This article first appeared in the Austin American Statesman
Former Pedernales lawyer sentenced to jail, fine
Demond gets tougher penalty than co-op’s ex-chief.
BOERNE — A Kendall County jury on Tuesday found former Pedernales Electric Cooperative attorney Walter Demond guilty of felony theft, money laundering and misapplication of fiduciary property for helping arrange secret payments of co-op money to relatives of Pedernales officials.
The jury sentenced Demond, 63, to 10 years of probation and a $10,000 fine. State District Judge Dan Mills also gave Demond 500 days in jail — 100 days a year for five years — and imposed $212,000 in restitution. The money will be paid to Demond’s former law firm, Clark, Thomas & Winters, which ceased operations earlier this year.
Demond’s attorney Rip Collins declined to comment, saying he planned to appeal.
His other attorney, Gerry Morris, had asked the jury to sentence his client to probation, citing his age, lack of a criminal record and the fact that he did not take the secret payments himself. He also said that Demond’s career was finished and “his reputation is gone.”
“One thing you can rest assured: Mr. Demond will never practice law again,” Morris said.
Prosecutor Harry White argued against probation, telling the jury that as a lawyer, Demond should have known better.
“If we allow Mr. Demond to just get probation, what is the message being sent?” White asked. “That you can be the lawyer to large electric companies and if you violate that duty, if you steal from a client, that’s not a big deal.”
Demond received a harsher sentence than the one given to former Pedernales General Manager Bennie Fuelberg by a Blanco County jury in February. Fuelberg got five years of probation, including 300 days in jail, and is appealing his sentence.
Demond was convicted of one first-degree felony — theft — and two second-degree felonies — money laundering and misapplication of fiduciary property. Fuelberg was convicted of lesser, third-degree versions of those charges.
“I think the evidence develops differently in different cases,” White said. “The jury decided Mr. Demond had a greater responsibility.”
Both men were prosecuted for their roles in arranging about $700,000 in secret payments of co-op money to relatives of former Pedernales executives. The payments went through Clark Thomas, which represented the co-op for decades.
Prosecutors say Demond inflated legal bills sent from the law firm to Pedernales between 1996 and 2007. That money secretly paid thousands of dollars per month to lobbyist Curtis Fuelberg, the brother of Bennie Fuelberg, and Bill Price, an attorney and the son of former co-op board member E.B. Price.
During the trial, Demond denied criminal wrongdoing and attributed many of his actions to following Bennie Fuelberg’s orders. Prosecutors never called Fuelberg to the witness stand. His attorney said that if they did, Fuelberg would use his Fifth Amendment right not to testify.
Jurors began deliberations Thursday morning but went home without a verdict and returned on Tuesday after the Memorial Day holiday. Demond and his attorneys showed little emotion when the jury issued its verdict.
Unlike Fuelberg’s trial, where defense attorneys called a long list of character witnesses, including his wife and neighbors, during the sentencing phase, Demond’s attorneys called no one. Morris told the jury that was because many witnesses had already attested to Demond as “an honorable man, a good lawyer, a leader among his peers.”
Before leaving the law firm in 2009 , Demond headed Clark Thomas’ energy section and was Pedernales’ top outside lawyer. He was described in court as a close friend of Fuelberg’s; the latter served as a best man at Demond’s wedding, and the two owned a hunting lease together.
The trial’s outcome caps a years-long saga at Pedernales, the nation’s largest electric cooperative, with more than 200,000 members.
Beginning in 2007 with a member-led lawsuit and investigative reports in the American-Statesman, the co-op was dogged by scandals related to questionable business dealings, closed-door practices and excessive spending. Its officials were called on the carpet by legislative bodies in Austin and Washington.
Today, Pedernales is run by a new CEO and directors who have enacted a number of reforms. All have said they are eager to put the Fuelberg era behind them.
Clark Thomas wasn’t so lucky. The affair cast a cloud over what was once Austin’s largest and oldest continually operating law firm, and it was one of the factors blamed for the firm’s demise in April, along with a tough economy. Most of its attorneys left to work elsewhere.
“This verdict should send a chill through the spine of all corporate lawyers,” Pedernales board President Larry Landaker said Tuesday. “General counsel has a higher duty to the law and the corporation’s shareholders. It is not an acceptable defense to say that ‘I was following orders of management or the board.