charges against me, and on April 11, 2013, the state bar did just that.
I told the state bar up front why I wanted to be charged: I wanted a jury trial, and I wanted the subpoena power that I would have as the defendant in a state court proceeding. Texas is one of the few states that allow a jury trial for disciplinary charges, and it may be the only state where the allegations in a sanctions order can be challenged in a subsequent jury trial. See Neely v. Commission for Lawyer Discipline, 976 S.W.2d 824 (Tex.App. - Houston [1st Dist.] 1998, no pet.). Stated differently, the Texas jury is not obligated to accept the legal or factual findings of the judge who issued the sanctions. I intended to prove once and for all that the everything I said about Rusty, Jimmie, Judge Stem, et al. was absolutely true. Likewise, I intended to prove that everything I said about the corrupt lawyers in D.C. was absolutely true.
Dirrell S. Jones, the state bar prosecutor assigned to my case, said he would not interfere with my efforts to get the evidence that I had been denied by Judge Smith and Judge Ellen S. Huvelle, the federal judge in D.C., and Mr. Jones would prove to be a man of his word. As a result of the state bar proceeding, I recovered several “smoking guns,” and I am now making them public on this website.
If you open up my July 14, 2014 letter to Coty Siegert, you will find hyperlinks to all the exhibits that are mentioned in that letter. Exhibits C, D, E, F, G, H, and I are the documents that the BCM fought so hard to hide. One of the most explosive pieces of evidence is not mentioned in that particular letter, but you can go to DirtyRottenJudges.com to read the evidence that Judge Walter S. Smith, Jr. sexually abused a deputy clerk in his chambers. Like it or not, Judge Smith made himself a witness in the state bar case because he was the one who made all of the false allegations against me in the first place, so that meant his credibility and personal biases were fair game.
In order to prove Judge Smith's bias, I needed to find out more about his friendship with Judge Stem, so I served subpoenas on Judge Smith, his wife, one of his ex-wives, and his brother. I also served a subpoena on Judge Stem and his wife. I intended to ask general questions about how much time the judges spend together (e.g., hunting or vacations) and whether they have any financial relationships, but all of the subpoenas (except one, which was not served) were quashed by other judges. That's not really surprising, because judges tend to protect one another.
Circling the wagons
One judge did surprise me, however, and that was Judge J.D. Langley of the 85th District Court of Brazos County. In addition to the subpoenas that I served on the judges and their acquaintances, I served subpoenas on Rusty Russ, Jimmie McCullough, and Trey Russ. All three contested the subpoenas in Judge Stem's court in Booger County, as did Judge Stem himself, so Judge Langley was assigned to preside as visiting judge.
At the hearing on the motions to quash, Rusty's and Judge Stem's lawyers made a big tactical mistake: they put their clients on the witness stand. And I know why they did it: I already had documents proving that Rusty and Judge Stem had an undisclosed attorney-client relationship, so the lawyers thought they needed to have Rusty and Judge Stem explain that away lest Judge Langley permit me to conduct a full-blown deposition.
Of course, by putting Rusty and Judge Stem on the witness stand, that automatically gave me the right to cross-examine them. And that's when Rusty and Judge Stem were both forced to admit that Rusty had provided the legal services at no charge to Judge Stem. See January 7, 2014 Transcript of the Testimony of Rusty Russ and Judge Robert M. Stem. This was an unequivocal admission by both of them that they had violated the gift ban at Texas Penal Code §§ 36.08(e) and 36.09, both Class A misdemeanors punishable by up to one year in jail. However, if Judge Stem paid Rusty back by ruling in Rusty's favor – and there was good evidence for that – then the crime was felony bribery.
I also asked Rusty and Judge Stem why they concealed their attorney-client relationship from the other attorneys who appeared before Judge Stem and opposite Rusty. Rusty claimed that the bar rules prohibited him from disclosing the fact that he was Judge Stem's attorney unless another judge ordered him to disclose it. See Transcript at 13-17. That was genuinely preposterous, because Rusty had just voluntarily disclosed the fact that he was Judge Stem's attorney, and no bar rule had ever prevented him from disclosing that fact in the first place. Id.
Judge Stem would not answer my questions, and he was obviously furious that a lowly mortal like me was getting to cross-examine him (I wish I had a videotape of his testimony -- he was fit to be tied). Id. at 27-31. As you can see from the transcript, however, Judge Langley kept cutting off my cross-examination, even when Judge Stem “opened the door” by raising an issue himself. I asked Judge Stem, for example, why he did not think that he needed to tell the parties appearing in front of him that Rusty was his attorney, and that Rusty was representing him for free:
JUDGE STEM: I explained all of this to the -- to the Commission, the -- the same questions you're asking and they dismissed your claim -- your grievance.
ME: Well, I'm not privy to what you explained to the Commission, so why don't you explain it here?
STEM'S LAWYER: That's privileged and confidential under the rules governing the Commission on Judicial Conduct --
ME: Your Honor --
THE COURT (Judge Langley): Sustained.
ME: Your Honor, he opened the door.
THE COURT: We are not going into Commission proceedings.
ME: All right, then I'm not asking you to tell me what you told the Commission, but you did not answer my question as to -- and the question was you said you didn't think it had any bearing, you didn't think third parties had a right to know, you didn't think opposing parties had a right to know, and I'm saying on what basis do you make that statement?
JUDGE STEM: Irrelevant.
THE COURT: Sustained.
Transcript at 30-31. I had known Judge Langley for many years, and I had thought better of him than that. Prior to the hearing, I had provided him with a copy of Neely v. Commission for Lawyer Discipline, thus he knew that I had the right to challenge the sanctions orders in front of the jury. He also knew that, in order to defend myself against charges that I filed a frivolous lawsuit in Judge Smith's court, I needed access to the evidence that would prove that the lawsuit was not frivolous. In other words, I needed an opportunity to question the witnesses in order to prove that they did exactly what I accused them of doing. I also needed a fair opportunity to prove that the person who accused me of filing a frivolous lawsuit – Judge Smith – had a conflict of interest because of his personal friendship with Judge Stem.
None of that mattered. Judge Langley quashed all of the subpoenas, including the subpoenas for Rusty, Jimmie, and Trey, even though my opposing party – the state bar – had not objected to any of them (and even though Trey had filed the grievance). Obviously, I had underestimated the power of Judicial Commandment No. 2: Thou shalt protect thy fellow judges. After all, that commandment is trumped only by Judicial Commandment No. 1: Thou shalt protect thyself. Clearly, Judge Langley was going to do whatever was necessary to protect Judge Stem.
Switching to Plan B
Fortunately, there is more than one way to skin a cat. You will notice in the 2009 federal complaint that some of my clients had been parties to a 2007 state-court proceeding that sought to set aside the fraudulent transfer of their oil and gas interests to a shell company owned by Rusty and Jimmie. I had the settlement agreement from that 2007 case and I knew for certain that Rusty and Jimmie had stolen over $1 million worth of royalties and real property, but as I mentioned earlier, I could not discuss it without getting my client sued for breaching the confidentiality clause.
The state bar case, however, gave me an opening to subpoena the settlement agreement from another source: Porter & Hedges, LLP, the Houston law firm that had represented some of my clients in the 2007 case in state court. I received the settlement agreement from Porter & Hedges in December of 2013, as well as the transcripts of the 2007 testimony of Rusty Russ and Jimmie McCullough. In his deposition, Rusty generally defers to Jimmie and that makes sense, because Jimmie is the brains of the operation. Jimmie is arrogant and unrepentant in his testimony, but he effectively concedes that he used shell companies to steal people's mineral interests.
As soon as Mr. Jones received all the evidence from Porter & Hedges, he opened an investigation of Rusty and Jimmie. I expect Rusty and Jimmie will be charged any day now, if they haven't been charged already, and I suspect they will ultimately be disbarred. (A new chief disciplinary counsel was appointed after my original grievances against Rusty and Jimmie were dismissed, and apparently she has a new way of doing business. In fact, she hired Mr. Jones).
The release of those transcripts, and all the related settlement agreements, will probably mark the beginning of the end of the Booger County Mafia, even more so than the demise of John Paschall. This has created what may well be the most delicious irony of my entire life: Trey Russ filed a grievance against me to avenge his daddy, and in all like likelihood that grievance will get his daddy disbarred. It might even get his daddy sent to prison. Oops.
A chain reaction
Apparently as a result of communications with Mr. Jones and investigators for the state bar (one of whom is a retired Secret Service agent), the FBI has reopened its investigation of the Booger County Mafia. And other lawyers may yet get snagged in the state bar's investigation. According to Texas Disciplinary Rule 8.03(a), "a lawyer having knowledge that another lawyer has committed a violation of applicable rules of professional conduct that raises a substantial question as to that lawyers honesty, trustworthiness or fitness as a lawyer in other respects, shall inform the appropriate disciplinary authority."
The majority of the Erwin heirs were represented by Porter & Hedges, LLP, specifically partners Dan Flatten, who is now retired, and Joanne M. Vorpahl. Apparently, Flatten and Vorpahl never reported anything to the bar or anyone else, even though they were fully aware of the evidence that Rusty and Jimmie had stolen over $1 million. For one thing, they had collected the documents and conducted the depositions of Rusty and Jimmie in 2007. By failing to report this information to law enforcement, Flatten and Vorpahl may have misprisioned of a felony (i.e., failed to report a felony to authorities), which is itself a felony. See 18 U.S.C. § 4.
If the Porter & Hedges lawyers committed a felony, that in turn would be a violation of Disciplinary Rule 8.04(a)(2), which classifies any "serious crime" as professional misconduct. And although the rule requiring attorneys to report each other was rarely enforced (if ever) in the past, rarely has a violation been so flagrant. Moreover, there's a new sheriff in town, i.e., the new chief disciplinary counsel. She might decide to make an example out of somebody. The biggest obstacle for the prosecutors, should they decide to pursue a case, will likely be the lapse of time, i.e., whether the limitations periods have lapsed or whether they have been tolled by concealment or for some other reason.
The bigger problem for Flatten and Vorpahl might be legal claims for breach of fiduciary duty from their former clients, because a breach of fiduciary duty is presumed to be undiscoverable by the beneficiary (therefore the limitations period is tolled until actual discovery). The Erwin heirs signed a contingent-fee agreement with Porter & Hedges that gave the firm 40 percent of whatever the heirs recovered. By itself, that is nothing unusual. However, my client Ruthie Roberts says that during a teleconference that Porter & Hedges held to promote a settlement with Rusty and Jimmie, she asked Dan Flatten pointblank if it would be possible to recover attorney fees. According to her, Flatten said there was no basis for recovering attorney fees. If he said that, he had to know that it wasn't true, because attorney fees can be recovered under the Texas Theft Liability Act (not to mention the federal RICO statute).
Ruthie says she also asked Flatten if it would be possible to recover punitive damages from Rusty and Jimmie, and Flatten said no. That sounds really outrageous, because any first-year lawyer in Texas should know that punitive damages can be recovered for fraud and conversion. The end result of the settlement agreement was that the Erwin heirs settled for 60 percent of what Rusty and Jimmie stole from them, and Porter & Hedges got the remaining 40 percent. That is a preposterous result. Based on the evidence that Porter & Hedges already had (e.g., Jimmie's testimony), the Erwin heirs could have easily recovered treble damages or more at trial, plus attorney fees.
Even if the heirs didn't want to run the risk of trial, I cannot imagine settling for so little. Think about the negotiating position that Flatten and Vorpahl were in: they were effectively holding a knife to the throats of Rusty and Jimmie. Granted, attorneys are prohibited from threatening criminal action in order to obtain a civil settlement, but such a threat wasn't remotely necessary. All Dan Flatten had to do was threaten to release the transcripts of Rusty's and Jimmie's testimony to the Bryan-College Station Eagle – which had already run a story about the case – and the whole thing would have blown up on its own. Yet Flatten told Rusty's and Jimmie's lawyers that he wanted to approach the case as a "business deal."
One lawyer proffered the theory that Porter & Hedges had figured out that Judge Stem was owned by Rusty and Jimmie – and that was pretty obvious from the courthouse file alone – therefore they didn't want to run the risk of trying the case in front of him. There are problems with that explanation. First, if that's really what Flatten and Vorpahl were thinking, then they had a duty to disclose that to their clients rather than try to dupe them into settlement based on false pretenses. The second problem is a note that I found in the files of Eugene Wilshire, an attorney who represented a separate group of Erwin heirs, but who worked cooperatively with Porter & Hedges.
According to that note, Wilshire had inquired about Judge Stem and was told that he was an honest judge who would be fair. I nearly laughed out loud when I first read it. Who had he been talking with? Rustie and Jimmie? Meanwhile, as I was writing this website, I stumbled across this document, which reminded me of a third issue: Flatten had told me that he was surprised that Judge Stem had never reported Rusty and Jimmie to the bar. I had forgotten about that conversation, but then I remembered what I had thought to myself at the time: Flatten seemed sincere, but how could he have been so naive about Stem? Moreover, Flatten implicitly admitted that he knew somebody should have reported Rusty and Jimmie to the state bar. In any event, it does not appear that Porter & Hedges rushed a settlement in order to dodge a trial in front of Judge Stem.
So why did Porter & Hedges push to settle the case so quickly and for so little? I suspect the answer requires an understanding of contingency fees and law firm economics. A fast settlement would produce an easy pile of cash for the firm with minimal effort. On the other hand, a trial could easily cost hundreds of thousands of dollars to the firm, especially a larger firm like Porter & Hedges, where partners may bill $500 per hour or more. In other words, it's possible to fight a lot harder and recover more money for your clients, but make the same amount or less in net attorney fees for yourself.
I hope that is not what happened, but right now I don't have a better explanation. Either way, I suspect Flatten and Vorpahl will be facing some difficult questions from the state bar.
Other attorneys may be facing some difficult questions as well. In the federal case in Waco, Rusty and Jimmie were represented by Rick Bostwick, David Dickson, and Melissa Wray of "TheTexasFirm.com." Those shysters took some real cheap shots during the federal case (I'll probably have more to say about that in Liars and Horse Thieves), and they're dirty style of lawyering may yet catch up with them. It is my understanding that the state bar recently sent a spoliation letter to the Waco firm, i.e., a letter demanding that the firm preserve evidence.
For one thing, the Waco lawyers had the same evidence that Porter & Hedges had, and they didn't report Rusty and Jimmie to the state bar, either. Did they have a duty to report? As a general rule, lawyers obviously must keep their clients' information confidential, but no court in Texas yet has addressed the conflict between that rule and Rule 8.03(a), which obligates lawyers to report fraud and misconduct by other lawyers.
I suspect the courts would rule that confidentiality trumps the duty to report, but the new chief disciplinary counsel might just try to test that theory on the Waco lawyers. The bigger problem for the Waco lawyers, in my opinion, is the possibility that they filed misleading documents with the federal court in order to conceal Rusty's and Jimmie's fraud. I suspect that's why they received a spoliation letter.
In federal court, defendants are obligated to answer the plaintiff's complaint line by line, and they are obligated to answer truthfully. The defendant's lawyer is prohibited from filing anything that he or she knows to be false, regardless of what the client wants. Now compare, for example, Paragraphs 146 and 147 of the federal complaint with paragraphs 146 and 147 of the answer filed by the Waco lawyers. Paragraph 147 of the complaint alleged as follows:
In order to create some pretense of a claim to the Mineral Estate, Defendant Russ instigated a series of sham transactions. On November 22, 2005, Defendant Deminimus, a shell company owned by Russ and McCullough, filed a deed purporting to transfer 90 percent of the Mineral Interest to Defendant Velnon, another shell company owned by Russ and McCullough. Defendant Russ knew that Defendants Deminimus and Velnon did not own any interest in the Erwin property, but he created the sham transactions so he could ultimately purport to transfer the Erwin heirs’property to Defendant Flare Royalties.
In Paragraph 147 of the answer, the Waco lawyers wrote that "Defendants deny the allegations contained in Paragraph 147 of the First Amended Complaint, except that the Russ & McCullough Defendants admit that the allegations contained in said paragraph to the extent they relate to the existence of information in a court order, pleading, or other official document." That's a shady answer under any circumstances, but it fails the truth test even with the caveat about a "court order, pleading, or other official document." Dickson had personally participated in the deposition of Rusty, the deposition of Jimmie, and the deposition of Nester Leamon, and he knew for certain that the shell companies did not own any interest in the Erwin property. He heard it from his own clients, and yet he, Bostwick, and Wray filed the false answer anyway.
Lawyers do that kind of shady stuff as a matter of routine because they almost never get caught, and when they do get caught, they almost never get punished. I hope that changes.
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