Page 3


they would generate enough cash to .pay off the bondholders early. With the county officials sold, the prison bonds Hutchison was backing still required help from another future principal in the conspiracy against his wife. The Texas Attorney General’s office had to approve the tax-exempt securities. And Jim Thomassen, an assistant attorney general, had reservations. His doubts centered on the same issue that prompted Hutchison’s private tirade at the Grahams: What government agency would be legally or politically inclined to house its inmates in the new private for-profit prisons? How were the prisons going to fill their beds and make money? Although this fundamental question an issue that ultimately produced the failure of the prison bonds was never completely answered, the attorney general’s office approved the bond deal in September 1989. What prompted the approval? In July 1989, the ‘Grahams converted a $10,000 payment made to their company by the contractors into a cashier’s check payable to Jim Mattox’s officeholder account, according to the bondholders’ pleadings. From that fund, the attorney general could legally pay for campaign expenses. Coincidence? Perhaps. But according to the pleadings, consultant Clifton testified that Michael Graham had complained to him about Thomassen’ s scrutiny, suggesting he didn’t know why the assistant attorney general was holding the matter up because Mattox had already personally approved the deal. Mattox says he has no knowledge of that cashier’s check, nor of the Grahams’ attempt to exert influence on the decision of the Attorney General’s office. He does concede that the Grahams later contributed to his unsuccessful 1990 gubernatorial campaign. Thomassen could not be reached for this story. In late October 1989, the prison bond deal finally closed. The signing ceremony was held in Ray Hutchison’s law office. Tom Bowden was present. But the former San Saba county judge and Hutchison didn’t see each other again until late the following spring, when Kay telephoned Bowden to ask him a favor. It was the day after his defeat in the Democratic primary for treasurer, Bowden says. He had never spoken to Kay Bailey Hutchison before, having had contact only with Ray. Kay was running on the Republican ticket and wanted Bowden’s endorsement, he says. She suggested that she and her husband come down for a visit. The ensuing lunch with Ray and Kay, Bowden and his wife took place on April 13, 1990, at the L&L, a San Saba County restaurant named after its owners’ initials, and referred to by locals as the Love ’em and Leave ’em, because of the attached motel. Ray Hutchison characteristically dominated the conversation, Bowden says. “Ray talked as much as Kay, perhaps more,” recalls Bowden. “He’s the more talkative of the two.” Fortis part, Bowden told the Hutchisons he needed more time to mull the matter over. Over the next two months, Bowden says, the Hutchisons and the Bowdens lunched a second time in a more high-brow atmosphere, Austin’s Hyatt Regency. Bowden again postponed any commitment. But at the end of May, Bowden says, he called Kay Bailey Hutchison to let her know he had decided to endorse her for state treasurer. Bowden denies that the decision had anything to do with the Treasury governmentrelations-officer job she offered him shortly after the election. 4,4, t , s pretty obvious why he got the job,” declares Jim Mattox, about Tom Bowden’s appointment. “Here he is a Democrat, he loses, and then he endorses her. It is my belief he got the job in exchange for the endorsement.” Those were his sentiments, Mattox says, when he talked to Bowden and Michael Graham last May through a car phone as the two men rode in Graham’s automobile. Mattox says that out of his concern for Bowden, whom he regards as a close friend, he discussed the situation with him. “They,” Mattox says, referring to both Graham and Bowden, “asked me if I might represent [Bowden] in seeking immunity before the grand jury. I talked generally but not in a lot of specifics. I agreed to set up an appointment for him. But he said he didn’t think he’d need one.” Mattox distances himself from the other participant in the May car discussion, Graham. The former attorney general describes Graham merely as “a fella I knew” who has “been around the political scene.” Pressed, Mattox concedes Graham was “a substantial political contributor.” As Ray Hutchison suggests, there is ample reason to believe Mattox is playing down his relationship with Graham. This past June, Mattox sent a letter to the federal judge in Houston presiding at a sentencing hearing for Graham on his tax-evasion conviction. Mattox also appeared as a character witness at the sentencing. Pleading with the judge to sentence Graham to community service rather than confinement, Mattox wrote: “Judge, I have stayed many times in this man’s house and I believe I know him rather well.” The judge sentenced Graham to three years’ probation, six months of home confinement, and 1,000 hours of community service. He fined Graham $25,000. All in all, a relatively light sentence; tax-evasion carries a penalty of up to five years and a $250,000 fine. Before that sentencing, Graham did, a Ray Hutchison suggests, put his case before the Travis County grand jury investigating Kay and receive immunity. Grahath, now on parole, confirms as much in explaining why he doesn’t want to comment on the allegations. “It was part of my immunity deal that I don’t talk about that,” Graham said in a brief conversation. Hutchison contends that Mattox helped Graham stay out of prison in his tax-fraud case and that, in exchange, the Houston businessman presented a false affidavit to Travis County DA Ronnie Earle, damning Hutchison’s wife. In it, Hutchison contends, Graham stated that he had brokered a job-forendorsement deal between the Hutchisons and Bowden in 1990. As Ray Hutchison presents it, Mattox and Graham pursued Bowden, even resorting to extortion to persuade the treasury official to nail the U.S. Senator. He believes the two men told Bowden that he could get immunity from the DA for his alleged violations in the jobs-for-endorsement deal, as well as for any campaign irregularities from the Grahams’ off-the-books contributions in 1990. Ray contends they also offered Bowden a job in the Treasury and free legal services from Mattox. With those offers, according to Hutchison, it is Mattox and Graham who. have crossed the line. “It is a federal felony for any person acting under authority of law to extort a thing of value,” Ray says. Hutchison is correct that Graham has certainly earned a reputation as the kind of guy who could be con What prompted the approval? In 1989 the Grahams converted a $10,000 payment made to their company by the contractors into a cashier’s check payable to Jim Mattox’s officeholder account. THE TEXAS OBSERVER 13