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THE DALLAS MORNING NEWS October 7, 2007 Simday FIRST EDITION

DallasNews.com

Rival developer blew whistle When City Hall turned down his projects, he became FBI informant
BYLINE: REESE DUNKLIN, Staff Writer rdimHin@dallasnews.com SECTION: NEWS; Pg. 1A LENGTH: 2559 words

Developer Bill Fisher couldn't believe the e-mail. He forwarded it to his lawyer for a second opinion. "Yeah," the lawyer replied, "it looks like you're being shaken down." An associate of Dallas Mayor Pro Tem Don Hill wanted money. A City Hall meeting on whether Mr. Fisher would get millions in economic incentives to build his low-income apartment complexes loomed, and Mr. Hill's vote would be instrumental. The lawyer advised Mr. Fisher not to respond. But the approaches continued. Hire this person or that, Mr. Fisher was told, and Mr. Hill's political support would follow. He continued to do nothing. When the meeting finally arrived in fall 2004, Mr. Fisher's projects were rejected. "We hadn't appreciated the magnitude of not cooperating until then," his lawyer, John Shackelford, recalled. So Mr. Fisher went to the FBI and became an informant. His cooperation set in motion the bribery and extortion investigation that rocked Dallas politics and led to last week's 166-page criminal indictment. The first outward signs of the investigation had been the sweeping raids at City Hall and beyond in summer 2005. Authorities won't say publicly when they got involved, but it's clear that most of the indictment's blow-by-blow specifics date to the time shortly after Mr. Fisher began his secret role. Through Mr. Fisher, investigators were able to spend months before the raids collecting evidence of the pay-for-votes scheme they say Mr. Hill directed. During that time, the indictment alleges, Mr. Hill and his associates demanded and received about $225,000 in contracts and fees from the developer. Mr. Fisher's assistance enabled the Justice Department to build criminal cases against at least 11 of the 16 people charged, including Mr. Hill, who's since left office, and his friends. It also led them to other alleged insider deals.

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Among the others indicted was Mr. Fisher's former boss. Southwest Housing Development Co.'s Brian Potashnik. Fhe two had dueling low-income housing proposals on the agenda in fall 2004, and only one of them could win approval because of state rules. Mr. Hill endorsed Mr. Potashnik because the developer, the indictment alleges, paid bribes similar to the ones Mr. Fisher refused. Most of the people charged have pleaded not guilty, including Mr. Hill, Mr. Potashnik and state Rep. Ferri Hodge, the only sitting official indicted. A few have yet to enter pleas. A Justice Department official acknowledged that Mr. Fisher's cooperation was voluntary and not because he was a target of an investigation. Neither his home nor the offices of his company Odyssey Residential Holdings, have been searched. Special Agent Mark White, an FBI spokesman, would not comment. Nor would U.S. attorney's office spokeswoman Kathy Colvin, other than to say: "Fhe indictment, all 166 pages of it, speaks for itself." Mr. Fisher is also saying little. When questioned, he mostly refers to the indictment, which calls him simply an "affordable housing developer known to the grand jury." "I think it speaks for itself," he told Fhe Dallas Morning News, borrowing a phrase from Ms. Colvin. Mr. Fisher's lawyer said his client was trying to handle the improper solicitations "in the right way." He added that Mr. Fisher didn't know at the time whether Mr. Potashnik had paid Mr. Hill. "He just wanted to be able to do business and have it be a level playing field," said Mr. Shackelford, who represents Mr. Fisher's real estate interests. "Fhat was his motivation." Mr. Potashnik's high-profile Washington, D.C., defense lawyer, Abbe Fowell, declined to comment on Mr. Fisher's involvement. He did say that prosecutors mistake routine dealings with public officials for efforts "to improperly influence them." Matt Orwig, the former U.S. attorney for the eastern part of Fexas, said he's read the indictment and is impressed. Having an informant cooperate early to help collect the kind of evidence that Mr. Fisher did is "tremendously important." "That's a huge, huge asset," said Mr. Orwig, who is now in private practice. "Those people give you seeds for everything else." Troubled past with feds James R. "Bill" Fisher, despite all his cooperation now, has had a stormy relationship with federal authorities. Back in the 1990s, they accused him of conspiring to bilk investors - including lawyers and professional athletes, such as former Dallas Cowboys quarterback Gary Hogeboom - of about $900,000 in a Florida thrift he and associates ran. Mr. Fisher was found guilty at trial in 1995, sentenced to more than seven years in prison and ordered to repay the money. One of the associates cut a plea bargain for a short prison term and helped the government. Another was acquitted. Mr. Fisher challenged the ruling and, more than a year into his prison sentence, successfully overturned the conviction in 1997. The 5th U.S. Circuit Court of Appeals found that prosecutors had withheld evidence of contradictions in a key witness's testimony at trial, hi addition, defense attorneys were improperly barred from showing he had won many of his disputes with investors in civil arbitration. Prosecutors, however, took him to trial again later that year. Mr. Fisher's new criminal defense attorney James M. Murphy said his client was targeted unfairly because he had sued federal regulators for breach of contract after they broke promises to the thrift. He eventually lost that suit.

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Ill his second trial, the jury acquitted Mr. Fisher on the criminal charges. He later tried unsuccessfully to sue the government, in part, over the prosecutorial misconduct. "He has no love lost for the FBI, the IRS or the United States government," Mr. Murphy said of his former client. "He's not doing this to be pals with these guys." Mr. Fisher declined to discuss his prosecution. "I have had extraordinary opportunity and experiences in my life," he said. "I have little to complain about." Housing duel starts The year he was acquitted, Mr. Fisher began working for Southwest Housing and Mr. Potaslinik. Southwest Housing was then a small Dallas operation that had mostly fixed up a couple of dilapidated apartment complexes. But the company was on the rise and, over the next several years, Mr. Fisher helped it become one of the biggest, most successful low-income housing developers in Texas. Former colleagues described Mr. Fisher as the large, happy-go-lucky lieutenant to Mr. Potaslinik, a former nightclub owner and stockbroker who loved poker and was reputed to be short-tempered. Mr. Fisher had a sharp mind for finance and accounting, which he studied at SMU, and frequently served as the public face of Southwest Housing at City Council and neighborhood meetings. The partnership ended by early 2003, when Mr. Fisher left to start a company constructing the same sort of complexes that made Southwest Housing a powerhouse. The split was acrimonious, colleagues said, with Mr. Potaslinik accusing Mr. Fisher of scouting for land of his own while finishing out his time with Southwest Housing. Some of Mr. Fisher's new proposals were virtually next door to Mr. Potaslinik's. If the bad blood weren't enough, the rules governing the sort of projects the two built changed. The state limited the number of the complexes within a close range to prevent a glut in the real estate market, meaning just one developer would get the deal. The state further required that elected officials representing those neighborhoods lend their support before developers could tap into lucrative federal tax credits worth millions of dollars. The credits helped lower construction costs significantly more than if a developer were to use conventional financing. The rule changes created a winner-take-all environment leading up to the pivotal Oct. 27, 2004, City Council meeting that would decide whether Mr. Potaslinik or Mr. Fisher would build in South Dallas. That became the backdrop, the federal indictment alleges, for Mr. Hill and his associates to begin peddling their influence. 'Not playing ball' Mr. Hill represented the district where Mr. Fisher and Mr. Potaslinik had rival projects. Because of City Council etiquette, his colleagues deferred to him. Mr. Fisher received a couple of requests for money from people close to Mr. Hill. But the most consistent solicitation, the indictment says, was for a share of any business Mr. Fisher got from the city. Mr. Hill steered him toward hiring people close to him, Darren Reagan and Allen McGill of the Black State Employees Association of Texas. That group didn't actually have any members. Yet Mr. Reagan and Mr. McGill used the influential sounding name to lend credibility to what federal agents say was a "sham" opposition campaign against low-income

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complexes like Mr. Fisher was proposing. Those two men later told Mr. Fisher that giving them six-figure subcontracts, profit-sharing in his projects and an hourly consulting rate of $1,500 would secure Mr. Hill's support and erase public opposition, according to the indictment. Mr. Fisher didn't follow through. Mr. Hill then met with Mr. Fisher and "expressed concerns for the first time regarding pending votes" for his deals, the indictment alleges. It was a change in Mr. Hill's tone, because he had previously indicated no problems with Mr. Fisher's proposals, the developer's lawyer said. Mr. Fisher did not act. When the Oct. 27 meeting arrived, Mr. Hill voted against two of Mr. Fisher's apartment complexes in favor of Southwest Housing's. Mr. Hill also persuaded his colleagues to delay decision on a third Fisher project. "It was like, wow, not playing ball with those guys imdoubtedly had an impact," recalled Mr. Fisher's lawyer, Mr. Shackelford. Mr. Fisher decided to go to the FBI during the next few weeks, his lawyer said. He explained to them what had happened. He did not, his lawyer said, specifically accuse Mr. Potashnik of any wrongdoing. "We didn't know why but we kept running up against this roadblock," Mr. Shackelford said. "Why is it that Bill's getting his deals quashed at City Hall, and the other developer is seemingly getting all of his deals approved?" Federal agents later found evidence that Mr. Potashnik had paid a bribe to Mr. Hill five days before the meeting, according to the indictment. It came in the form of a $14,000 check for a consulting contract with Sheila Farrington, now Mr. Hill's wife, who allegedly kicked back the money to the City Council member, hi total, Mr. Potashnik gave about $1 million to Mr. Hill and his friends, the indictment alleges. The Justice Department official said authorities were initially skeptical of Mr. Fisher and wondered whether he was just a sore loser. They were also familiar with his past run-ins with the government. But the official, who spoke only on condition of anonymity said Mr. Fisher's tips and information checked out. Mr. Orwig, the former U.S. attorney said defense attorneys would probably try to discredit Mr. Fisher and raise questions about his motivations. But, Mr. Orwig said, that won't be enough to "raise reasonable doubt." Cooperation begins As an informant, Mr. Fisher helped the authorities start collecting evidence quickly. At that point in the indictment, the narrative becomes rich in detail with precise times and direct quotations. Agents cite e-mails, faxes, voice-mail messages and eventually recorded conversations. Three people questioned by the FBI told The News that agents revealed Mr. Fisher was wearing a wire. When asked about it, Mr. Fisher has not flatly denied that. One of the first major events that Mr. Fisher helped the FBI document was the next City Council vote on Nov. 10, when the project Mr. Hill delayed was on the agenda. hi the days leading up to that meeting, Mr. Hill's right-hand man and plan commissioner, D'Angelo Fee, asked Mr. Fisher three times to contribute between $2,500 and $7,500 to "sponsor" Mr. Hill's birthday party, according to the indictment. Mr. Fisher didn't pay. On the morning of the vote, Mr. Hill's associate, Mr. Reagan, phoned the developer and told him the project, the Homes of Pecan Grove, didn't have support. Mr. Reagan said the

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two needed to meet immediately in the City Hall parking lot, the indictment says. Mr. Fisher showed up 30 minutes later. This time, he signed a consulting contract with Mr. Reagan's group. An hour later at the council meeting, Mr. Reagan and Mr. McGill dropped their opposition and applauded Mr. Fisher's apartment complex. Mr. Hill, too, backed the project. A day later, Mr. Reagan met with Mr. Fisher and picked up a check for $10,000. The federal indictment goes on to lay out multiple alleged extortion attempts. Mr. Hill's associates frequently dropped his name when seeking payments from Mr. Fisher - such as the time Mr. Lee told the developer "it was a bad move" not contributing to the birthday party and that it "really stung Don." When the developer didn't move fast enough, he frustrated Mr. Hill and his friends. They responded by stalling his projects - and let him know they used their clout with Mr. Hill to make it happen. hi February 2005, tor instance, Mr. Reagan complained to Mr. Hill that the developer was "waffling" on signing contracts with their friends. He told Mr. Hill "we just need to pull" a zoning-change request Mr. Fisher had on the agenda for an upcoming meeting. Mr. Hill did so. That gave Mr. Reagan more time to lean on Mr. Fisher, the indictment says. Mr. Fisher later handed Mr. Reagan checks for $12,500 and $10,000. On the same day, Mr. Reagan allegedly met with Mr. Hill and Mr. Lee behind a church and gave Mr. Hill "at least $ 10,000 in cash." Mr. Hill "thanked Reagan for the payment" the next morning, the indictment

The last event Mr. Fisher helped the FBI document was in May 2005 - a month before the raids. Mr. Fisher was again told if he would work with two different associates of Mr. Hill, contractor Kevin Dean and lawyer John J. Lewis, he could get the official's support on yet another zoning-change request for the Homes of Pecan Grove. On the morning of the vote, Mr. Dean and Mr. Lewis picked up a signed contract and a $50,000 check from Mr. Fisher. Lhe indictment shows that Mr. Lewis then sent a text message to Mr. Hill several minutes later: "Everything is signed! Approve the project!!" Later that day, Mr. Lewis showed up at City Hall, where Mr. Hill led his colleagues in voting for the zoning change. Lliis elicited another text message from Mr. Lewis: "Thanks." One of the 'good guys' After the raids revealed the FBI investigation, Mr. Fisher faced suspicions from housing agencies, investors and lenders about his role, his lawyer said. It was understandable because search-warrant affidavits sought documents regarding his projects. "As Bill's out talking to different people, it would come up in conversations," said his lawyer, Mr. Shackelford. "I think to a certain extent it's just human nature that people think the

Mr. Shackelford wrote a letter and began giving it to people to explain his client was not a "target," cooperated voluntarily and would some day be seen as one of the "good guys." Mr. Shackelford said no one in the Justice Department, which was aware of the letter, called to correct it. Mr. Fisher "was actually a victim of some of the wrongdoing," the lawyer said in an interview. "His company paid a hefty price in not being able to do some deals." Staff writer Jason Trahan contributed to this report.

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LOAD-DATE: October 7, 2007 LANGUAGE: ENGFISH GRAPHIC: PHOTO(S): F Bill Fisher's cooperation set up the bribery inquiry. 2. Brian Potashnik 3. Don Hill PUBLICATION-TYPE: Newspaper

Copyright 2007 THE DALLAS MORNING NEWS 2 of 3 DOCUMENTS

THE DALLAS MORNING NEWS October 2, 2007 Luesday FIRSF EDITION

DallasNews.com

Couple is central in indictment Developers deny that company's success was built on bribes
BYLINE: REESE DUNKLIN, Staff Writer rdunklin@dallasnews.com SECTION: NEWS; Pg. 9A LENGTH: 789 words

Over the last decade, Brian and Cheryl Potashnik grew their tiny Dallas company into one of the largest, most successful developers of low-income apartments in Fexas. The power couple earned praise for revitalizing slums and offering temporary refuge to Katrina evacuees. Business was so good that they moved into a Highland Park mansion. But there was something more to their rise, federal investigators alleged Monday: The Potashniks built the empire, in part, by bribing government officials for favorable votes. The Potashniks doled out more than S1 million in gifts, benefits and sham construction contracts starting in 2002, according to an indictment in the public corruption investigation into affordable-housing deals in Dallas. Authorities said those payouts often were timed to influence crucial votes that helped the Potashniks' company, Southwest Housing Development Co., win economic incentives and zoning approvals - as well as freeze out competitors.

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The money continued to flow until federal agents raided Dallas City Hall, Southwest Housing's offices and the Potashnik home in the summer of 2005, according to the indictment. Mr. Potashnik, speaking on behalf of his family, continued Monday to maintain his innocence. He said in a written statement that his family was preparing to fight the criminal

The charges come as Southwest Housing is moving to sell its stake in 47 of its 53 apartment complexes in Texas to Seattle-based Cascade Affordable Housing, according to the Texas Department of Housing and Community Affairs. "We ask for people to wait for the facts and give us the benefit of the doubt we have worked so hard to earn," Mr. Potashnik said. The indictment broke little fresh ground in the corruption investigation. Instead it fleshed out in meticulous detail alleged back-door deals that the Potashniks made with government

According to the indictment, starting in 2002, the Potashniks first began paying most of state Rep. Terri Hodge's rent at one of their apartment complexes, covered her electricity bill and even installed new carpet for her. The couple ended up spending more than $30,000 on Ms. Hodge, who reciprocated by lending her support to Potashnik projects and helping lobby other elected officials. Such support was important because the Potashniks needed backing from local government officials to receive federal tax credits for their apartment complexes. The credits are part of a federal program designed to encourage construction in poor neighborhoods and can be worth several million dollars. That helps lower building costs significantly for a developer. Southwest Housing fueled its growth by receiving more than S280 million in tax credits since the mid-1990s, according to the state housing agency. The credits were central to other allegations in the indictment. hi the fall of2004, the Potashniks proposed apartment complexes in South Dallas. They were up against a company led by a former Southwest Housing executive, James R. "Bill" Fisher. Most of these dueling projects were in former Mayor Pro Tem Don Hill's City Council district. By that time, the city of Dallas had rules that limited the number of tax-credit projects within a close proximity. This meant just one developer would get the tax breaks and permission to build. The Potashniks - after conversations with Mr. Hill and his right-hand man, former city Plan Commissioner D'Angelo Lee - agreed to start hiring associates of the two as subcontractors and consultants on various developments, the indictment said. One associate was Mr. Hill's former campaign consultant and now wife, Sheila Farrington. She received a "sham" consulting agreement from Southwest Housing worth nearly $180,000 over a year's time, the indictment said. Then Ms. Farrington subsequently would disperse the money to Mr. Hill and Mr. Lee - to buy luxury cars and, one time in Mr. Lee's case, "pay his tithe," the indictment said. The Potashniks also gave a construction contract worth more than $800,000 to two other associates, the indictment said - even after Potashniks' staff had awarded another company

Because of the financial dealings, authorities allege that Southwest Housing got Mr. Hill's support to build its apartment complexes, and Mr. Fisher's projects lost out. Mr. Fisher wasn't charged in the indictment. He wasn't mentioned by name, although authorities refer to "another affordable housing developer known to the grand jury."

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His projects, he acknowledged Monday, were named in the indictment, but he declined to discuss specifics. "All I can say is generally if someone is being paid to do something they wouldn't otherwise do, then there's winners and losers in all these competitions," Mr. Fisher said. LOAD-DATE: October 2, 2007 LANGUAGE: ENGLISH GRAPHIC: PHOTO(S): (FILE 2005/StafF photo) Brian and Cheryl Potashnik are accused of doling out more than SI million in gifts, benefits and sham construction contracts to benefit Southwest Housing Development Co. PUBLICATION-TYPE: Newspaper

Copyright 2007 LHE DALLAS MORNING NEWS 3 of 3 DOCUMENTS

THE DALLAS MORNING NEWS October 1, 2007 Monday FIRST EDITION

DallasNews.com

City Hall charges due today Ex-councilman, developer among up to 14 to be named in Dallas corruption probe
BYLINE: DAVE LEVINTHAL, RUDOLPH BUSH and GROMER JEFFERS JR., Staff Writers SECTION: NEWS; Pg. 1A LENGTH: 1991 words

Federal prosecutors are expected to unseal long-awaited indictments today in connection with allegations of insider dealings at City Hall that include conspiracy, tax evasion, bribery and money laundering, according to several sources familiar with the investigation. The indictments of as many as 14 people, including former elected officials, are expected to be announced today at the Earle Cabell Federal Building and Courthouse, the sources said Sunday. The roster will include former Dallas City Coimcil member James Fantroy, as Mr. Fantroy confirmed he is scheduled to appear at the federal building today.

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It also includes Brian Potaslinik, president of apartment developer Southwest Housing; his wife, Cheryl Potaslinik; and his father. Jack Potaslinik, according to a statement from Brian Potashnik's attorney. "I am disappointed by the prosecutor's decision," the younger Mr. Potaslinik said. "Although our company had provided all the information the prosecutor asked for over 27 months, we now face an undeserved legal battle. How the prosecutor could include my 73-year-old father, fighting cancer, and my wife, the mother of our 9- and 10-year-old sons, is cruel and unjustified." Dallas Mayor Tom Leppert said Sunday evening that he knew of two people who would be indicted, declining to elaborate. He added that he did not have firsthand knowledge of other indictments or additional details. A grand jury handed up sealed indictments late last week, and attorneys for some of the defendants have been told to surrender their clients today at the U.S. Marshals Service office in downtown Dallas. The defendants are expected to make initial appearances in front of a magistrate judge starting today, but some may be held over until Tuesday, sources

Such action would culminate an FBI investigation into public corruption in Dallas that began publicly 27 months ago, when federal agents raided then-Deputy Mayor Pro Tem Don Hill's City Hall office. U.S. Marshals Service officials could not confirm Sunday whether they expected to accept any investigation targets into their custody today. Federal officials declined Sunday to comment on the record. "My heart goes out to those people involved. But we must let the process take its course," said Mr. Leppert, who became mayor in June. Mr. Leppert stressed that none of the people known to be targets of the investigation today serve in city government, and that "there's some really good, productive things going on at City Hall." "But I understand that it would be more difficult to get that out with people's minds on this," he said. "We will continue to work hard and be determined to earn the respect and trust of the people of Dallas. All I can do is continue to reassure them. We're a new council with new leadership. There's a lot of new people with different backgrounds. A new team is in place." Said Deputy Mayor Pro TemDwaine Caraway: "Government cannot stop. It continues. And this situation coming down won't stop us from moving forward. We must let the system take care of it. ... Our folks are going to move forward, stay prayerful and hope for the best resolution." After federal officials announce their intentions, Mr. Leppert said, he plans to schedule meetings with top city officials and other government officials outside Dallas city government to discuss the situation. "We will do that on an ongoing basis," the mayor said. Long-term stigma Mr. Fantroy, a former four-term council member, confirmed as early as last week that he expects to be among those indicted. He said he received a target letter three months ago describing the likely charges against him, including embezzlement, bribery and tax evasion. Mr. Fantroy said that federal authorities also were prepared to offer him leniency in exchange for his cooperation. But he publicly refused the deal and defiantly urged prosecutors to charge him. Authorities had requested that Mr. Fantroy come speak to them last week, but the interview was canceled after he went public with their offer, he said.

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The current Dallas City Council, inaugurated in June, includes eight new members and none of the council members known to be under FBI scrutiny. Current elected officials, including Mr. Leppert, have been critical of the investigation and have called for its quick conclusion, no matter what the outcome. "You've got to ask the question: 'Why are they still dragging this out?'" District 8 council member Fennell Atkins said in July. "The FBI has put a cloud over the whole city of Dallas. If you have an investigation going on for two years and nothing happens, it's very hard to erase the stigma, especially in the southern sector." Said District 3 council member Dave Neumann: "It's almost a miscarriage of justice for this to go on this long." A sweeping search It was a Monday in late June 2005 when federal agents swept across Dallas, tearing apart the City Hall and law offices of Mr. Hill, the security business of Mr. Fantroy, and the headquarters of Southwest Housing, a prominent developer of low-income tax-credit housing projects. They also searched the cars and homes of Mr. Hill and his then-appointee to the City Plan Commission, D'Angelo Lee. Search warrants indicated that the allegations included bribery and money laundering. A later subpoena named former council members Leo Chaney and Maxine Thornton-Reese; former city plan commissioners Carol Brandon and Melvin Traylor; and Odyssey Residential Holdings, run by Brian Potashnik's rival and former associate James R. "Bill" Fisher. Fhey requested documents, computer files and tapes on four of Southwest Housing's southern sector tax-credit projects and three of Mr. Fisher's projects. Mr. Chaney's lawyer said Friday that federal officials confirmed to him that Mr. Chaney is a material witness but no longer an FBI investigation target. Additional FBI searches targeted the office of the Black State Employees Association of Fexas and the homes of three of its directors, Darren Reagan and spouses Allen McGill and Gail Terrell. Subpoenas also named state Sen. Royce West, state Rep. Terri Hodge and Dallas schools trustee Ron Price, as well as several business partners of Mr. Hill's: contractor Andrea Spencer, developer Ron Slovacek and consultant Sheila Farrington. Former NFL player Kevin Dean was also named. Ms. Hodge received $32,000 in rent and utility subsidies from Southwest Housing over a three-year period. Lhe breaks occurred after Ms. Hodge threw her support to several of Mr. Potashnik's projects, including the apartment complex where she lives, Rosemont at Arlington Park. Southwest Housing contracted with Ms. Spencer and Ms. Farrington at Mr. Hill's and Mr. Lee's urging. Ms. Farrington, a campaign consultant of Mr. Hill's who provided him the BMW that was searched by the FBI, also had her apartment searched by federal agents. Mr. Hill and Ms. Farrington married in 2006, shortly after Mr. Hill divorced his previous wife. The companies operated by these contractors, including Mr. Lee's 825 Co.; Ms. Spencer's LKC Dallas; Mr. Slovacek's Kiest Boulevard LP and Millennium Properties and Development Inc.; Ms. Farrington's Farrington & Associates; and Mr. Dean's KDAF were also named in subpoenas, as was a company called RA-MILL LLC. Lives affected Mr. Lee stepped down from the influential City Plan Commission in early September 2005, days before the second City Council vote over whether to remove him. The first vote, spearheaded by then-Mayor Laura Miller, failed after a heated debate before the City Council. Meanwhile, Mr. Fantroy is stricken with cancer and kidney disease, and some politicians have quietly remarked that he won't live to either fight for his reputation in court or see his name cleared, hi recent days, however, Mr. Fantroy's condition appeared to have improved, and he's vowed to fight any indictment.

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For Ms. Brandon, it's already too late for her to face charges or have her name cleared: She died in April of cancer. The investigation has also effectively derailed Mr. Lee's political career. He hasn't occupied elected or appointed office since, and left Dallas for California shortly after resigning from the Plan Commission, although he's been spotted in Dallas periodically. Dueling developers The far-reaching probe seems to have started with humble beginnings in 2004, as Mr. Potashnik and Mr. Fisher, two rival apartment developers, fought for City Coimcil approval for millions of dollars in tax subsidies. The developers were pushing dueling projects in three southern-sector neighborhoods. With a new rule banning City Council approval of two tax credit projects within a mile of each other, Mr. Potashnik and Mr. Fisher were desperately seeking support. They collectively donated tens of thousands of dollars to City Council members' campaigns (Mr. Potashnik and his family had given at least $25,000 to Ms. Miller since 2002). Mr. Fantroy pushed for approval of one of Mr. Fisher's apartment complexes where his security company had a contract. And public officials, including Mr. Hill and Mr. Lee, steered Southwest Housing associates toward hiring their political associates as consultants and contractors. Mr. Fisher's office has not been searched by the FBI. But Dallas businessman Comer Cottrell has said that Mr. Fisher offered him $250,000 to try to bribe Mr. Hill to support of one of his housing projects. Mr. Cottrell, who declined the offer, said he was later told by the FBI that Mr. Fisher was wearing a recording device for the agency. Mr. Fisher, an ally of Mr. Fantroy's, has used the council member's family security firm at his low-income housing projects. Flexible moratorium? hi July 2005, Ms. Miller unilaterally announced that Dallas would place a moratorium on new applications for tax-credit housing projects. But soon afterward, the council, which didn't formally vote on the moratorium, began backtracking oil it. City housing records indicate that in 2006, the council approved two Dallas Housing Finance Corp. tax credit applications: the 332-unit Goodhaven Apartments project at 1810 High Hill, and a 319-unit development at 4030 N. Central Expressway. Likewise, it approved a Lexas Department of Housing and Community Affairs application involving the 209-unit City Walk at Akard project at 511 N. Akard St. downtown, which is slated to primarily house formerly homeless people. Politics and race Some black leaders - outraged that the large majority of those targeted in the FBI probe are black - have called the investigation a conspiracy. Despite the investigation, Mr. Hill announced in January that he'd run for mayor, entering a crowded field that ultimately numbered 11 candidates. Lhey all sought to replace Ms. Miller, who decided in July 2006 not to seek re-election after having served as mayor since early 2002. The investigation clearly hampered Mr. Hill, who struggled to raise money and allay voter fears that he'd become mayor - only to be led from City Hall one day in handcuffs. Mr. Hill captured about 14 percent of Dallas' May 12 general election mayoral vote - good enough for third place among 11 candidates, but well behind Mr. Leppert and District 3 council member Ed Oakley, both of whom advanced to a runoff. Mr. Leppert defeated Mr. Oakley in the June 16 runoff.

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Mr. Fantroy said last week that he expects the City Hall corruption cases to "be the biggest mess since O.J.," referring to the racially charged murder trial of former football star O..T. Simpson. But Mr. Caraway said he expects a measured process. "We must look at the facts. I don't see people rallying in the streets or anything," Mr. Caraway said. Staff writers Jason Trahan, Emily Ramshaw and Reese Dunklin contributed to this report. dlevinthal@dallasnews.com; rbush@dallasnews.com; gjefifers@dallasnews.com Digital Extra Archive: Read previous stories on the FBI investigation at Dallas City Hall, dallasnews.com/extra Updates: Visit our Web site for updates throughout the day. dallasnews.com LOAD-DATE: October 2, 2007 LANGUAGE: ENGLISH GRAPHIC: PHOTO(S): 1. Brian Potashmk. 2. James Fantroy PUBLICATION-TYPE: Newspaper

Copyright 2007 THE DALLAS MORNING NEWS

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