FOR IMMEDIATE RELEASE                                         CRM
WEDNESDAY, JULY 30, 1997                           (202) 514-2008
                                               TDD (202) 514-1888 

                  HOUSTON OFFICIALS CHARGED WITH
                      CONSPIRACY AND BRIBERY
                                 

     HOUSTON -- The Justice Department's Public Integrity Section
today announced that a federal grand jury has indicted two
Houston City Council members, two former Council members and two
other individals with conspiracy to violate federal law
prohibiting bribery concerning programs receiving federal funds.

     Named as defendants in the 11-count indictment are: John E.
Castillo, Michael J. Yarbrough, John W. Peavy, Jr., Ben T. Reyes,
Ross C. Allyn, and Elizabeth Maldonado, all residents of Houston,
Texas. 
 
      In addition to the conspiracy charges, Castillo is charged
with two counts of bribery; Yarbrough and Peavy are charged with
one count of bribery; Reyes is charged with four counts of
bribery and one count of mail fraud involving a scheme to deprive
another of honest sevices; Allyn is charged with three counts of
bribery; and Maldonado is charged with two counts of bribery.

     The charges arise from a two year investigation conducted by
the FBI.  The indictment charges that Reyes, while a member of
the City Council, directed a fictional company established by the
FBI, "The Cayman Group," to seek an ownership interest in a
convention center hotel to be developed under a city contract
worth over $150 million.

     A special agent of the FBI acted in an undercover capacity
as a partner in the Cayman Group, according to the indictment.  A
witness cooperating with the FBI also acted in an undercover
capacity as an employee of the Cayman Group, the indictment said.
 
     To advance the interests of the Cayman Group in the hotel
project, the indictment further charges, the defendants
participated in a conspiracy in which Reyes, Castillo, Yarbrough,
and Peavy solicited and received unlawful cash payments while
they were members of the City Council.

     It was further part of the conspiracy, the indictment said,
that Reyes, while still a member of the Council would and "did
corruptly solicit...accept and agree to accept," things of value
to influence and reward his official acts in connection with
matters affecting the Cayman Group's interest in the hotel
project; these included a secret personal financial interest in
the Cayman Group's proposed investment in the hotel project and
cash payments.

     Castillo, 58, and Yarbrough, 46, are current members of the
Houston City Council.  Peavy, 55, and Reyes, 50, are former
members of the Houston City Council.  Allyn, 40, and Maldonado,
39, represented individuals and commercial entities seeking
favorable consideration of their positions on proposed
legislation and other matters within the jurisdiction of the City
Council.

     The defendants, if convicted on all counts, face the
following maximum statutory penalties:  Castillo -- 25 years in
prison and a $750,000 fine; Yarbrough -- 15 years in prison and a
$500,000 fine; Peavy:  15 years in prison and a $500,000 fine;
Reyes -- 50 years in prison and a $1.5 million fine; Allyn -- 35
years in prison and a $1,000,000 fine; and Maldonado -- 25 years
in prison and a $750,000 fine.   

     This case is being handled by the Public Integrity Section
of the Criminal Division of the Department of Justice.  The
investigation was conducted by the Houston Division of the FBI.

     An indictment is only a charge and is not evidence of guilt. 
The defendants are entitled to a fair trial at which it will be
the government's burden to prove guilt beyond a reasonable doubt.

     For further information, contact John Russell at (202) 514-2007.
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