State district judge Lena Levario isn't mincing words. She thinks Dallas district attorney Craig Watkins acted improperly when he sought the counsel of attorney and political benefactor Lisa Blue on a high-profile mortgage fraud case.

In 38 pages of findings and conclusions dated August 2, Levario asserts that Watkins and Blue worked in tandem to pursue a criminal indictment against Hunt Oil heir Albert Hill III. Levario also calls into question the credibility of several other members of the district attorney's office and points out the huge financial benefit that Hill's indictment seemingly had for Blue.

Levario dismissed the charges against Hill in March when Watkins was held in contempt for refusing to testify about his relationship with Blue and their conversations in the days leading up to Hill's indictment. Hill's attorneys accused Watkins of prosecutorial misconduct and vindictive prosecution in a successful push to have the fraud charges dismissed. Watkins has since tried unsuccessfully to have the contempt charge dropped and to remove Levario from the case.

In the August 2 findings, Levario once again rejects Watkins' invocation of work-product privilege. But now she points out that the testimony of other assistants in Watkins' office would waive any work product privilege that was purported to exist. Three then-assistant district attorneys gave extensive, detailed testimony about their work on the case.

Even if a work-product privilege was warranted, Levario says it would not extend to conversations Watkins had with Blue, a third party not employed by the county.

Levario says in the finding that based upon testimony of Blue, Watkins and others, the court was entitled to draw a negative conclusion against the state.

The judge calls assistant district attorney Stephanie Martin's testimony "not credible" and points out that she was impeached by her own handwritten notes. Levario also questioned assistant district attorney Terri Moore's credibility, citing her "close relationships with Ms. Blue and Mr. Watkins."

"The court therefore concludes that because the [district attorney's office] lacked any valid claim of privilege, Mr. Watkins' refusal to testify about his communications with Ms. Blue strongly supports the inference that [Hill's] claims of misconduct are true," the finding reads.

Levario points out that Blue's decision to invoke the Fifth Amendment came after she had already testified about her relationship with Watkins and specific conversations concerning Hill's indictment for another lawsuit related to Hill and is therefore suspect.

At the heart of this case is Blue's involvement in contentious litigation against Hill, her former client, to recover more than $50 million in legal fees. That trial was just days away from starting when Watkins' office indicted Hill and his wife, Erin, for mortgage fraud.

On the advice of their attorneys, the Hills did not testify at their trial due to the ongoing criminal case against them. The court ultimately ruled against the Hills and ordered them to pay $21.9 million in attorney's fees; as part of a trio of attorneys, Blue is entitled to around $7.3 million of those funds.

Levario points out Blue's repeated donations to Watkins as well as their frequent phone calls and texts around the time of the indictments as evidence that Hill's claim of prosecutorial misconduct is founded.

"Ms. Blue not only personally contributed substantial sums to and in honor of Mr. Watkins, but also hosted a fundraiser for him at her house just weeks before the indictments," the finding reads.

"The court concludes that Ms. Blue and Mr. Watkins were effectively agents or co-conspirators of each other, and that it is appropriate to draw an adverse inference against the state because of Ms. Blue's refusal to testify."

Dallas District Attorney Craig Watkins' refusal to testify led to fraud charges being dismissed against Al Hill III.

Dallas South News

Dallas District Attorney Craig Watkins' refusal to testify led to fraud charges being dismissed against Al Hill III.