The Estes Estates

A QUESTION OF POSSIBLE violation of state law by a former school superintendent. Allegations of continuing sidestepping of school system policy by a current high-ranking administrator. The loss within the past decade of $50 million through “malfeasance and waste,” according to one school board member. These are reasons for the public to once again scrutinize the operations of the Dallas Independent School District.

While controversy concerning land deals and possible kickback schemes raged through the DISD administration in 1979, former school superintendent Nolan Estes always eluded suspicion of wrongdoing. Although his judgment was challenged and there was some question of his involvement in conflicts of interest, nothing was ever proven.

Estes left the DISD at the end of 1978 free and clear to assume a prestigious job as professor of educational administration and coordinator of the superinten-dency program at the University of Texas in Austin. Now, however, a careful examination of Dallas real estate records shows a pattern in Estes’ land ownership that again raises questions of conflicts of interest and possible violations of state law.

It has been known for some time that Estes invested in Oak Cliff real estate, but the relation of those investments to DISD properties has not been thoroughly analyzed before.

Estes is not a big-time real estate operator; City of Dallas tax records show current holdings in his name totaling 14 pieces of property valued for tax purposes at just over $226,000.

There are, however, two particularly interesting characteristics about Estes* holdings. Five of the properties are close to James Hogg School in Oak Cliff, including one lot directly across the street from the school. During Estes’ tenure as superintendent, plans were initiated to construct a new school building on the Hogg site.

Also of interest is the relationship between Estes and Kedric Couch, DISD assistant director of athletics. In 1979, school officials found that Couch had violated DISD conflict of interest rules by buying up land the DISD was about to acquire and then selling it to the district at a good profit. The district compelled him to pay back to DISD the profits he had accumulated from land dealings on property the DISD acquired. Tax records show that Couch still holds seven pieces of property near Hogg School. Included is one lot split so that Couch owns one half; Nolan Estes, the other. Estes also owns another piece of property adjoining land that once belonged to Couch.

As a real estate operator, Couch outclasses Estes. City tax records show that Couch holds 35 pieces of property with a tax evaluation of almost $500,000. As recently as mid-July, Couch sold one of his properties for $85,000. Even with his wide real estate interests, he remains a full-time DISD employee.

In addition to the land near Hogg School, Couch has found other Oak Cliff school areas attractive. He has nine properties close to Arcadia Park School. Of Couch’s three properties near John Peeler School, tax records show that one adjoins property owned by DISD Trustee Brad Lapsley and is across the street from an Estes property. At one other site, Couch and Lapsley are also neighbors.

Both Lapsley and Couch say they know nothing about this. Lapsley says he and Couch “have chatted about general conditions and so forth” about realty and have also discussed Nolan Estes’ holdings.

Lapsley and Estes are participants in a joint venture, each holding an interest in a warehouse. Lapsley notes that Estes “has asked my opinion” about some properties and that Estes “is always moaning about how terrible it is” not to be making money on his investments.

The Estes and Couch land holdings raise issues more subtle than those that caused Couch’s problems two years ago. At that time, Couch was buying land the DISD planned to use immediately thereafter. Couch’s sales to the DISD netted him about $20,000 after briefly holding the land (in some cases for less than a year).

Profit expectations for the current properties can be based in part on estimates of the impact of new school construction on that school’s neighborhood. When a new school building replaces a run-down facility, the area immediately becomes more attractive to parents as well as to long-term developers. Early investors like Estes and Couch can reap substantial profits.

Couch vehemently disagrees with any suggestion that his status with the DISD remains tenuous. According to Couch, “I have never been accused of one thing by the school board or one thing by Linus Wright.” Of his previous problems with the district regarding conflict of interest he says, “I’m a victim of circumstances. It’s all a joke.”

Couch refuses to accept the validity of Wright’s 1979 declaration that Couch “in light of his agreement to return the funds … will remain in his present position with the understanding that he will cease and desist from such practices in the future.”

As to the money Couch is turning over to the DISD, he insists that it is in the form of voluntary “contributions” that can be used for scholarships. He admits that the Internal Revenue Service has been questioning him about this money.

Defending his investments in property near schools, Couch says, “That’s smart business.” He has claimed he conducts all his real estate business outside the office, but at his DISD desk he is quick to pull out a list of his properties. He comments that he passes on tips to “all sorts of folks” in the DISD administration.

One of Couch’s 1980 purchases was again near Hogg School. Linus Wright says his understanding of the agreement with Couch was that Couch would not become involved even in the neighborhoods of new school construction. Asked what he would do if he found Couch buying land in these neighborhoods, Wright said, “I’d have to look at it very seriously.”

Couch shrugs off criticism. “There’s a lot of jealousy involved,” he says. “People don’t understand the difference between speculation and investments.” Again he says of any and all allegations about his conduct, “It’s a joke.”



According to Dallas County tax records, Nolan Estes acquired 20 properties by warranty deed between August 1976 and September 1979. (Estes left the DISD at the end of 1978, but 17 of these acquisitions took place during his tenure as superintendent.)

It isn’t easy to determine how much money Estes made or will make on these deals, since the deeds for many of the properties merely indicate “all cash.” One holding for which complete financial records are available shows that Estes knows how to turn a profit; a property he purchased in November 1978 for $4250 was sold in September 1979 for $18,000. The property is three blocks from J.H. Reagan School -a school that in the summer of 1979 received an allocation of $2.2 million, using almost half of the remaining funds from the 1976 bond money to renovate several schools. Estes was no longer superintendent at this time, but his imprimatur was clearly on the policies that allocated the $80 million approved by voters in 1976. Reagan was one of the “new school” sites included in the 1976 bond proposal that was principally Estes’ creatio.

DISD board member Jerry Bartos is troubled by the $2.2 million allocation at Reagan. “That stands out as an unusually large improvement when compared with all other elementary school improvements in the bond issue,” he says. “That particular amount is a million dollars more than was scheduled [originally].”

An Oak Cliff real estate agent and a bank official agree that the school construction would have had an impact on property values. The real estate agent says, “New schools are going to help a lot,” and adds that the schools, “promote new interest by lending institutions.” He calls the increase in value of this property “exceptional.”

Estes’ activities raise major

conflict of interest questions. As superintendent, Estes could strongly influence -if not absolutely determine – the location and scheduling of school construction and improvements. Under the Texas Penal Code (Sec. 39.03), “Misuse of Official Information” is defined as:

A public servant commits an offense if, in reliance on information to which he has access in his official capacity and which has not been made public, he: (1) acquires or aids another to acquire a pecuniary interest in any property transaction, or enterprise that may be affected by the information; or (2) speculates or aids another to speculate on the basis of the information.

This is a Class A misdemeanor punishable by a fine of up to $2000 and a year in jail.

“Official Misconduct” (Sec. 39.01) states, in part:

A public servant commits an offense if, with intent to obtain a benefit for himself or to harm another, he intentionally or knowingly: commits an act relating to his office or employment that constitutes an unauthorized exercise of his official power.

This also is a Class A misdemeanor.

A question the district attorney could resolve is this: Did Superintendent Estes manipulate the development of school construction priorities for the benefit of his (and perhaps Couch’s) realty investments? For example, in August 1976 Estes purchased land across the street from the Hogg School expansion site-a major new school project that eventually entailed a cost allocation of almost 50 per cent over the 1976 bond issue budget.

DISD Trustee Jerry Bartos, who before serving on the board had campaigned vigorously for the 1976 bond program, says of the Hogg project, “I thought the whole allocation of funds was strange.” He says such overspending violated the “covenant with Dallas voters” about which projects would be undertaken and how much money would be spent.

Also: To what extent if any, were Couch’s purchases, which stretch back to the early Seventies, guided by information from Estes? Was there collusion between them?

Driving along the 1100 block of Madison Avenue in Oak Cliff, it is obvious that the neighborhood has been enhanced by the new Hogg School. The building is large and modern, standing in striking contrast to the original Hogg facility. While Dallas civic leaders were campaigning for passage of the 1976 bond issue, Estes and Couch were buying land in the vicinities of school projects the bond money would fund. Beginning with the Madison Avenue purchase in 1976 and continuing into 1979, Estes and Couch kept buying property in the area. For example, Couch purchased 1000 Bishop Avenue, several blocks from Hogg School, in December 1978. A month later, Estes bought 1002 Bishop.

Although the overall plan for school construction and improvements was made public during the 1976 DISD bond campaign, the actual setting of priorities and establishments of timetables was subject to the discretion of the superintendent, followed by board ratification. According to one DISD board member, Estes was “a despot” when it came to determining such matters.

The link between Estes and Couch remains a puzzle. When I asked Couch if he had ever talked with Estes about property, he said: “I know you better than I know Nolan Estes.” (He had never spoken to me before.) He went on to say that “Estes ran into me in the hall one day and I told him it [real estate] was a good tax write-off.”

Couch insisted this was the extent of their conversation. When the adjoining properties and other similarities in ownership patterns were pointed out to him, Couch grudgingly added, “He has asked me in the hallway, that’s all.”

The fundamental issue here is whether a school district superintendent should be involved in any way in real estate dealings that are affected by school district business. Favoritism towards particular school facilities – and to neighborhoods – can follow too easily.

Current Superintendent Linus Wright will not discuss the activities of his predecessor. Wright does, however, have definite ideas about extracurricular business activities of school administrators.

“I personally don’t get involved in any investments. I can’t spend the time. Being superintendent is a 24-hour job.” Wright adds that when he was a school official in Lubbock, it was written into his contract that he could not deal in real estate. The knowledge and power inherent in the superintendent’s job are such, he says, that “if I was inclined to, I could have made a fortune.” For someone with access to inside information, argues Wright, “it ought to be against state law to participate in any kind of real estate development.

“What bothers me is just the involvement, period. Being associated with the schools and having inside knowledge of where the development is going to go. I still think it’s unethical, and as I told the board, I would never have tolerated that had I been here.”

When shown the lengthy list of Nolan Estes’ realty dealings, Wright looked amazed and said only, “Is that right?”

In response to a request for an interview, Estes left word with his secretary that he “would not be able” to see the reporter.

Also at issue in this matter is the role of the school board as watchdog. When possible illegal activity by school administrators becomes known (as with Couch in 1979), it should be immediately referred to the district attorney for a determination of legal status. The DISD board has a bad habit of trying to “wish away” the district’s problems. The theory seems to be, “If we keep quiet, maybe the public won’t find out what is going on.”

In many ways, the DISD has caused problems for itself with its weak, inconsistent approach to misconduct. The maneu-verings in the Couch case are a good example. It is not the DISD’s responsibility to determine the legality of an employee’s acts. The board, nevertheless, took it upon itself to assume investigative and judicial roles, both of which it handled with remarkable ineptitude.

Wright is sharply critical of the board. He says that the board had adequate policies governing conflicts of interest. The problem, Wright says, “was lack of following through once this became knowledge. They’ve talked about not having adequate control, not having adequate policy. But I don’t care what kind you have if you don’t do anything about it once it’s discovered. That’s their problem, and that’s where the board was derelict in not following through once it became knowledge and not accepting the fact that it was a problem.”

Board member Brad Lapsley says, “I think we make a very incompetent judicial system. We are not prone to get all the facts.” Lapsley doesn’t like the board trying to handle certain personnel matters: “I think the board is really remiss and amiss when they go trying to do this because as it stands right now, most of our people don’t know what a conflict of interest is if they meet it out on the street.”

Lapsley, a former board president, also takes a more relaxed view of activities such as former superintendent Estes’ land dealings. Of Estes, Lapsley says: “I know he has bought land from time to time, here, there, and yonder.” Lapsley doesn’t see anything wrong with this. “In my opinion,” says Lapsley, “unless the school district was going to need that land … I would see no problem in somebody buying it and enjoying the appreciation that came either through the bond program or anything else.”

Lapsley is also less bothered than is Wright by Couch’s realty ventures. “As long as it does not encroach on what he does during the day,” says Lapsley, “I see no problem in buying land or having some other activity.”

Wright’s own position has been more absolute than the stance adopted by the board. As to the land dealings, Wright says, “I’ve told the board that there is no way ethically or morally that I could agree to anybody doing it, I don’t care who it is.”

One trustee who backs up Wright is Jerry Bartos, who, because of his insistence on open discussion of DISD controversies, has not endeared himself to fellow board member.

After reviewing information about Estes and Couch, Bartos says, “the fact that there are any problems at this point in time is phenomenal. The board has never made an aggressive commitment by official action to deal with any of these things.”

What infuriates Bartos is the lassitude inherent in the board’s head-in-the-sand approach to these issues. The board, says Bartos, has a “non-developed or underdeveloped sense of what is ethical in a public setting or even a private business setting.” Reflecting on general DISD practices, Bartos continued, “I have never seen such improper conduct, sweetheart deals, even involving, I guess, the highest levels of the administration … without anybody particularly caring about it.” This recalcitrance is particularly insulting, argues Bartos, to the people who tried to prod the board into action. “To say that the citizens didn’t come forward – to say that the documents weren’t there to deal with these problems -is just not accurate.”

Bartos also stresses the magnitude of these problems. “My guess,” he says, “is $20 million in public money was lost through business and construction malfeasance up and down the line.” He claims that when taking into account the malfeasance and waste in other DISD matters, “you could easily say the taxpayers of Dallas fluffed off $50 million between 1975 and 1979.”

Bartos does not want to see these matters sidetracked again. Based on his review of information that has now surfaced about Estes and Couch, Bartos says he wants the board to request appropriate law enforcement agencies to examine all the information. Bartos promises, “I’m going to propose that we vote in a public meeting to ask the district attorney to take a more determined look at the full scope of what we dealt with and be certain that we have not by omission or commission condoned or not dealt with some of the problems before us.”

What he wants most, says Bartos, is for the board to finally make a “clear-cut commitment to deal with these kinds of things.”

Why bother plunging into these DISD controversies that many people wish were behind us?

If a former superintendent can engage in perhaps unethical (or even illegal) activity with impunity, there is something seriously wrong with the values and management of our school system.

The ostensible purpose of the DISD administration and board is to oversee the education of children. The strengthening of the school system and residential neighborhoods through school construction is a proper activity. When, however, that activity becomes tainted by individuals pursuing personal profit, the integrity of the entire education system suffers.

That is reason enough to reopen investigations into the decision-making processes within the DISD. With school board elections this fall, voters should demand that the board clean house and keep it clean.