Good Hair Perry and His Murky Land Deals

Murky land deals mark Gov. Rick Perry's past
09:15 PM CDT on Sunday, July 25, 2010

By JAMES DREW, STEVE McGONIGLE and RYAN McNEILL / The Dallas Morning News

Three years after Gov. Rick Perry's biggest real estate score, questions persist about whether the governor benefited from favoritism, backroom dealing and influence-buying.

The Dallas Morning News found evidence that Perry's investment was enhanced by a series of professional courtesies and personal favors from friends, campaign donors and the head of a Texas family with a rich history of political power-brokering.

Together they may have enriched Perry by almost $500,000, according to an independent real estate appraisal commissioned by The News.

The governor's staff insists these were routine, legal deals that were properly handled. They point to a bank's appraisal, done when Perry sold his land in 2007, that said the buyer was paying Perry slightly less than market value.

Experts hired by The News dismissed that appraisal as "unsupported" and said it did not meet professional standards. County tax appraisals at the time also indicated that the governor was able to buy the land below market value and sell far above it.

Perry, in a brief interview last week, said every land transaction he has made while in office "has been open and honest, and at arm's length," and disclosed in public records.

"So I would just have folks take a look at the record, and I think the record pretty much speaks for itself," Perry said. "Being open and being honest and being at arm's length is what people expect every day."

At the center of the dispute is a gently sloping, half-acre grassy lot on the shore of Lake Lyndon B. Johnson in the Texas Hill Country resort of Horseshoe Bay. The resort is owned by Doug Jaffe, whose family has long, deep and sometimes controversial ties to Texas politics.

Jaffe's company had sold the parcel to state Sen. Troy Fraser, R-Horseshoe Bay, a friend and political ally of Perry's. Fraser sold the lot to Perry for just above $300,000.

An appraiser hired by The News determined that the land actually was worth $450,000 when Perry bought it.

Perry sold the property in 2007 to Alan Moffatt, a British national who is a business partner and close associate of Jaffe's.

Moffatt, as the owner of an aviation firm, was questioned, but never prosecuted, for his company's international arms shipments to Africa in the 1990s.

He paid Perry $1.15 million for the parcel. The News' appraiser, who has decades of experience in Horseshoe Bay real estate, found that price to be $350,000 above market value.

Moffatt denied that anything improper occurred in the transaction. "It just happened that the governor of Texas owned that lot," he said. "It was a good deal for me."

If Perry was deemed to have received any gifts, he would, as a state officeholder, have been required to disclose them. He did not do so.

Perry has portrayed himself as one of the most financially transparent governors in Texas history, and has attacked Democratic nominee Bill White for not releasing all tax returns.

Republican Perry, running for re-election to a record third four-year term, has been criticized by political opponents, including GOP Sen. Kay Bailey Hutchison, for enriching himself via land deals while in office.

The head of a nonpartisan, nonprofit organization that promotes transparency in government said Perry's Horseshoe Bay transactions look questionable.

"The man on the street on this would think that this is a series of deals that smell of special favors being created for elected officials to curry their favor," said Ellen Miller, executive director of the Sunlight Foundation in Washington, D.C.

The Perry deal was hardly the first time the Jaffe family has operated among shadowy businessmen and influential officeholders.

For the Jaffes, it has been a way of life.

'Wheeling and dealing'

Doug Jaffe and his late father, Morris, have built widely chronicled reputations as big-money backers of Democratic politicians going back to Lyndon Johnson's days as a U.S. senator. Johnson and Gov. John Connally were occasional dinner guests at the Jaffe mansion in a San Antonio suburb.

Morris Jaffe, who died in 2001, rose from poverty on San Antonio's west side to create an empire that included oil and gas exploration, real estate, a department store chain and an insurance firm. Among his business partners was Houston oilman Oscar Wyatt, who went to prison in 2007 for paying kickbacks to Iraqi President Saddam Hussein.

The Jaffes were implicated in a federal investigation of billionaire rancher Clinton Manges, a protégé of legendary South Texas political boss George Parr. Manges was convicted of using the mail to file false claims with a state land official to retain an oil lease for the Jaffes.

"Anything they do is wheeling and dealing," said Bob Wallace, a former business associate of the Jaffes whose venture with them fell apart. "Anything they do is complicated."

Doug Jaffe found success in the vending machine business and made a fortune selling "hush kits" that allowed older commercial jets to meet government noise restrictions. His worldwide client list included the government of Nicolae Ceausescu, communist dictator of Romania, and Samuel Doe, a notoriously repressive president of Liberia.

In 1989, numerous press accounts reported that a congressional ethics committee investigating House Speaker Jim Wright subpoenaed both Jaffes to testify about an East Texas oil exploration venture that, despite producing nothing, earned Wright about $150,000.

The Jaffes disputed allegations that they helped enrich Wright so that he would support a bid by one of their companies to win a $3 billion military aircraft contract.

The federal Office of Independent Counsel also investigated the Jaffes as part of a probe of former San Antonio Mayor Henry Cisneros, then the U.S. housing secretary, according to the counsel's report. The Jaffes acknowledged they had made thousands of dollars in loans to Linda Medlar Jones, a former Cisneros girlfriend.

While best known for backing Democrats, the Jaffe family also has contributed to Republicans when the GOP was in power. After giving $25,000 to Perry's Democratic rival in 1998, Doug Jaffe gave $5,000 to Perry's campaign fund for governor in 2004, campaign records show.

Doug Jaffe said he appreciated Perry's stewardship of the Texas economy. "I feel blessed that we've had him there," he said recently.

Bexar County Judge Nelson Wolff, a longtime Democratic ally of the Jaffe family, chuckled when asked if he thought Doug Jaffe was a Perry supporter.

"Money," he said, "generally follows the candidate they think is going to win."

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