Some folks have asked why I believe David Wallace to be unethical, corrupt, and unfit to represent the GOP in the CD22 Congressional race, even as a write-in with no significant chance of winning. Well, I received the following item tonight that supplies a neat summary of the problems with David Wallace. I also have all or almost all of the documents and articles in question, though I was having difficulty uploading them for my site

Public information on David Wallace, Mayor of Sugar Land and an announced Republican Candidate for Texas Congressional District 22, from earliest to current.
A. David G. Wallace on April 28, 1988 filed a voluntary petition of personal Chapter 7 Bankruptcy in Collin County Texas. Chapter 7 means that Wallace paid his creditors nothing.
B. A November 23, 1991 article in The Guardian (London) identifies Wallace as a business partner of Mark Thatcher, son of former British Prime Minister Margaret Thatcher. The article reports that Wallace and Thatcher were business partners in a firm identified as Emergency Networks, Inc.
C. An April 2, 1995 article in The Sunday Times reports that the IRS accused Emergency Networks, Inc. of not paying the taxes withheld from employees’ pay to the IRS. The article reports that a memo shows that Wallace, a director of the firm was “fully aware of the unpaid taxes.”
D. The 4/2/95 Times article also reports that employees (Liquori and Hughes families) of Emergency Networks complained that health insurance premiums were withheld from their pay but that the firm did not pay the premiums to the insurance company leaving the employees without health care for which they paid. The Liquories had to file personal bankruptcy when they were unable to pay their medical bills for lack of health insurance they had paid for.
E. An October 17, 1994 article in The Independent -- London Emergency Networks,Inc. was placed in Chapter 7 bankruptcy in 1994.
F. A November 25, 1992 article in The Guardian (London) states that a secret United States government communications identified Mark Thatcher as being involved in a Saudi Arabia arms deal. The same article reported that Howard Teicher, who was monitoring military build-up in the Middle East indicated that Mark ThatcherÂ’s name turned up in diplomatic dispatches from US Embassies in Europe and Saudi Arabia regarding Middle East arms deals in the 1980s.
G. An October 10, 1994 article in The Guardian (London) reported that David Wallace and Mark Thatcher were partners in Grantham Company, an investment company that would “look for companies on hard times and put up the money with some hands-on management” said one associate. The article also reported that Thatcher in 1992 was named in a US court in connection with a $4 billion payment to a Saudi national by Rolls-Royce and British Aerospace to help them with a defense contract with Saudi Arabia. An October 10, 1994 article in the Los Angeles Times reported that both the Sunday Times and Independent said that Mark Thatcher earned a $19 million commission for helping secure the Saudi Arabia arms deal. The LA Times claimed that the Sunday Times said the allegations that Thatcher profited from the arms deal came from transcripts of telephone calls tapped by Saudi intelligence between members of the Saudi Royal Family and its agents.
H. Thatcher for many years maintained that he was not involved in any arms sales, but an April 5, 2005 Dallas Morning News article reported that Mark Thatcher in a plea bargain agreement pleaded guilty in South Africa to helping finance a coup attempt in Equatorial Guinea.
I. An October 2, 1994 article in The Observer Newspaper reported a Houston attorney, William King (now Managing Partner of Linebarger, Heard law firm’s Houston office), revealed that Mark Thatcher and his business partner David Wallace were being sued by John “Jay” Laughlin under anti-racketeering, or RICO, legislation. Laughlin claimed that he was duped after David Wallace took over his firm, Ameristar Fuels, and he was squeezed out of management. Laughlin claimed that Ameristar was worth at least $2 million when Wallace took over in 1993 and that by September, 1994 when Wallace placed Ameristar in Chapter 11 Bankruptcy that the firm had a negative $6 million worth. Thatcher and Wallace maintained that they did nothing wrong, but in an August 1, 1995 article The Guardian (London) reported that Thatcher paid approximately $500,000 to settle the case.
J. The 4/2/95 article in The Sunday Times reported that Grechen Hyland, financial controller of Ameristar claimed that “Wallace wired large sums of money to Indonesia without supporting documents. I lost count of how many times I requested documents of these outgoing wire transfers.”
K. A January 22, 1995 article in the Mail on Sunday (London) reported that Barnet Skelton, Jr. an attorney investigating Ameristar stated that Wallace was simply a pawn of Mark Thatcher. The article reported that Jay Laughlin, who had filed a RICO suit against Wallace and Thatcher, claimed that the money Wallace used to take over Ameristar came from Thatcher. Skelton claimed that Thatcher wanted to conceal his involvement in Ameristar to evade US tax law. Ameristar enjoys several US tax privileges on condition that all of its shareholders are US Citizens or residents for tax purposes and Thather was a resident of Switzerland. Laughlin stated that Margaret Thatcher was encouraging her son Mark to “distance himself from Wallace” and that Wallace was asked by Ms. Thatcher to resign as Treasurer of her foundation.
L. It appears that David Wallace and Mark Thatcher were business partners in at least two failed businesses from about 1990, shortly after Wallace filed personal bankruptcy until 1995 when the suit by Laughlin was settled, during the time that Thatcher was identified as profiting from arms deals involving Saudi Arabia and Iraq.
M. An August 3, 1998 Dallas Business Journal article reported that WallaceÂ’s investment firm The Markpoint Co. had acquired Power Battery Inc. WallaceÂ’s firm supposedly pumped $1 million into Power Battery and exchanged about $14 million in private stock from LSM International, Inc. a south Texas battery manufacturer that Markpoint purchased in 1997. The new company was named Consolidated Power Battery Corp. Wallace was paid to manage the business but on August 22, 2000 Wallace placed the company in bankruptcy (Case No. 00-37735-H4-7 (Chapter 7).
N. On October 20, 2000 the Bankruptcy Trustee for Consolidated Power Battery Company (CPBC), Robbye R. Waldron, sued Wallace and other Directors of CPBC for mismanagement. Wallace and the other Directors settled the lawsuit for a $300,000 payment.
O. On January 8, 2001 Wallace filed a Proof of Claim against the bankrupt CPBC on behalf of Wallace & Associates Investments, Inc. (f.k.a. The Markpoint Company) for $107,643.78. The bankruptcy trustee filed an objection to the claim pointing out that Wallace was an insider and a director of the bankrupt CPBC. The claim was denied.
P. On January 8, 2001 Wallace as Manager of SVP Management LLC, the General Partner of Sundance Venture Partners L.P. filed a Claim against the bankrupt CPBC for $820,974.84. The Bankruptcy Trustee of CPBC, Robbye Waldron, filed an Objection To Claim pointing out that Wallace was an insider and director of the bankrupt CPBC. The claim was denied.
Q. On December 21, 2001 WallaceÂ’s firm, Wallace & Associates Investments, Inc. borrowed $76,794.04 from SouthTrust Bank, Houston, Texas for 6 months. David Wallace personally guaranteed the loan.
R. Wallace failed to pay the note according to its terms and on June 12, 2002, after Wallace had been elected Mayor of Sugar Land, SouthTrust filed suit, Cause No 773900 in County Court at Law # 1 Harris County Texas to collect from Wallace.
S. On December 2, 2002, while Wallace served as Mayor of Sugar Land, Wallace entered into an Agreed Final Judgment whereby the court ordered David Wallace, individually, and Wallace & Associates Investments, Inc. to pay SouthTrust an amount totaling $82,870.42 plus post judgment interest of 10% per annum. Wallace agreed to pay SouthTrust $1,000.00 per month, with all sums to be paid by December 31, 2003.
T. Wallace failed to pay according to the terms of the Agreed Final Judgment.
U. SouthTrust abstracted the judgment by filing it of record with the County Clerk of Harris County on February 2, 2004.
V. On February 27, 2004 attorneys for SouthTrust filed a writ of discovery on David Wallace. As of January 1, 2006 the amount Wallace owed totaled about $100,000.00 including accrued post judgment interest.
W. A March 1, 2005 article in the Fort Bend Sun Newspaper reports that Wallace had received a one-third equity interest in a real estate investment trust from Will Perry and then placed that equity interest in his childrenÂ’s trust which places the equity interest beyond the reach of WallaceÂ’s lenders and creditors.
X. The 3/1/05 article also revealed that Wallace had moved his office into W. C. PerryÂ’s office in early January 2005 and had taken a position as Chairman investment Committee W. C. Perry Realty Investment Fund & W. C. Perrry Properties, L.P. WallaceÂ’s announcement that he had taken a position with W.C. Perry as an executive created a concern about conflict of interest on a proposed land development project involving the City of Sugar Land, Imperial Sugar, Cherokee Investment Partners of Raleigh North Carolina (developer of the project), W. C. Perry Properties and the State of Texas for the acquisition and development of the Imperial Sugar Mill property and adjacent state of Texas land in Sugar Land. The project involved the potential of favorable financial benefits being granted to the developer and one of its partners, Perry Properties, to develop the project. There was the potential for abatements or other financial benefits being granted from the city, county, or state to the developers. The city had been in discussion for several years on what should happen with the property following Imperial SugarÂ’s bankruptcy and Wallace had privileged information on the project.
Y. A March 8, 2005 article in the Fort Bend Sun revealed that the City Council of Sugar Land had created a “firewall” around Wallace following his announced involvement with Perry and would exclude him from any further discussions on the Imperial Sugar/Cherokee Investment Partners project.
Z. Harris County public documents shows that on February 6, 2006 a Limited Partnership, NC Two LP of Raleigh, North Carolina, created and controlled by NC Ventures, Inc. a Stafford, Texas firm owned by Wallace’s former neighbor and campaign contributor Michael Hrebenar provided Wallace a Satisfaction of Agreed Final Judgment thereby releasing the judgment lien previously filed by SouthTrust Bank against Wallace. According to public information, NC Ventures, Inc.’s business includes acquiring bad debts from financial institutions at a substantial discount from the amount of the debt and collecting the debt. The industry standard for this type of purchase of bad debts is about 10¢ on the dollar. According the Harris County public documents NC Two LP controlled by NC Ventures, Inc. acquired Wallace’s bad debt from Wachovia Bank successor to SouthTrust Bank on September 7, 2005.
AA.On June 30, 2006 Wallace filed a Financial Disclosure Statement relating to his pursuit of US Congressional District 22 seat that showed he earned $85,775 for the six months of 2006 and $160,000 in 2005 the majority coming from (W.C.) Perry Properties Brokerage Services ($60,000 in 2006) ($120,000 in 2005). That report discloses the interest in W. C. Perry Properties, LP (valued between $1 and $5 million) given to Wallace in 2005 and explained above is held by his dependent children. The home Wallace lives in is also owned by his dependent children (valued between $250,000 and $500,000) as is an interest in Sugar Land Entertainment Enterprises, LP (valued between $250,000 and $500,000) and 4660 Sweetwater Professional Centre Partners, LP (valued between $50,000 and $100,000). Such ownership structure effectively renders Wallace judgment-proof should lenders or creditors attempt to collect from Wallace. It is not known if Wachovia Bank knew about WallaceÂ’s earnings in 2005 or about the interest in the real estate investment company that Perry gave Wallace when it sold, at a discount, the SouthTrust loan made to Wallace to NC Two LP.
Wallace’s track record over an 18 year period involves personal bankruptcy, multiple business failures, and accusations of impropriety including RICO violations. Though he has recently stated he “turns businesses around”, he has not publicly presented specific examples of successful turnarounds.

Now let's be real honest here -- there may be perfectly logical and reasonable explanations for some of these items -- but a reasonable person must wonder if such explanations exist for every single one of them, including the legal/business/financial issues that are currently at issue. And more to the point, do we really want to have a candidate with this much baggage following in the footsteps of our former congressman, whose ethical record has been questioned over the years -- and who is currently facing criminal charges?

Whether the CD22 precinct chairs decide to endorse a write-in candidate or someone already on the ballot, we need someone of high integrity with as clean a record as we can find. And i'm sorry, folks, but David Wallace is not it.

Posted by: Greg at 03:35 PM | Comments (17) | Add Comment
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