Produced by Chris O'Connell and Greg Fisher
This story first aired on April 26, 2014. It was updated on June 27, 2015.
"This is Whidbey Island, where I grew up from birth 'til I was 8 years old," Peggy Sue Thomas said as she looked out toward the island aboard a ferry. "The hard memories outweigh the good memories....Because I am accused of a crime I didn't commit."
Though she didn't pull the trigger, investigators are convinced Peggy Sue Thomas helped set the stage for Russel Douglas' murder on the island she knew so well.
"How does a former beauty queen end up at the heart of a murder case?" "48 Hours" correspondent Peter Van Sant asked Thomas.
"I don't even know how to answer-- I don't know how I ended up here," she replied in her only TV interview.
Before she was a murder suspect, Thomas, 48, had already lived a full life. She's a former beauty queen, but Thomas wasn't born with a pageant sash across her chest.
"And I'm all about proving myself in a man's world," she said.
Thomas was a trailblazer. In the Navy, she served as an aircraft mechanic during Operation Desert Storm.
"Do you see yourself as a patriot?" Van Sant asked Thomas
"I am very patriotic, yes," she replied.
Along the way, she married and divorced three times -- raising two beautiful daughters, Taylor and Mariah.
"My kids are my proudest accomplishment," said Thomas.
But in the late 90s, with her second marriage on the rocks, Thomas physically transformed herself.
"It was amazing ... She started working out and the weight just fell off," said Vicky Boyer, who was once Thomas' good friend. "To me, I was like, 'You go girl!' And then, someone had approached her about maybe being Ms. Washington."
"And I was down and a little heartbroken. And she said, 'Do something crazy.' So I did," Thomas told Van Sant. "I ended up winning."
"I'd rather wear jeans and boots and jump on a Harley than be a beauty queen," she said.
In her home, however, Peggy Thomas' pageant memorabilia holds a special place of honor.
"I think it meant everything to her," Boyer said. "Everything she needed came from that pageant."
By 2003, Thomas was living in Las Vegas, where she worked as a glamorous limousine driver to high rollers.
"I spoiled my clients. And my tips were often in the thousands for one night. It was my all-time favorite job ever," she said.
To understand how this beauty queen made yet another transformation -- to murder suspect -- you have to go back to a cold, dark night on Whidbey Island in December 2003:
KIRO-TV report: Tonight, Island County detectives have a murder mystery on their hands. They're looking for the person or persons responsible for the shooting death of 32-year-old Russel Douglas.
Detective Mark Plumberg of the Island County Sheriff's Department was called to the scene that night.
"It's dark, secluded dead end road, not a lot of traffic ... It's a good spot for a murder," Det. Plumberg said. "The car was in a dark driveway, door open, Russel was inside the vehicle ... it was a massively traumatic wound."
Russel Douglas was the estranged husband of Brenna Douglas, one of Peggy Sue Thomas' good friends.
"After we had confirmed the identity of the man in the vehicle as being Russel Douglas, we ... decided to go and speak with the wife Brenna Douglas," said Plumberg.
It was after 10 p.m. and pitch black when Plumberg and a colleague came calling. Plumberg said that Brenna, "came out and crossed her arms and leaned against the door frame and said, 'May I help you?'"
"She didn't say, 'What's happened? Why are you here?'" Van Sant asked.
"No," the detective replied.
It was suspicious behavior, especially after they told Brenna her husband had been murdered.
"Almost no reaction," Plumberg told Van Sant. "I would expect at least a slew of questions: 'Who, what, when, where, why and how?'"
"And did Brenna ask those questions?
"Not one," said Plumberg.
And Brenna Douglas had even bad-mouthed her dead husband.
"She mentioned that he had had some affairs," Plumberg said. "She mentioned that he could be emotionally abusive. She alluded to some physical abuse."
Brenna said their marriage was in trouble. They had separated, but Russ was staying with her and their two children over Christmas.
"And we know from experience that the spouse in a murder is often -- the perpetrator," Island County Prosecutor Greg Banks explained. "There was no one else that the police could find -- that had a reason -- to murder Russ. ...Brenna was the prime suspect."
Just weeks into the investigation, cops discovered a possible motive: money. Brenna, who owned a hair salon, was in debt and with Russel's death, she would receive a six-figure payout.
"...there were at least two life insurance policies," said Banks.
"And that money, $400,000, we've heard $500,000," Van Sant said. "But that would've cleared the decks for Brenna."
"You would think so, yeah," Banks replied.
But Brenna was not arrested because investigators couldn't link her to the shooting.
Detective Plumberg then checked Russel's phone records and discovered calls from a Las Vegas number. They came from Peggy Sue Thomas. She had called Russel several times in the days leading up to his murder.
"Those phone calls were on the 23rd of December, in which we were playing phone tag," Thomas told Van Sant.
Thomas explained to cops she was back on Whidbey for the holidays. She was calling Russel to give him a Christmas present for her friend, Brenna.
"She was very open, answered all my questions," Plumberg said of Thomas. "Nothing about her reaction made me second-guess anything."
For the next seven months, the case consumed Detective Plumberg.
"Not one person could tell me a bad thing about Russel Douglas, certainly not anything that would make me think, 'That's why somebody wanted him dead,'" he told Van Sant.
But a mysterious caller was about to unlock all the secrets of this murder.
A world away from Whidbey Island, Washington, it's happy hour in a small town on the west coast of Florida. Someone on the stage is Detective Mark Plumberg's mysterious caller.
"When the informant called, he told us that he played in a band. ... called 'Buck Naked and the Xhibitionists,'" said Detective Mark Plumberg.
After Googling the band's name, Det. Plumberg zeroed in on the bass player.
"His name was Bill Hill ... lived in a Florida in a town called Punta Gorda," he said.
Hill said a band member -- lead guitarist Jim Huden --had confided in him during a late-night drive to a gig just one month after the murder of Russel Douglas.
"He (sighs) ... needed to tell me something," Hill told Van Sant. "I said, 'OK.' I didn't know if he was gonna tell me he was gay or somethin'."
Instead, Jim Huden told Hill he'd been abused by his stepfather as a child.
"I could sense that it was something that was really deep," said Hill.
What Huden said next was bizarre -- that he wanted to seek revenge for his stepfather's abuse by killing another abuser.
"And -- he says, 'So I started lookin' for somebody that met that - that -- M.O.,'" said Hill.
Jim Huden thought he'd found that abuser, Hill said, in Russel Douglas.
"He says, 'I shot him,'" Hill explained. "I said, 'What?' He says, 'Yeah.' He says, ' Got a gun and ... shot him in the head.'"
Hill agonized over that secret, waiting six months before he made the call to turn in his good friend, Jim Huden.
"Jim Huden ... what do you know about this guy?" Van Sant asked Det. Plumberg.
"We knew nothing," he replied.
Hill said that Huden began naming his accomplices. The first: his own girlfriend, Peggy Sue Thomas. It was huge break in the case.
"Yes," Plumberg said. "Peggy Thomas, the woman I had spoken to, works in Las Vegas as a limousine driver. And I said, 'Well, so far, I can confirm his story. Let's go from here.'"
Hill then revealed the name of the second accomplice: Brenna Douglas, the victim's wife.
"Bill Hill ... felt that the widow had knowledge, though not necessarily any active part," said Plumberg.
Meanwhile Det. Plumberg was learning more about the relationship between Jim Huden and Peggy Thomas. They'd had a long history together both growing up on Whidbey Island.
"I had a childhood crush on him," said Thomas.
But in the early 2000s, Thomas had moved on, eventually settling in Las Vegas. Jim Huden and Thomas lived separate lives until June of 2002, when she reconnected with Jim at a funeral on Whidbey Island.
"Jim and I spoke, connected on this level of losing someone we both loved," said Thomas.
"Things got hot and heavy right away," Hill said. "He had really strong feelings for her."
But there was a little problem. Jim Huden was married and living in Punta Gorda with his wife, Jean.
"At the time this was going on did you have any idea?" Van Sant asked Jean Huden.
"Not at the beginning," she replied. "I was so in love with him and so clueless."
The man she loved was a successful software developer. Jim Huden had even sold a program to Microsoft.
"When he sold this to Microsoft he made several million dollars?" Van Sant asked.
"Yes. Or close to a million," Jean Huden replied. "But he did very well for himself."
While Jean ran their business, Jim focused more on his band.
"You were married to a rock star now?" Van Sant asked Jean Huden.
"Yes. Or a wannabe ... rock star," she replied.
But Jean Huden says she started to notice a troubling change in her husband after that funeral.
"... he was just never the same," she said. "He started to get very depressed and dark and started drinking heavily and doing drugs and it just wasn't Jim anymore."
But Jim Huden was finding comfort in his long-distance relationship with Peggy Thomas.
Asked if she was in love with Jim Huden, Thomas told Van Sant, "I was."
"What did you love about him?" Van Sant asked.
"His mind, believe it or not," said Thomas.
"So that's when the double life began," said Jean Huden.
Las Vegas became Jim Huden's home away from home. He'd lie to Jean, telling her he was coming here looking for gigs, when he was really meeting Peggy Thomas. The beauty queen was now making a good living driving that limo.
"You're having an affair with a married man," Van Sant noted to Thomas.
"Yeah," she replied.
"Are you a bit of a femme fatale?"
"Are you trouble Peggy?" Van Sant asked.
"Far from it, actually," Thomas replied with a laugh.
Among the friends who visited Thomas and Jim Huden in Las Vegas: Brenna Douglas, who partied with them just three months before her husband was murdered on Whidbey Island.
"Did Brenna ever say to you, 'You know, I wish he was dead,'" Van Sant asked Thomas.
"Not -- no. Not that," she replied.
"You paused, though. Did she say something close to that?"
"At one time, she did say something," Thomas said. "'He's worth more to me dead than alive.'"
"That's a bit ominous."
"It was... Brenna spoke, I guess, to a lot of people about hers and Russ's marriage," said Thomas.
As Thomas and Jim Huden's fling progressed, she began flying to Florida. Reading Jim's emails, Jean discovered the affair and confronted him; Jim swore it was all over. Then in April 2003 there was a knock at Jean's front door.
"I opened the door and there's Peggy on my doorstep," Jean Huden told Van Sant.
"You, the mistress, wants to get together with the wife... to confront the husband?" Van Sant asked Thomas.
"Yeah, because he was lying to both of us and we were both believing him," she replied.
"And what did he say?" Van Sant asked.
"He said he loved two women," said Thomas.
"I told him to make a choice. I was like, 'You need to decide who you wanna be with,'" Jean Huden said. "He said he wanted to be with me."
"How did Peggy react to it?" Van Sant asked.
"Oh, she was furious," Jean Huden replied.
But Thomas' anger didn't last long. The two lovers couldn't stay away from each other and in December 2003, Jim Huden told his wife he was going to spend the holidays with his family back on Whidbey Island. But it was just another chance for a romantic rendezvous with Peggy Thomas
"I don't think of myself as a stupid person, but when it came to Jim Huden, I was a complete moron," Jean Huden told Van Sant.
On the morning of December 26, the day Russel Douglas was murdered, Thomas and Jim Huden were at a house on Whidbey Island.
"He said he wanted to go out and get some cigarettes," said Thomas.
"What time of day was this?" Van Sant asked.
"Late morning," Thomas replied, "between 10 and 11."
It was just around the time investigators believe Russel Douglas was murdered.
"Tell me about the Jim that comes back into the house. What do you see?" Van Sant asked Thomas.
"The Jim I always saw," she replied.
"Did he have a handgun with him?"
"I did not see a gun," said Thomas.
"No tears, no strange behavior, no sweat coming out of his forehead--nothing? " Van Sant asked.
"Not that I remember, no," Thomas replied.
"And you're telling me the truth, right?" Van Sant pressed on.
"I'm absolutely telling you the truth," said Thomas.
But Plumberg had an entirely different take.
"You believe in one way or another Peggy Sue Thomas was involved in this plan to murder Russell Douglas?" Van Sant asked the detective.
"Absolutely," said Plumberg.
His theory? Peggy lured Russel to that secluded area on Whidbey Island to exchange a gift for Brenna. It was here that Jim Huden lay in wait with a gun.
"Did you encourage Jim --" Van Sant asked Thomas.
"Absolutely not!" Thomas interrupted.
"-- to murder Russ..." Van Sant asked.
"Absolutely not!" said Thomas.
"Did you tell him, 'Look, he's a child abuser?" Van Sant continued.
"No," Thomas replied.
"You did not participate in any way, conspire to kill him?" Van Sant asked Thomas.
"I swear on the love for my children. I swear on my life," she replied.
CLOSING IN ON SUSPECTS
By Aug. 4, 2004, Det. Mark Plumberg had traveled to Punta Gorda, Fla., to confront the man he believed murdered Russel Douglas.
"I looked him in the face and I said, 'Mr. Huden, I know you're the man that pulled the trigger and killed Russel Douglas,'" Plumber told Peter Van Sant.
Later that afternoon, Jim Huden agreed to be questioned at the local police department, where he denied shooting Russel:
Jim Huden (police video): I'm a son of a bitch, but I - I --I'm no killer. But I'm a son of a bitch.
Jim Huden: This is quite a frightening experience.
Det. Plumberg: What is it that you're scared of?
Jim Huden: That you guys are here.
At the same time, cops had just raided Peggy Sue Thomas' home in Las Vegas.
"I had at least three police officers with guns to my head telling me to 'Freeze! Freeze! Freeze!' And they take my car keys ... put me in handcuffs, shove me in a dark laundry room," said Thomas.
Peggy Thomas says her house was ransacked with police taking computers, photographs and beauty pageant videos--but leaving her Ms. Washington sash behind. They then proceeded to grill her about the death of Russel Douglas.
"Detective Wallace said 'If you don't start confessing now we'll make sure that you get the death penalty and your kids are going to watch you die,'" said Thomas.
"How did it come that your lover, Jim Huden, shot Russ Douglas in the head, unless you put him up to it?" Van Sant asked.
"Well, I thought he didn't know him," Thomas replied. "I don't believe I could've said or did say anything to him to make him go psycho like he did."
Investigators had a strong circumstantial case against Peggy Thomas and Jim Huden. Remember those insurance policies?
"I believe there is over $500,000 in insurance premiums," said Bill Hill.
Jim Huden told Bill Hill how the money would be divided.
"And Peggy was supposed to get a certain amount and Jim was supposed to get $50,000 for pulling the trigger," Hill told Van Sant.
"Absolutely untrue. Money's not that important to me," said Thomas.
"Did Brenna, Russel Douglas' wife, did she know that her husband was about to be assassinated?" Van Sant asked Hill.
"According to Jim, the answer would be yes."
Det. Plumberg (police video): You know what you've told Bill. He's your best friend in the whole world. ... Who you told ... that you killed this guy on Whidbey Island.
Jim Huden: It's not true.
Detective Plumberg presses Jim Huden to see if he'll now implicate Peggy Sue Thomas or the victim's wife, Brenna Douglas.
Investigators have Jim right where they want him, but he shuts down.
Det. Plumberg (police video): I think the plot for this didn't come from you. I don't think the scheme for this came from you ... You got played Jim.
Jim Huden: That's fine. Uh... it's attorney time.
With no hard evidence against them, both Jim Huden and Peggy Sue Thomas were free to go.
"At that point, they had nothing to hold him on. They had no warrant. No indictment. So they brought him home," said Jean Huden.
According to Jean, Jim Huden had told her everything about the murder, including that Peggy Sue Thomas and Brenna Douglas were involved. But Jean Huden refused to betray the man she loved.
"I thought in maybe some warped way that this would bring us closer together. You know, if we shared this horrible secret," Jean Huden told Van Sant. "That Brenna and Peggy and he had planned to kill Russel Douglas."
Jean Huden says, after his interrogation, Jim became frantic
"At that point, he is just tripping out because he knows it's only a matter of time," she said.
Also tripping out was Bill Hill, who couldn't believe investigators had told Jim that he was the informant.
"I felt totally afraid. I slept on the couch with a .357 under me, beneath my pillow," said Hill.
In an effort to generate new leads in the case, Island County investigators went to the media and announced that Jim Huden and Peggy Sue Thomas were their prime suspects.
They were hoping a tip might lead them to the gun used to murder Russel Douglas.
"I assumed the murder weapon would be at the bottom of Puget Sound and we would never see it again," said Plumberg.
But luck was on Plumberg's side when he received an unbelievable tip.
"We got a phone call from an investigator in New Mexico," Plumberg said, "who said he had talked to someone who thinks they might have the murder weapon in the Russel Douglas homicide."
It was a .380 Bersa. A friend of Jim Huden's told police Jim gave it to him at Thomas' house in Las Vegas.
"And I took it immediately to our state laboratory who was, within hours, able to confirm this fired that shell casing and it fired the bullet that we pulled from Russel's head. It was almost too good to be true," Plumberg told Van Sant.
With this new evidence, Island County investigators flew to Las Vegas, where Peggy Sue Thomas agreed to answer their new questions.
"They showed me a picture of a gun and asked if I'd ever seen it," Thomas told Van Sant.
Detective (police video): So prior to February you never saw Jim in possession of a gun like that?
Peggy Sue Thomas: No.
"I said, 'No, I haven't.' And they said, 'Well, it is the murder weapon. We've matched it with the ballistics,'" said Thomas.
After the interview , Thomas called Jim Huden to confront him.
"And I said, 'The police told me they have a murder weapon. What's going on?' And he said, 'I did it. I killed Russ.' And he said, 'I'm sorry I got you involved. Just know that I love you and you'll never see me again.' And he hung up the phone," said Thomas.
Thomas claims she was in shock from Jim's confession.
"I broke. I broke. I could not believe that someone I loved and allowed into my house could kill someone. I was hysterical that day," she told Van Sant.
Jean Huden says Jim became unstable, threatening to commit suicide, but she had a better idea.
"I was like, RUN! Do something. You know, you have a chance. It's not over yet," she told Van Sant.
Jim Huden caught a lucky break when Hurricane Charlie hit the west coast of Florida. The murder suspect was now gone with the wind.
TRACKING A FUGITIVE
In the chaos following Hurricane Charlie in August 2004, Jim Huden blew out of town.
"He just disappears," said Det. Plumberg.
"He just falls off the face of the Earth?" Van Sant asked.
"He just disappears," the detective replied.
While investigators on Whidbey Island were left scratching their heads, wondering where Jim Huden had gone, little did they know that he was more than 2,000 miles away in Veracruz, Mexico.
"He loved this area. He would come here and sit for hours," said Jorge Mabarak, who was a close friend of Jim Huden's in Veracruz. But he knew him by a different name.
"Jim Martin. So everybody knew him as Jim Martin," Mabarak told Van Sant.
Mabarak is a famous jazz pianist in Mexico and often played onstage with Jim.
"And -- he had an ins -- emotional insight on people. Everybody like him. He likes everybody -- he liked everybody. Never had any problem," Mabarak said. "He was a blues player and a blues man."
Jorge Mabarak remembers a concert in Veracruz where Jim was one of the featured performers. Mabarak, a CBS News consultant, says this fugitive from justice had a soft side.
"If you look at the videos of him he really looks mean on the stage. But he was not. He was a very soft guy, very tender, very understanding ... and there was never any -- any sign of violence or any attitude -- an aggressive attitude. Never," he told Van Sant.
But Jim wasn't comfortable talking about his past.
"He told me, 'There are things about me that I'm not gonna tell you, so don't ask," said Mabarak.
While reporting this story, "48 Hours" learned about one of Jim Huden's old hangouts and got a tip he may have left behind some belongings.
An old friend of Jim Huden's gave "48 Hours" permission to look inside a locker that had not been opened in more than two years.
While that locker was empty for the most part, elsewhere in the residence, "48 Hours" did find Jim Huden's birth certificate from the state of Washington, his Florida driver's license and his border crossing paperwork dated Sept. 10, 2004.
It turns out Jim Huden had help getting to Mexico and staying out of sight for more than six years.
"I got Jim out of the country. I supported him for years. I went to Mexico to see him," said Jean Huden.
Jean Huden admits she lied to investigators about Jim's whereabouts for years.
"That was definitely the wrong thing to do," she told Van Sant.
Meanwhile, the other woman in Jim Huden's life, Peggy Sue Thomas, continued to drive limos in Las Vegas. Despite being a murder suspect, she hit the jackpot when she met Mark Allen in 2007.
"First time I met Peggy was through a limo service. And -- they ask -- me ... 'What, do you want, a guy? Or the ex-Mrs. Washington?' I said, 'Well, we'll take the-- ex-Mrs. Washington," Allen said with a laugh.
Mark Allen is a multimillionaire oilman and thoroughbred horse owner. One of his horses was the winner of the 2009 Kentucky Derby.
"Honestly, did you marry him for his money?" Van Sant asked Thomas.
"No," she replied. "I married Mark 'cause I loved him deeply."
"Mark was madly in love with Peggy?" Van Sant asked Vicky Boyer.
"Head over heels," she replied.
"And Peggy was madly in love with his bank accountant," Van Sant commented.
"Head over heels," Boyer laughed.
Vicky Boyer worked with Thomas and Allen on their horse ranch in New Mexico.
"I mean, (sighs) he was a good man. And he just -- he did everything she asked him to," she said.
Vicky Boyer had always believed in her friend's innocence in the murder of Russel Douglas. That is until one night in a bar, a drunken Peggy Sue Thomas allegedly joked about "taking care" of a problem for a friend and mentioned that she could use her gun.
"And she looked at me and she said, 'Well, at least this time I'll know to throw it in the water," Boyer told Van Sant. "I went home and I literally just fell apart. I mean, I just-- like, I just started shaking. I was crying."
Thomas has denied that conversation ever took place. But for Boyer, the episode led to a startling realization.
"That she did it," Boyer said. "... that her and Jim did this."
"The murder of Russel Douglas," said Van Sant.
"Yes," Boyer affirmed. "I mean, I was sure of it."
And Boyer wasn't the only person having problems with Thomas.
"It started out good and-- the more controlling she got, the -- less responsive I got, you know. I won't be controlled, you know, by anybody," said Allen.
After just seven months of marriage, Mark Allen was separated from both Peggy Sue Thomas and a sizeable chunk of change.
"You did get $700,000 and a houseboat," Van Sant noted to Thomas.
"Yes, I did. But I can tell you, if I was the true definition of a gold digger, we had a prenup and it entitled me to way more than $700,000 and a boat," she replied.
Meanwhile back in Florida, Jean Huden's life had fallen apart. By 2011, she had become a drug addict -- arrested multiple times on charges ranging from possession to forgery to theft.
"And it's just-- I-- it got to a point where I couldn't do it anymore. I'm tired of paying for Jim's mistake," she said.
Facing serious jail time for multiple felonies, Jean Huden decided to cooperate with investigators.
"I had to finally tell them where he was," she told Van Sant.
And that's when investigators got the break they needed. Jim Huden was arrested in Veracruz, Mexico, and returned to Whidbey Island nearly eight years after Russel Douglas was murdered.
One month later, authorities came for Peggy Sue Thomas.
"When the detective came up, he said 'You're in pretty big trouble,'" Thomas recalled.
"And what was that moment like for you?" Van Sant asked.
"Scary," she replied. "My life became a tabloid story with headlines about 'Drop-Dead Gorgeous.' ... I knew I had a battle on my hands."
SEEKING JUSTICE FOR RUSSEL DOUGLAS
From a beauty queen strut to a perp walk at the Island County Courthouse on Whidbey Island, Wash., in the summer of 2011, Peggy Sue Thomas is formally charged with the murder of Russel Douglas.
"These accusations that I'm involved in this crime have been a lie since the beginning," Thomas told Van Sant.
First up for trial is Thomas' former lover and alleged trigger man, Jim Huden. Prosecutor Greg Banks says there may have been several motives for murder: insurance money or that Huden was out to avenge the abuse he claims he was subjected to as a child.
"He had experienced abuse. And so he was gonna wipe the slate clean somehow by killing an abuser," Van Sant commented to Banks of a possible motive.
"Yeah. I think that's -- that's what, in the warped alcohol, pickled, drug-altered mind of Jim Huden -- was the thing that was makin' sense to him," Banks replied.
Cops say they never found any evidence that Russel Douglas physically abused anyone.
At the trial, the star witness against Jim Huden would be Bill Hill, who says Jim confessed to him about killing Russel Douglas.
"It was ... a scary situation," Hill said of testifying. "I could not look at him the whole time I was on the stand."
"Bill Hill was really very much a hero in this case," Banks said. "I probably could have rested the case after Bill testified."
Jim Huden refused to take the stand, leaving unanswered what the real motive might have been. After an eight-day trial and 20 witnesses, the jury took less than four hours to reach a verdict.
KIRO TV report: Guilty as charged! An Island County fugitive now faces years behind bars...
Jim Huden was sentenced to 80 years in prison.
Six months later, it was Peggy Sue Thomas' turn to face justice. And Banks had a witness who was ready to implicate her: Jim Huden's wife, Jean.
"Peggy herself told me she was involved in this murder. So I mean it doesn't get much clearer than that," said Jean Huden.
Dynamic defense attorney Craig Platt will represent Peggy Sue Thomas. Asked if Jean Huden should be believed, Platt told Van Sant, "No, absolutely not. There are so many problems with Jean Huden's testimony, it actually boggles my mind to know where to begin."
Platt says Jean Huden is a liability for prosecutors because she changed her story time and time again.
"It's a road map of inconsistencies. When Jean Huden originally talked to detectives back in 2004 ... she said, and I quote, Jim never told her that Peggy knew," Platt said. "Now, seven years later, 'Oh, I remember, Peggy's involved, the one that stole my man, the one that ruined my life. Yeah, she did it.'"
Even Jean Huden admits her memory is a bit shaky.
"Couldn't it be that what you said to Detective Plumberg, this was the truth. That Jim told you Peggy wasn't involved in this case. 'Cause your story didn't change for years" Van Sant asked Jean.
"Uh-huh," she replied. "Yeah. It's possible. It is possible. I just -- to be honest, I do -- I honestly don't remember saying that..."
Platt says Jean Huden's changing story demonstrates how desperate the prosecution is to make a case without credible witnesses or evidence.
"This is about a confederacy of dunces. This is about misinformation being allowed to grow and be perpetuated and used against an innocent woman to try to convict her for a crime she didn't commit," said Platt.
"Would you like to get Jean Huden up on the stand with an opportunity to cross-examine her?" Van Sant asked.
"That would be so much fun. That's almost too much fun for a defense attorney like me, to be honest," Platt replied.
"That was a big problem for us. I did not wanna walk away from Peggy Thomas empty-handed. And the case really hinged on Jean," said Banks.
Just a week before the trial is about to start, prosecutor Banks folds his hand and offers Thomas a plea deal: four years in prison on a reduced charge of rendering criminal assistance. She accepts.
"So what innocent person accepts a plea deal where you're gonna end up in prison for four years?" Van Sant asked Thomas.
"A person that's smart enough to realize that in this tiny little community of people who have been fed and fed and fed a story that isn't true ... that I wasn't gonna get a fair trial," she replied.
And remember the first suspect in this case, the victim's wife, Brenna Douglas? Investigators found no evidence that money ever changed hands between Brenna, Jim Huden and Peggy Sue Thomas. But prosecutor Banks says Brenna remains on his radar.
"I mean, she remains a suspect in my mind," he told Van Sant. "To this day."
After she ignored repeated requests to speak with "48 Hours", Van Sant finally came face to face with Brenna in a store parking lot:
"Hey Brenna? Peter Van Sant, CBS News. After all this time, investigators still believe you were involved in the murder of your husband. What do you have to say to that?"
"I have to say that you're harassing me and I already filed a police complaint for you guys following me. So I want you to leave," Brenna Douglas replied.
"I have not followed you. These are questions you should talk about. Peggy says that you once said to her that Russ was worth more to you dead than alive. Brenna talk to us. I'll ask you two questions and we'll go away," Van Sant asked as Brenna Douglas drove away.
"Peggy, with this plea deal, did you get away with murder?" Van Sant asked Thomas.
"Absolutely not. I don't want to minimize Russ's death in any way because I grieve for his family," she replied. "But I'm also a victim in this. ... I'm actually giving up four years of my life for something I didn't do."
But for Greg Banks, the real victim in this case has been largely forgotten.
"You know, this case is about getting justice for Russ Douglas. I mean, (sighs) what did Russ do? He was trying to do the right thing by his wife, trying to get back together. And for that he got a bullet in the head," said Banks.
Just a few days before going to prison, Thomas shared some final moments together with her daughters.
"I figure there must be a greater plan at the end of all of this for me," she said. "There's something wonderful on the other side of this and I don't know what the lesson is yet, but there's gotta be one."
Peggy Sue Thomas cannot be charged with murder even if additional evidence is uncovered. She is eligible for parole on Aug. 12, 2016.
Jim and Jean Huden are still legally married. They have not spoken in years.
Bill Hill passed away in October 2014.
AUTHOR ANN RULE ON THE DOUGLAS MURDER
Ann Rule, the true-crime author of over two dozen New York Times bestsellers, tells "48 Hours" she couldn't help but write about the Russel Douglas case. Hear why the case was so intriguing to her.
"Practice to Deceive" is published by Simon and Schuster Inc., which is owned by CBS Corporation, the parent company of CBS News and CBSNews.com.