Texas Court Revives Selective Prosecution Defense by Wealthy Defendant

TexasIn an unusual ruling, the Texas Court of Criminal Appeals is giving Albert G. Hill III the opportunity to prove that he was selectively prosecuted as a favor to his former lawyer. Hill is charged with making fraudulent statements on a loan application to induce a bank to give him a $500,000 home equity line of credit. The bank, which suffered no loss, told the district attorney’s office that it was not interested in seeing Hill prosecuted for mortgage fraud. Hill was indicted despite the absence of any harm to the bank.

Hill’s Claim

The Court of Criminal Appeals (the highest court in Texas to hear criminal appeals) described Hill as “a member of a prominent Dallas family.” He is a beneficiary of a trust that Texas oil tycoon H.L. Hunt created for Hill’s grandmother. In 2007, Hill filed a lawsuit against his father and other family members challenging control of the trust. According to Vanity Fair, the colorful litigation involved family assets worth between $2.5 billion and $4 billion.

Shortly after winning a favorable ruling in his lawsuit, Hill was charged with mortgage fraud. The prosecution alleged that Hill misrepresented on his loan application that he was the sole owner of his home when, in fact, the trust owned 80% of it. One of the trustees complained that Hill obtained a mortgage against the property without the trust’s participation, thus exposing the trust to a risk of financial loss.

Hill asked the Dallas County court to dismiss the charge. Hill alleged that his disgruntled father reported the fraud allegations to the District Attorney, Craig Watkins. He also claimed that his attorney in the trust litigation, Lisa Blue Baron, persuaded Watkins to prosecute the mortgage fraud claim after she sued Hill for several million dollars in unpaid legal fees.

Hill presented evidence that his father’s attorney reported the alleged mortgage fraud to the District Attorney’s office four days after his father was found to have committed perjury in the trust litigation. A partner in his father’s law firm then made contributions totaling $48,500 to Watkins’ re-election campaign.

In the weeks before Hill was indicted for mortgage fraud, Lisa Blue Baron made about three dozen calls to Watkins’ office. She also contributed $5,000 to his campaign, held a fundraiser for him at her house, and met with Watkins to take publicity photos regarding a $100,000 donation that she earlier made in Watkins’ honor to SMU Law School. Hill contended that Blue Baron bragged about her ability to use the District Attorney to intimidate other people.

Hill’s lawyer alleges that the Assistant District Attorney assigned to the case apologized to him on behalf of her office for bringing the mortgage fraud charge. She also said that she would refuse to try to the case if the District Attorney’s office continued to pursue it. Shortly after that meeting, she was reassigned to the prosecution of animal cruelty cases, a low-prestige assignment.

Trial Court Proceeding

Hill based his dismissal motion on three grounds. First, he claimed he was denied his due process right to a disinterested prosecutor. Second, he claimed that the prosecution was vindictive in violation of his right to due process. Third, he contended that he was being selectively prosecuted under circumstances that would not lead to a prosecution of anyone else, in violation of his right to equal protection of the law.

Over the objection of the prosecutor, the court held a hearing on Hill’s motion. Hill’s attorney called Blue Baron as a witness, but she exercised her Fifth Amendment right not to testify. Hill’s attorneys attempted to call Watkins as a witness, but he refused to attend the hearing. At a later hearing, Watkins refused to testify on the ground that he had a right as an attorney not to discuss his “work product.”

The judge held Watkins in contempt for refusing to testify. Watkins was later acquitted of contempt of court charges. Watkins was defeated when he ran for reelection in 2014.

The judge eventually ruled that the only people who knew whether Watkins was being influenced to prosecute Hill for improper reasons were Watkins and Blue, both of whom refused to answer questions. The judge then decided that Watkins, in particular, was preventing Hill from developing the facts he needed to prove that his prosecution was vindictive or selective. For that reason, the court dismissed the prosecution.

The Appeal

The State appealed. The Texas Court of Appeals held that Hill was not entitled to a hearing on his dismissal motion because he failed to allege sufficient facts to show that his constitutional rights were violated. The appellate court therefore reinstated the prosecution.

The Texas Court of Criminal Appeals agreed to review the Court of Appeals’ decision. It concluded that the trial court had discretion to hold a hearing on the dismissal motion. While it may not have been required to do so, it reasonably decided that Hill’s concerns merited a hearing at which evidence would be taken.

The Court of Appeals did not decide two other issues upon which the State based its appeal:  whether Watkins’ refusal to testify was a proper basis for concluding that the charge against Hill should be dismissed, and if so, whether the judge erred by dismissing the case “with prejudice,” which prevents the State from refiling the charge. The Court of Criminal Appeals sent the case back to the Court of Appeals so those issues could be addressed.

 What Will Happen Next?

All defendants who enter the American system of criminal justice are entitled to equal protection of the law. The constitutional right to be free from selective prosecution does not mean that everyone must be treated in the same way. In most cases, the right to equal protection means that defendants cannot be selectively prosecuted for arbitrary, irrational, or improper reasons.

Hill’s claim that other people in Dallas County who commit a similar alleged crime — making false statements on loan applications — would not be prosecuted in the absence of a financial loss may be difficult to prove, since financial loss is not part of the crime. On the other hand, Watkins might have testified that his office had never prosecuted anyone else for fraud in the absence of a financial loss, and Watkins might have had difficulty identifying a rational reason for treating Hill differently. Since Watkins did not testify, Hill had no way to get at the truth and was arguably prevented from establishing his equal protection violation.

The same is true of Hill’s vindictive prosecution claim. Prosecuting an individual in retaliation for that individual’s exercise of a right violates due process. Whether that was, in fact, Watkins’ motive is something only Watkins knows. It may be fair to infer that he refused to testify because he doesn’t want to admit that he engaged in a vindictive prosecution (punishing Hill for challenging the trust and for challenging his legal fees) in exchange for campaign contributions.

Whether the Court of Appeals will hold that Watkins’ failure to testify is enough evidence to support Hill’s claims of vindictive and selective prosecution is unclear. It is clear, however, that the case has become an embarrassment for the District Attorney’s office. Even if the State wins its appeal, whether it would continue the prosecution in Watkins’ absence can only be the subject of speculation. The special prosecutor who is now handling the case, however, acknowledges that the prosecution has “gone on too long.”

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