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From the Spring 2003 issue of The News Media & The Law, page 21.

From the Spring 2003 issue of The News Media & The Law, page 21.

By Wendy Tannenbaum

A confidential source for a story about alleged drug trafficking has turned against the reporter who was prepared to go to jail to protect his identity.

Ohio scholar Donald E. Schulz filed a sworn affidavit April 15 accusing Mexican reporter Dolia Estevez of lying and conspiring to defame The Laredo National Bank of Texas. The affidavit was part of a settlement that ended a lawsuit between Schulz and the bank.

The bank sued Schulz, who is chairman of the political science department at Cleveland State University, for allegedly planting incorrect information in an unofficial U.S. government document. The document, part of a file in a federal narcotics investigation called “Operation White Tiger,” linked the bank and its Mexican owners to drug trafficking. The bank claimed Schulz deliberately leaked the damning draft report to members of the press, including Estevez.

Following the leak, former Attorney General Janet Reno repudiated the document in a letter, saying the “analysis and any conclusions and inferences contained in the [White Tiger report] remain in draft, and therefore, have not been adopted in official views and positions” of the Clinton administration.

The settlement comes after almost three years of litigation, during which time Estevez and three other reporters were subpoenaed to provide documents and testify before the court. The subpoena to Estevez sought information relating to a May 1999 newspaper article she wrote about the leaked document.

Estevez has been the Washington, D.C., correspondent for El Financiero, a Mexican newspaper, since 1989.

Estevez successfully resisted the subpoena, claiming it infringed upon her right to keep confidential her source materials. A federal magistrate judge in Virginia ruled on March 19, 2002, that the bank had not shown that the information it sought from Estevez was relevant, that it could not obtain the information elsewhere or that it had a compelling need for the information.

Estevez said one of the main reasons she fought the subpoena was to protect Schulz, her confidential source.

Now that source has turned against her.

In the affidavit accompanying the recent settlement agreement, Schulz accused Estevez of operating a “scheme to injure the reputations of the [bank] and Carlos Hank Rhon,” the bank’s majority shareholder, “for political and perhaps personal reasons.”

The affidavit states that before she wrote her May 1999 article, Estevez indicated to Schulz that “she had strong political beliefs against the Mexican political system and, in that context, disdain” for Hank and his father, a Mexican politician.

“I now believe that Estevez was determined to portray the Hanks unfavorably,” the affidavit states.

The affidavit also states that Estevez misled Schulz by telling him she would not publish the leaked government document and that she made statements in her articles that created a false impression of the contents of the documents. Schulz accuses Estevez of mischaracterizing the draft document as a finished product.

As to the allegations of narcotics involvement at the bank, Schulz stated in the affidavit that throughout his academic endeavors as a Latin American expert on narco-politics, he has “never discovered any evidence that Laredo National Bancshares, Inc., the Laredo National Bank or any of its officers, shareholders or directors have participated in any type of criminal activity.”

According to a press release issued by the bank, the settlement involved an $8 million judgment against Schulz, which the bank agreed to waive in exchange for Schulz’s promise to help “dispel the lies being promoted and disseminated about Laredo National.”

Under the terms of the settlement, if Schulz violates the order not to disclose inaccurate information, the bank could enforce a liquidated damages award of $88 million against him.

Estevez, who received word of Schulz’s affidavit via the press release, was “stunned” by the accusations against her.

“They are completely false, entirely without merit, without any basis in fact,” Estevez said. She said she was shocked that Schulz would accuse her of wrongdoing.

“I was willing to go to jail to defend his identity. I fought the subpoena precisely to preserve the confidentiality of sources,” she said.

Both Estevez and her attorney, Richard M. Goehler of Frost Brown Todd LLP in Cincinnati, said the contents of the affidavit signaled that Schulz must be “a very desperate man.” Goehler called it very “unfortunate that he chose to settle in this manner.”

The bank has previously publicized its belief that Estevez conspired against it. In a statement issued March 21, 2002, after the court quashed its subpoena against her, the bank said: “We are strongly convinced, based on certain facts and evidence we are gathering, that Estevez used her role as a journalist for El Financiero, to knowingly engage in a campaign of misinformation to harm the reputation of the Laredo National Bank, one of the major investments in the United States, of Ing. Carlos Hank Rhon, a successful NAFTA/Mexican business leader.”

Estevez and her lawyer are uncertain as to why the bank has focused its attentions on her and not on the three other reporters — Jamie Dettmer of Insight, the weekly magazine of The Washington Times; Tracy Eaton of The Dallas Morning News; and Christopher Whalen, an investment banker and freelance writer — who also were subpoenaed in the bank’s lawsuit against Schulz.

“Some people think they have gone after me because I’m the only one who published in a Mexican paper,” Estevez said in an interview. The bank may have decided it would confront fewer obstacles fighting against a Mexican news organization rather than an American one, she said.

As of early May, Estevez had received no formal indication that the bank planned to take action against her or any other reporter.

But the bank’s press release announcing its settlement with Schulz warns of future litigation.

“The Schulz case serves as notice that we will not cease our efforts to uncover the ongoing scheme that has been perpetrated against us and Carlos Hank Rhon,” the bank’s president, Gary G. Jacobs, said in the statement. “This successful resolution of the Schulz litigation advances the process of revealing those, who, for their own secret agenda, have been disparaging Carlos Hank Rhon and us. We will take all appropriate legal action to root out the conspirators, expose the campaign of misinformation which has been used to pollute the public record as well as numerous databases, and bring those responsible to justice.”

Estevez vehemently denies all of the accusations in the affidavit.

Goehler said he “wouldn’t be surprised” if the bank chose to use the Schulz affidavit to bring some kind of legal action against Estevez. Nevertheless, he said, “they’ve had the opportunity to do it in the past, and they haven’t done so.”

The bank could not sue for libel based on Estevez’s May 1999 article because the statute of limitations for such a claim has expired.

“They have no claims against Dolia Estevez,” Goehler said. “We’ll take it one step at a time.”

Goehler said El Financiero supports Estevez completely and is prepared to fight any action based on her reporting.