Dallas D.A. Watkins Refuses To Testify, Judge Dismisses Case

DALLAS (AP/CBSDFW.COM) — A state district judge held the Dallas County district attorney in contempt Thursday and threw out mortgage fraud charges his office brought against an oil fortune heir, blaming the DA's refusal to answer allegations he did a favor for a friend and campaign donor.

Judge Lena Levario said Thursday it was clear to her that District Attorney Craig Watkins was "calling the shots" when his office investigated Al Hill III. Attorneys for Hill argued that Watkins targeted their client as a favor to attorney Lisa Blue, who was embroiled in a multimillion-dollar fee dispute with Hill.

Watkins took the stand only to refuse to answer questions. Levario said she would not immediately take action against Watkins.

Having the case dropped was a major, public blow to Watkins and his office, which fought for months to pursue the case against Hill, the well-known great-grandson of oil titan H. L. Hunt. While Watkins has won national plaudits for his work to free wrongfully convicted inmates, he also faces local controversy over the Hill case just as he gets ready to run for re-election next year.

Prosecutors introduced evidence to suggest Hill had signed false paperwork to obtain a $500,000 loan, but they ultimately could not change Levario's mind that questions remained about why the case went to a grand jury.

Hill's defense team pointed to records of calls between Watkins and Blue around the time the case was taken to a grand jury, as well as campaign contributions and pledges.

Blue refused to testify last month, invoking her Fifth Amendment right not to incriminate herself. Her attorney said Blue is also involved in a federal investigation in which the Hill case could play a role. An FBI spokeswoman has previously declined to comment.

An attorney for Watkins, meanwhile, said he was bound by attorney-client privilege as well as a state privilege that allows prosecutors to withhold some notes and other materials in developing a case. Levario rejected both of those arguments and said several of his employees had testified about subjects that could be considered work product.

She offered Russell Wilson III, a prosecutor who argued on Watkins' behalf Thursday, time to ask Watkins again if he wanted to testify. Wilson came back and said Watkins had declined again. Shortly afterward, Levario dismissed the cases.

"When it was time for Craig Watkins to answer, he balked and said no," said John Hueston, one of Hill's attorneys, outside court.

Debbie Denmon, Watkins' spokeswoman, said afterward that "we clearly disagree" with Levario's ruling.

"This is an example of rich people manipulating the system," she said in an email.

Three prosecutors involved in the case testified Thursday about how it was handled, including a "pitch meeting" before Watkins to discuss it before it went to a grand jury.

Prosecutors showed a slide presentation used at the pitch meeting that makes clear they were aware that Hill was famous. The presentation lists several of Hill's failed business ventures, outlines his family's bank accounts and mentions that his wife, Erin Hill, is a former Miss Georgia and Miss America runner-up.

While Blue has said in an affidavit that she spoke to Watkins and that Hill's name briefly came up, Moore said she couldn't remember Watkins mentioning those conversations. Moore also said Watkins did not intervene in the Hill case.

But Stephanie Martin, the prosecutor who took the case to a grand jury, said she remembered Watkins asking several questions during the pitch meeting, particularly about title documents. Martin on Thursday called the case "one of the easier cases I had," but Hill's attorneys showed documents suggesting Martin wasn't as sure about the investigation months before an indictment.

Levario said Martin's testimony helped change her mind about what to do. She said she wasn't swayed much by Moore's testimony because of Moore's business and personal relationships with Blue and Watkins.

"All of this evidence makes it smell really bad," Levario said.

Prosecutors say they will appeal the judge's decision to dismiss the case or present the evidence again to another grand jury, in an attempt to secure another indictment.  They say they will fight Watkins' contempt charge as well, which could ultimately result in a fine and/or jail time.

(©2013 CBS Local Media, a division of CBS Radio Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)

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