Weekly Wire
FW Weekly The Last Oil Baron

Is Tex Moncrief an innocent victim of the IRS 'Gestapo' or just a 'mean, litigious bastard'?

By P.A. Humphrey

AUGUST 31, 1998:  It was a tale to excite the most jaded old pol in search of a hot campaign issue. With a quavering voice, 78-year-old Fort Worth oilman W.A. "Tex" Moncrief sat before the U.S. Senate Finance Committee on April 29, and told how an IRS investigation of his family business and a subsequent raid on his office had almost ruined his life. "If you had told me that 64 IRS agents would storm my office, with sidearms holstered and boot heels trampling my civil rights and my business reputation, I wouldn't have believed you," he said.

His craggy face etched with fury and frustration, Moncrief ran his hands through his thinning white hair and delivered an indignant indictment of the IRS, the U.S. Attorney's Office and anyone else who dared to question whether he or his company had paid all the income taxes they owed. The IRS, he charged, virtually extorted $23 million from his family without cause.

When he was done, several Republican senators broke form to apologize and vow to rein in the IRS. True to their word, Congress, last month, passed an IRS reform package that puts stringent restrictions on tax agency investigators and shifts the burden of proof in civil cases from the taxpayer to the government. It was signed into law by President Bill Clinton in July.

There is more to the Moncrief story, however, than the tale told that spring day on Capitol Hill, and Tex Moncrief is anything but the bewildered, naive old man he portrayed. Moncrief didn't tell, for example, about the signed plea-bargain in which he agreed to pay millions in back taxes and his company agreed to plead no-contest to criminal tax fraud. He didn't explain why, after federal officials approved the plea-bargain, it suddenly stalled, or how he and his company ended up paying less than one-fifth of what IRS investigators said they owed.

Moncrief didn't criticize U.S. Attorney Paul Coggins, the man in charge of the investigation and subsequent negotiations, nor did he mention that Coggins since had been recommended for a federal judgeship. And, Tex stayed quiet about his own ties to Sen. Phil Gramm, the opinionated lawmaker who has the power to stall judicial nominations but has kept his silence regarding Coggins' chances.

Whether the whole truth is ever extracted from the web of depositions, lawsuits, and multi-million dollar settlements that surround the IRS investigation will be up to Congress or the courts. In the meantime, the man who let Tex Moncrief walk waits to be confirmed as a federal judge, the man who blew the whistle on him waits for a chance to tell his story, the woman who claims she was his long-time mistress waits for a new life, and - as his family dynasty crumbles under the weight of disloyalty, suspicion, lies and betrayal - the last of the Fort Worth oil barons seeks absolution ... and revenge.

A few years back, there was an ongoing joke among members and trusted employees of Shady Oaks Country Club on Fort Worth's West Side. "Someone would say, 'Here comes Tex Moncrief and all of his friends,' and you'd look up and there would be Tex and his daddy," one former employee remembers.

The second child of William Alvin Moncrief Sr. and his wife, Elizabeth, Tex has been a millionaire since he graduated from grade school. His fortune originated with his father. The original W.A. Moncrief, known as "Monty," was one of Texas' storied wildcatters and a genuine oil-patch legend. Monty was born in East Texas in 1895 but grew up in Oklahoma. He attended the University of Oklahoma and served as a machine gun officer in France during World War I, before returning to Oklahoma, ready for further adventure and looking for a way to strike it rich. Monty went to work for Marland Oil Co. in Oklahoma and eventually returned to Texas as vice president of Marland Oil Co. of Texas. The family settled in Fort Worth.

At the age of 29, disgusted because his boss was investing in the stock market instead of oil wells, Monty formed a partnership with Houstonite Eddie Showers. The pair bought three drilling rigs on credit and proceeded to drill more than a dozen dry holes. Finally, an entrepreneur who had been pushing the notion of undiscovered oil in East Texas persuaded them to buy 5,000 acres of leases near Longview for $1 an acre. They sold a few to get the money to drill a well. On Jan. 23, 1931, their drill bit hit a soft formation, at slightly more than 3,500 feet in depth. The partners had a core sample taken, packed it in a gunnysack and headed off for the Longview hotel to check it out, Moncrief remembered in an interview with journalist James Presley in 1968. "The core resembled brown sugar that had been dipped in oil," he said. "Truly it was a beautiful sight to behold!" The well made Moncrief money. The ones that came after made him rich, as he made important strikes in Louisiana, Florida, New Mexico, Colorado and Wyoming. Moncrief Oil grew into one of the largest independents in the nation. Monty bought a ranch in Wyoming and built a mansion in Fort Worth. He entertained presidents and counted President Lyndon B. Johnson as a friend. Like many early Texas oilmen, Monty made a point of befriending movie stars, sometimes bringing them into his deals.

Former friends and employees remember Monty as a hard, controlling man who could also be kind and warm. "He was controlling, but in a persuasive way," one former employee said. "He would say, 'If my opinion means anything to you, you will.' Of course, you did."

When it comes to the oil business, Tex Moncrief is his daddy's son, always seeming to know where the next strike would come. "He's not one of those spoiled little rich boys who inherits his daddy's fortune and blows it all," said one observer. "He has the magic touch. He inherited his daddy's fortune and turned it into a bigger fortune."

"Tex" Moncrief was born in Fort Worth, the second child of Monty and Elizabeth Moncrief. He followed his father into the family oil business. The Moncrief family tree has two main branches, Tex's and that of his brother, Richard B. Moncrief. Dickie, as Richard was known, died in 1970. A sickly, sensitive soul, Dickie had no interest in oil and gas and always felt like something of a family outsider, adopted son Mike Moncrief, a state senator, remembered in an interview in the Fort Worth Star-Telegram. As adults, brothers Tex and Dickie rarely spoke.

Tex has four surviving sons from two marriages: Bill (W.A. III), Dick, Charlie and Tom, who bears the middle name of "Oil." Charlie and Dick followed Tex into the oil business. Three of Dickie's children survive: Richard Jr., Mike and their sister, Lee Wiley Moncrief, none of whom work for the family business, Moncrief Oil.

While Charlie and Dick, because of their oil business ties, wield much power and influence in Fort Worth, Mike - a former Tarrant County judge and state representative - is the highest-profile of all of Monty and Elizabeth's grandchildren. Mike and his wife, Rosie, are major contributors to social causes such as care of AIDS patients and abused women. Besides representing the area in the Texas Senate, Mike sits on the boards of various social service advocacy associations and foundations, such as Planned Parenthood. He has never worked in the family business and has no connection, except to collect paychecks from the foundation set up for the grandchildren from Monty and Elizabeth's estate.

His Uncle Tex calls him "an ingrate." "As far as I know," he told The New York Times, in a recent article, "Mike has never worked a day in his life outside of being a county judge and a politician."

The friction between the two factions of the Moncrief family is legendary in Fort Worth although underplayed in the typically diluted fashion of the mainstream press. Tex and his sons control the family fortune, including the family trusts. The resulting feelings of envy, suspicion and resentment lie behind a family feud that has grown and festered into charges of mismanagement and incompetence, lawsuits and countersuits. "The Moncriefs are not as close as people think they are," one former family friend said. "They don't get together for Thanksgiving dinner or anything like that. Tex and his father were close. I think Monty is probably the only person on earth Tex ever loved and admired."

Tex was the one Monty relied on and, after earning a degree in petroleum engineering from UT and serving a stint in the Navy, he came home to Fort Worth to become a partner in the family business. Despite the similarities with his father, former employees say, there were some things that were strikingly different. Tex isn't regarded quite so fondly. Former employees, family members and acquaintances describe Tex variously as arrogant, controlling, opinionated, short-tempered, headstrong, unyielding. "When you're no longer what he needs, you're dead, you don't exist," said one former employee. "He doesn't really care what other people think. He is never wrong. If he wants something, all he has to do is buy it."

Tales of Tex's domination of his family are legendary. Although they are in their 40s and 50s now, his children are expected to toe the daddy-knows-best line. When the youngest son, Tom, decided to marry, one story goes, Tex insisted that his fiancee sign a prenuptial agreement. The couple didn't show up for the lawyer's appointment he set up for them and Tex was furious. He cut off Tom's access to his own money, and the younger Moncrief had to come to him or his older brother to ask for money. Tex refused to attend the wedding and only loosened up on the purse strings when the grandchildren began to appear.

Tex Moncrief, who did not return a half-dozen phone calls from FW Weekly, likes to portray himself as a self-made man when it comes to business, but he has never known poverty. Forbes magazine estimated his net worth at $300 million in 1995. There is no doubt that he knows the power he wields and enjoys using it. The tongue-lashings and verbal assaults of employees are legendary and many of them - like family members - reportedly live in fear of him.

"Tex has a different kind of morality than most of us. What he thinks the truth to be is what the truth is," another ex-employee said. "He believes he can buy himself anything he wants, and he probably can. That's Tex Moncrief. He is impatient with anyone who doesn't have several million dollars in their savings account."

Moncrief's interests outside of the family business are few. He favors Crown and Coke, plays gin rummy with some good ol' boys at Shady Oaks most afternoons, and, according to court testimony, is fond of gambling on football games and other sports events. A long-time donor to Republican candidates and conservative causes, he backed Dallasite Ross Perot in his 1992 presidential bid.

In Fort Worth, the Moncrief family is close to sacrosanct. Part of the city's history, the Moncrief name has become linked in the public consciousness with civic pride and charitable generosity. There is a Moncrief building at Will Rogers, the Moncrief Radiation Center was established and endowed by the family, and the M.D. Anderson Cancer Hospital in Houston is a favored charity. Tex Moncrief, a former member of the UT Board of Regents, has given millions to TCU and his alma mater, UT.

As soon as the IRS agents crashed through the door of the oil company office in the white marble and glass Moncrief Building on the corner of 9th and Commerce in downtown Fort Worth, Tex Moncrief knew someone inside the company had been playing fast and loose with information. He suspected everybody, but especially, he suspected Billy Jarvis.

Jarvis, a short, bespectacled CPA who grew up in the small Grayson County town of Sherman, had worked as the chief accountant for the family, the Moncrief Foundation and Montex for more than 14 years and was privy to all of the family's financial dealings. Tex was correct about him.

"While I was there I had observed certain things that were, or bordered on, a tax evasion scheme," Jarvis said from his Sherman home last week. "I suspected that they might be discovered if any employees or other people that had had dealings with Tex decided to turn him in to the IRS. I had begun to believe that if there was any investigation, Tex would blame me for his misdeeds, since he himself never made a mistake."

Jarvis went to his brother, Don, now a county judge in Sherman, to ask him how he could protect himself. "He advised me that I would probably be found guilty if I had witnessed illegal activities and not reported them." Don Jarvis enlisted more experienced consultants in tax and federal law to advise his brother, who in the fall of 1992 decided that his only recourse was to approach the IRS.

"I was concerned about my physical well-being as well as my financial well-being," Billy Jarvis said, noting that he asked the IRS to keep his name secret. He also asked for a piece of the action and got a guarantee of up to $25 million, depending on the total amount of back taxes collected. He was so nervous, he met with IRS investigators in Washington because he was concerned that leaks in Fort Worth or Dallas could get back to Tex. In 1993, Jarvis was fired - according to documents filed in state district court - charged by Tex with "gross incompetence." The records don't explain how incompetence of such magnitude had escaped anyone's notice for more than a dozen years. Jarvis quoted Tex as telling him, "I don't need you anymore."

According to court documents, Tex says Jarvis was disgruntled by his firing and headed up a conspiracy to filch confidential information and convince the government to commence an unfounded criminal investigation of him in order to collect government bounty and fees.

Jarvis said the Moncrief tax records and other documents were in his home office and the evidence they contained was clear. "He didn't ask for them back," he added, "so I didn't offer." It was enough to persuade IRS investigators to take a closer look. In the search warrant affidavit, agent Donald R. Smith Jr. said that evidence, from Jarvis and other sources, showed there was probable cause for the government to believe that Tex Moncrief and business associates and family members "have willfully engaged in a conspiracy and scheme to defraud the United States and to commit certain offenses in violation of the laws of the United States, namely to evade taxes."

In interviews and court documents, Tex has vehemently declared that all of the charges are false. The affidavit alleges five "schemes to evade payment of taxes":

(1) "Deduction of personal expenses as business expenses by the Tex Moncrief family." The Moncrief company took business deductions for personal items such as a jet used to fly to their Palm Springs home and Colorado ranch; salaries for personal household help, and losses from family ranches primarily used for pleasure.

(2) "Failure to pay gift taxes relating to the transfer of funds to Richard W. Moncrief." Tex, Monty and other family members paid $40 million for $8-10 million worth of son Dick's oil and gas properties, giving him a gift tax-free present of $30 million to help him out of a financial bind.

(3)"Failure to pay taxes on the transfer from Tex Moncrief to Charles B. Moncrief." Tex transferred his interest in a gas property to another son, without paying gift taxes.

(4) "Failure to file estate tax return showing the receipt of $40 million." Tex kept his elderly mother's portion of an $80 million court settlement involving a gas property, which allowed her $40 million portion to pass to Tex and his sons after her death, without payment of gift taxes or estate taxes.

(5) "Failure to pay gift tax and generation skipping tax on transfer from Mrs. Monty Moncrief to her grandchildren." Tex circumvented inheritance taxes by persuading his mother to give each of her seven grandchildren a gift of $2 million, which was allowed at that time without incurring a generation skipping tax. But, "the scheme devised by Tex Moncrief" and his associates was to have the grandchildren turn around and purchase their grandmother's oil and gas properties, worth up to $190 million, for $12.5 million, it says. The difference between what the grandchildren paid for the properties and what they were worth amounted to a gift of $177.5 million, on which taxes were never paid, and exceeded the $2 million generation skipping tax limit, the document claims.

After the raid on the Moncrief offices, Jarvis worked for the IRS for 22 months. Early on, he approached Mike Moncrief's accountant, Jerry Goodwin, and offered to share information and documents that would prove that Tex was cheating Mike's side of the family out of their rightful inheritances.

"Jerry had a similar job with Mike that I had with Tex. Since that side of the family didn't communicate well with the other side of the family, we did most of the communicating about the family business," he said. Tex's maneuverings had cheated Mike and his siblings out of $50 to $100 million, Jarvis said. "That kind of thing had been going on since at least when Monty died," he said.

Six months after the Sept. 1 raid, Mike and his siblings sued their uncle and two of their cousins, contending they had been cheated. Tex countersued, contending that his nephew had made false claims against him in an attempt to injure him, the family and the business. "There were six conspirators that set us up for the raid, and Mike Moncrief was in with them ... ," he later testified, in a criminal case allegedly related to the IRS investigation. "He was involved in the background of the raid, there's no doubt in my mind about that."

It wasn't long before Jarvis, who was already collecting an IRS pay check, found another way to capitalize on his former employer's problems. When investigators discovered that their informant was being paid $5,000 a week to advise Mike Moncrief in his lawsuit against Tex, and had agreed to split his IRS reward with Mike's lawyers, however, the tenor of their investigation began to change. It wasn't long before Tex learned that Jarvis was the whistleblower. Jarvis suspects the IRS recriminated against him for his actions by leaking that fact to Tex.

No outsiders know what was said when Tex confronted his brother's children about the lawsuit, but the younger Moncriefs agreed to back down. The suit was dropped and Mike apologized in writing. "I have signed a document with my uncle and the rest of the family committing not to talk about that," Mike said, in a telephone interview last week, "and I intend to honor that commitment."

Tex then went after Jarvis, the attorneys who had advised him, including his brother Don, and Gary Richardson, Mike Moncrief's attorney. In the lawsuit Tex filed against them, he charges the men were part of an unethical conspiracy to instigate Mike's lawsuit and the IRS investigation and harm the family.

Richardson, a former U.S. attorney, says he is not sure why Tex filed suit against him. "I've wondered that myself," he said. "I hear people talk about how Tex will come after you if you cross him and I guess I'm experiencing that myself. I've been practicing law for more than 20 years and I've never had an experience like this before."

Richardson said that even he does not know the details of Mike Moncrief's settlement with his uncle, or whether it included money. "I still don't know the full story of that," he said.

U.S. Attorney Coggins and the government agents who handled the investigation won't be sued, however, and neither will the U.S. government, thanks to an unusual no-liability clause attached by the U.S. Attorney's Office to the $23 million settlement.

"They ended up protecting the government agents," Jarvis said, "and exposing the whistleblower."

Subsequently, the IRS has refused to pay Jarvis the reward he was promised, saying he violated his contract with them by telling Mike about Tex's dealings. Jarvis is suing the government for the millions he says he is owed.

With the current anti-IRS mood in Congress, it would seem like pursuing a criminal investigation against one of the country's richest men and his company would spell trouble for Paul Coggins' ambitions. Coggins, the charismatic U.S. Attorney in charge of the northern district of Texas for the past five years, has both a reputation for being tough on crime and an undisguised hankering to be a federal judge.

It wasn't a surprise to most observers when Coggins was suggested as a nominee to the federal bench in Dallas. However, the idea has raised nary a peep from Phil Gramm or the Republican senators who professed outrage at Tex Moncrief's testimony. Coggins' name went to the White House for consideration on June 24, and Clinton is expected to forward a nomination to the Senate soon.

"Coggins ought to be in hot water," said David Stagner, a Sherman attorney who represents Jarvis. "If it's true that [Billy Jarvis] duped the government into prosecuting Tex - if Tex is innocent - why did Coggins extort $23 million from him? If Tex is guilty, why did Coggins agree to any settlement at all?"

After investigators raided the Moncrief offices on Sept. 1, 1994, hauling away more than one million documents, and a subsequent investigation of nearly two years in duration, the IRS accused him of owing the government $100 million to $300 million, Tex said during his Senate testimony and in several subsequent interviews.

Government negotiators, under Coggins' leadership, reached an agreement with Montex and Tex's family that would have allowed them to plead "no contest" to one count of criminal tax fraud, in exchange for dropping any other criminal charges stemming from the investigation. Charles B. Moncrief, Tex's son and business partner, and the family's lawyers - who included Robert S. Bennett, best known for representing Bill Clinton in the Paula Jones case; James A. Bruton III, a former acting chief of the Justice Department's tax division; and Fort Worth attorney Dee Kelly - signed the agreement, under which Montex admitted to shifting $900,000 in business expenses to Tex Moncrief, who "improperly deducted" them on his 1990 personal federal tax return.

The plea-bargain was sent to the tax division of the Justice Department for approval. For some reason that is still unexplained, however, the agreement was never officially filed. "The only thing that intervened," attorney Stagner said, "was $23 million."

On Jan. 4, 1996, Tex Moncrief and Montex settled with the IRS by agreeing to pay that amount - less than 20 percent of what government investigators estimated they owed in unpaid taxes, interest and penalties - "for deficiencies in income, excise and gift taxes for taxable periods from Jan. 1, 1989, through Aug. 31, 1994." It was one of the largest settlements from a family-based business the IRS has ever won, said Doug Gastorf, chief of criminal investigations for the agency's North Texas district..

"If what I saw was true, and Tex owed $200 million in taxes, why did they let him get away with paying $23 million?" Jarvis wondered aloud. "If you know any other taxpayers who are allowed to pay 10 percent of what they owe, I wish they'd step forward. A lot of people have gone to jail for a lot less.... They documented everything I told them, they had plenty of proof." Did U.S. Attorney Coggins, as Jarvis and his supporters believe, back off on Tex in exchange for a guarantee from Tex that his buddy Phil Gramm would not block a future Coggins' judicial nomination? Gramm - who introduced Moncrief to the Senate Finance Committee as a long-time friend and who, according to campaign finance reports, received $5,000 in campaign contributions from Moncrief family members in 1992 - did not return calls from FW Weekly.

"Our role is passing nominees and Mr. Coggins is not a nominee, yet," Gramm's spokesman Larry Neal recently told Texas Lawyer, in an interview about the Moncrief case. The IRS hearings did make an impression on the senator, who at first had been skeptical. "... After listening to witness after witness tell in detail the horrors they had experienced in dealing with the IRS, his view changed," Neal said. "You notice Tex is out to get everybody involved in the investigation except Coggins," attorney Stagner said. "He's not likely to say anything against Coggins. Neither is Phil Gramm or anybody else. We may see him make district judge because of an agreement that was negotiated three years ago."

Coggins said speculation about a behind-the-scenes deal is nonsense. He refused to discuss the plea-bargain, however, citing government regulations and pending litigation in the Moncrief and Jarvis lawsuits. Questions about the deal could come up during confirmation hearings, he said, and he will be prepared to answer them. "I have been a U.S. attorney for five years, and I think that when you're a U.S. attorney, your whole tenure is subject to scrutiny," he said. "This is one of those deals where questions will be raised and I plan to answer those questions as fully and truthfully as I can."

Coggins, who chaired Bill Clinton's North Texas campaign in 1992, said he stands by the IRS investigation. The agency and Justice Department negotiators "did great work for us," he said. Despite that praise, he refused to declare Moncrief guilty of tax fraud, or even opine about how much the oilman really owed in back taxes. "Obviously, we think the result was a fair result and the $23 million was a fair payment."

Coggins said it was unfortunate that the Senate hearing - and news stories that grew from it - focused only on one side. The IRS Criminal Investigation Division, one of the "best, most dedicated and conscientious groups of investigators" in the country, was unfairly represented as a "wild bunch," he said, noting that IRS Commissioner Charles Rosotti has asked former CIA and FBI director William Webster to examine each of the cases the Senate committee heard. "I would just say that obviously our side wasn't presented at that hearing. At some point, I think it will be," he said. "I expect there will be some vindication in Judge Webster's report." Like Gramm, Tex Moncrief has not taken a public position on Coggins' judicial chances. The Star-Telegram did, however. In "The Insider Report," on the op-ed page of the Sunday, Aug. 1, edition, the paper declared that Coggins' future was in Moncrief's hands and quoted an unnamed Republican activist as saying, "If the Moncriefs don't kill it, he'll probably get to be a judge."

If anyone understands what it's like to be left out to dry, Mary Ellen Lloyd says, she is the one. Some observers say, however, that underestimating Mary Ellen Lloyd may have been the worst blunder Tex Moncrief ever made. "Ol' Tex made the stupidest mistake a rich man can make," her attorney, Robert Hinton, said, with a laugh, "he pissed off his mistress....You should never, ever piss off a woman who has had your money in her pocket and her hand in your pants."

Like many men of his generation, Tex Moncrief regards women as useful but ineffective creatures, without the brains or guts to take on the big guys and win, Lloyd said during an interview at Hinton's Dallas office. Lloyd - a long-time Moncrief family employee, confidante and the woman who, she says, kept Tex Moncrief sexually satisfied for more than 16 years - has both.

For his part, Tex Moncrief has consistently and adamantly denied having a sexual relationship with Lloyd. Under oath, in one-word answers, he testified that there had been "absolutely" no personal relationship with her and that he knew her only as a long-time employee who eventually betrayed him.

At 55, Ellen, as friends and co-workers call her, said she looks back now on the relationship and wonders how she could have been so naive for so long. Her disillusionment with Tex began, she said, the day of the IRS raid on the Moncrief offices, where she did bookkeeping and kept the oil, personal and trust accounts. The raid came as a surprise to employees and to the Moncriefs, she said. "They did come in like the Gestapo. They had guns and billy clubs. They knew people by name and they ordered everyone to stop what they were doing," she said. "It was scary. They told me they could come to my house any time they wanted and search for whatever they wanted."

After the raid, Tex was rattled, Lloyd said. She said he knew someone close to the business was a government informant, but he didn't know who. "He became a very savage and paranoid person. That wasn't uncommon if you were another family member, but it was unusual to me," Lloyd said. "This IRS investigation is the only thing I've ever seen him afraid of. He lost weight, he lost sleep, he had bags under his eyes. He was afraid he was going to end up in the penitentiary." As the investigation dragged on, it became apparent that Moncrief was "really losin' it," she said. "He became really concerned about what employees would say when they were interviewed by the IRS. He became really concerned about me."

Since she had been put in charge of writing the checks for Tex's and the late Monty's still-active personal accounts, the agents tore up her office, took books and scores of papers and left piles of discards on the floor, Lloyd said. The rest of the office, too, was in chaos. An accountant brought in under the advice of Tex's attorneys to try to straighten out the mess the IRS agents left began to ask questions about the checks that Lloyd said Tex had authorized her to write to pay her credit card bills and other expenses and to cover bets she had placed for him in Las Vegas.

Under the stress, she said, the romantic relationship was dwindling. Tex told her it would be better if she were unavailable when the IRS came to interview her, Lloyd said. She could come back when he issued the all-clear. "I was supposed to disappear to cover the fact that I was his mistress," she said. "I think he was concerned about his reputation."

Lloyd went to Las Vegas, a favorite get-away, and later to Southern California. It wasn't until the cops showed up at her door and hauled her off to a jail in San Bernadino that she discovered she had been charged with a crime. "In California, no one would tell me what was going on," she said. "I assumed it was part of the tax fraud investigation that had to do with the Moncriefs."

Desperate to get back and do what she could to help Moncrief, she waived extradition, Lloyd said. When she got back to Fort Worth, she posted bail, still with no idea what was going on, until she talked to Hinton for the first time. He told her the bad news: Mary Ellen Lloyd had been indicted by a Tarrant County grand jury on Feb. 2, 1996, and charged with two counts of embezzlement of more than $20,000. The charges had been brought by Tex Moncrief.

"I wouldn't believe it," she said. "I don't know how long it took for [Hinton] to convince me that Tex had done that to me. To see him sitting in that [witness] chair wanting to send me to prison, yeah, I can believe it now." She rejected a plea bargain that would have guaranteed her no jail time and went to trial to defend her name. She took the stand and told her story: Tex Moncrief was her lover. He had paid most of her living expenses for more than a decade, given her jewelry, bought her clothes, insisted that she remodel her house "so it would be fit for a Moncrief to visit," and given her money for gambling. He put her on a budget, not to exceed the allowance he gave his wife, Deborah - $25,000 a month.

Tex, whose most animated testimony came when he was denouncing the IRS, took the stand and refuted every word of Mary Ellen Lloyd's defense, including testimony about their decade-plus romantic relationship. His only feeling about her was that "she was a trusted employee," Tex said, under oath, until "... the spring of '95, when one of our accountants discovered that [Lloyd] had been embezzling money for a number of years." He could not, however, explain how his signature came to be on some $10,000-plus checks used to pay her Master Card bills, except to speculate that the signature had been forged.

"He denied it: I was just an employee, a file clerk, I believe he said. I was not a family member," Lloyd said, during the interview. "It hurt." Lloyd was found not guilty on April 23, 1998. The jury came back with the verdict in less than three hours. "You could look at the jurors and tell that they just didn't believe Tex Moncrief," Hinton said. "They took one look at that mean, litigious bastard and knew he was lying through his teeth." Ellen, as friends, co-workers and family members know her, met Tex Moncrief and his dynamic daddy as a self-described "cute, young" 26-year-old assistant to the golf pro at Shady Oaks Country Club, back in 1969. She was married, but her marriage was falling apart. "I'd go out on the course and hang around with Monty and his golfing buddies and we kind of became all friends," she said.

She went to work at Moncrief Oil in December 1976. In 1979, Lloyd said, she and Tex became lovers. "I guess I had a lot of respect for [Tex] and I really did care for him," she said. "Sometimes he'd make comments about how I looked or how I did things, like family friend-type stuff instead of boss to employee, and that made me feel good. One day in his office, he kissed me. I was very surprised because he didn't do that type of thing." In the months ahead, they had sex in Tex's office and his daddy's numerous times, Lloyd said.

Over the years, Lloyd said, she became close with all of the Moncriefs, but especially Tex's mother, Elizabeth, for whom she helped care. She spent many afternoons visiting or watching television with the elderly woman, who had never recovered from a fall that broke her hip when she was in her 90s. Monty, she said, was like a grandfather to her. "People told me I was like the daughter they never had," she said. "I was special." No one knew about her sexual relationship with Tex, she said. They never went out, never took a trip; he always came to her house and wouldn't get out of his car until it was in the garage with the door closed, Lloyd said. "Looking back, I see that he was very smart," she said. He let his guard slip just once. "One day he came back from lunch and he had been drinking. He came up behind me in the reception area and kissed me on the back of the neck," she said. "There were a few people who did see that, but nobody ever said anything."

Instead of running up five-digit credit card bills and wearing $2,000 dresses to work, Ellen Lloyd today works 60 hours a week ferrying food orders to customers at an area restaurant. "I'm free now," she said. "I'm free because I'm no longer controlled or owned by somebody. I'm nobody's possession."

If the criminal charges against Ellen Lloyd were, as the jury apparently believed, part of Tex Moncrief's campaign to save face and protect himself and his business, it was a failed one. His vendetta against the IRS and those he thinks done him wrong is far from over, however. He continues to insist publicly that he did nothing wrong. "Had I known then what I know now," he told The New York Times earlier this month, "I would not have paid them a penny."

He is asking for damages in his lawsuit against Jarvis and his advisors. On August 4, U.S. District Judge Eldon Mahon remanded the case back to state court. It is scheduled to begin on Oct. 12, in Judge Ken Curry's 153rd State District Court in Fort Worth. Stagner, who had argued that Jarvis was a federal employee at the time of the investigation, said he would appeal that order. Even if the case goes to trial, however, that likely will not be the end. Jarvis' suit against the IRS is pending. Lloyd probably will pursue some legal remedy of her own against Tex Moncrief, Hinton said.

Jarvis will likely become the scapegoat for the disintegration of the government's criminal case against Tex Moncrief and Montex.

In a deposition, the IRS inspector called in to investigate Tex's complaints about the IRS seems to back him up. The agency had confirmed some of the allegations raised by Jarvis and IRS investigators had come up with additional irregularities, but Jarvis' involvement with Mike Moncrief compromised the investigation and prematurely put a stop to it, inspector Bruce Mason says. In the end, the IRS investigated Jarvis and even considered filing charges against him for providing Mike with Tex's tax returns before concluding that Jarvis had not violated federal law, Mason says.

"That may be," Jarvis' lawyer, Stagner, snorts, "but that doesn't mean that Tex wasn't guilty of tax fraud.... I have been a lawyer for 27 years and I have never been as disheartened by anything as I am right now. I am convinced there is corruption somewhere, and the intervention of improper political influence at the highest levels of the federal government." For his part, Jarvis says he would do it all over again. "I think that's what a citizen needs to do and should do if he sees a crime, to report it," he said. "It's the government that didn't follow through. They are allowing the criminal to prosecute the witness."

Jarvis says he is broke; he owns only a 10-year-old Cadillac, a small accounting practice in nearby Whitesboro, and his self-funded retirement plan. He wonders, he said, about a millionaire who would pursue a "pauper" just for revenge. "Part of the reason he's doing what he's doing to me is to make an example, I guess," he said. "A lot of these people know what I knew and he doesn't want anybody telling what he considers his secrets."

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