On the surface, the criminal fraud trial might have resembled any routine bankruptcy-related proceeding. Most of the testimony came from accountants; the evidence centered on financial transactions.
Bubbling beneath the surface in that federal case in Dallas, however, was a background that is anything but routine. In fact, "bizarre" has been the word most often invoked to describe the story that has placed Dallas spiritual adviser Terri Hoffman at the center of so much litigation involving allegations that she has committed murder through mind control. US v. Hoffman, 3-93-CR216-D.
Her November 23rd conviction on 10 counts of bankruptcy fraud marks just the latest chapter in a lengthy saga. Allegations in pending civil suits accuse Ms. Hoffman of causing and profiting from the deaths of 10 associates and relatives who committed suicide or suffered untimely deaths while under her influence.
With state investigators unable to bring any credible criminal charges stemming directly from the deaths, the federal bankruptcy fraud case has been compared by some sources to an "Al Capone strategy." They suggest that federal authorities employed the bankruptcy fraud prosecution as a way of getting a conviction of some kind against her, just as the government in the 1930s used income tax evasion charges to put the notorious Chicago crime lord behind bars. Still, the fraud case itself is "significant," says Molly W. Bartholow, the chapter 13 bankruptcy trustee in Dallas. Ms. Bartholow says the case may lead to other, similar, prosecutions.
Ms. Hoffman's lawyers have been unavailable for comment. Previously, they have described her as a woman being persecuted for religious beliefs and linked unfairly to an almost unbelievable chain of coincidence.
For the past five years, the Hoffman saga has perplexed prosecutors and litigators alike as they have sought to explain the unusual string of deaths that seems to surround her. Lawsuits depict her as the leader of a cult. They accuse her of using hypnosis and mind control to seize the assets of followers and then somehow cause them to suffer fatal accidents or commit suicide. Ms. Hoffman's attorneys have called the allegations absurd and say they amount to character assassination.
"These people -- her followers -- were all well-educated," says Cecil Emerson, chief felony prosecutor for the Dallas County district attorney's office. "We had a number of offenses we tried to assemble, but bankruptcy fraud is all that's happened so far, and that's not even connected to anything except the property she got."
The prominence of some of the alleged victims has enhanced the notoriety of the Hoffman litigation. Examples include:
* David Goodman -- a former professor at Southern Methodist University -- and his wife, who were discovered shot to death in 1989 in what's officially been dubbed a double suicide. They allegedly were introduced and married by Ms. Hoffman, who also had collected a total of $110,000 from them in the years before their deaths, according to check registers found in their home.
* Glenn Cooley -- one of Ms. Hoffman's former husbands -- who died of a drug overdose in 1977, three months after their divorce and just one month after he allegedly had executed a will surrendering all property to her.
* Kenneth Wilder -- Ms. Hoffman's son -- who was killed in a 1979 construction accident.
* Sandy Cleaver and her maid, who died in a 1981 auto accident after preparing new wills and leaving their estate to Ms. Hoffman, along with a $300,000 insurance policy made out to her.
* Robin Lynn Huntoon Otstott, who shot herself in 1987 after drafting a will that left jewelry, land and other possessions to Ms. Hoffman.
* Don Hoffman, Ms. Hoffman's husband, who died of a drug overdose in 1988 after explaining in a video recording that he believed he had inoperable cancer.
Reporters for the Dallas Morning News have traced Ms. Hoffman's career as a spiritual adviser back to the early 1970s, when she began collecting followers while teaching a weekly, non-accredited meditation class at SMU. As Terri Cooley, she founded a company in 1974 called Conscious Development of Body, Mind and Soul Inc. Instead of paying fees for the courses, students made "love offerings" and allegedly were encouraged to surrender certain items of jewelry believed to have "negative energies."
According to biographies distributed by her company, Ms. Hoffman was born in 1938 in Fort Stockton, Texas, and adopted by a Dallas family after having bee orphaned. She has described herself as a financial adviser, but it's clear her consulting covered a wide range of matters. Her biography describes her belief that her real family consists of invisible beings she calls "masters," who visited her as an infant.
The publicity surrounding the death of the Goodmans first catapulted Ms. Hoffman into the spotlight. A former business and computer professor educated at Berkeley and Yale, Mr. Goodman had left academia in 1987 to launch an investment counseling business and write newsletters. The deaths are the basis for one of the civil suits against Ms. Hoffman by their heirs. Goodman vs.. Hoffman, 91-12630 (Dist. Ct., Dallas Co.).
Just after the Goodman deaths in 1989, the Dallas County district attorney's office launched a wide-ranging investigation into Ms. Hoffman's activities, focusing on the deaths and seeking any information that might directly link her to murders. But Mr. Emerson says he could come up with nothing more sinister than allegations of mind control.
"It just doesn't translate into a grand jury proceeding," he says. "It's been an interesting endeavor, but I just never could quite get there."
Mr. Emerson says his interviews with surviving followers left him convinced that she has hypnotic powers. But, he adds, "These folks were emotional problems before they found her, and they became easy victims for her."
When FBI agents started poking around in Ms. Hoffman's bankruptcy case, Mr. Emerson says, he shared his files with them. But the assistant U.S. attorney who prosecuted the bankruptcy fraud case says he decided to keep his focus clearly on the financial problems and avoid any confusion from introduction of unrelated allegations.
"We did not want to go into the hocus-pocus," says Larry E. Jarrett, emphasizing his office's new vigor in pursuing bankruptcy fraud investigations. "We won't tolerate deceptions by debtors any longer in the Northern District of Texas."
Ms. Hoffman filed for bankruptcy protection in October 1991, contending that her financial and psychic counseling businesses had suffered from the publicity about the deaths. Meanwhile, her accusers have attached the bankruptcy as a strategy for derailing the civil suits. Their complaints and the observations of Ms. Bartholow inspired the investigations that prompted the fraud case.
Officially, the 12-count indictment alleges that Ms. Hoffman hid a variety of assets, debts, payments and contracts. More specifically, the government accused her of failing to report four credit card accounts that she kept open and one card on which she made payments. It also charged that she failed to report a $100,000 prepaid contract for attorneys' services with her civil lawyer -- a document considered an asset by the government. In addition, the government charged that she had failed to disclose existence of a contract for book or movie rights on her life story, failed to list property she held for a Chicago associate and tried to conceal her ownership of 13 valuable Audubon prints.
In opening statements to the jury, Ms. Hoffman's attorney, Dallas sole practitioner Shirley Baccus-Lobel, blamed her client's troubles on honest mistakes. "This is not a highly educated woman, and she is not a woman with a remarkable IQ."
As the trustee who pushed for the charges, Ms. Bartholow served as the key witness for the prosecution. She testified first about numerous revisions by Ms. Hoffman to her financial disclosures during creditor hearings on the 1991 bankruptcy and said that creditor meetings repeatedly turned up inconsistencies. Ms. Bartholow also provided another crucial piece of evidence, in the form of a videotape she made of the inside of Ms. Hoffman's home in North Dallas. Because Ms. Hoffman did not testify on her own behalf, the tape stood as the jury's only exposure to her.
Defense witnesses included several of Ms. Hoffman's associates, who testified that she suffered from mental stress and strain during the time of preparation of her bankruptcy papers. But it wasn't enough to overcome the conclusion voiced by Ms. Bartholow and argued by the prosecution that Ms. Hoffman is a bad-faith debtor. Jurors convicted her on 10 counts of fraud but acquitted her on two of the counts, related to the contract for attorney services and the failure to disclose sale of the Audubon paintings.
Besides facing prison for the fraud convictions, Ms. Hoffman also faces the equivalent of an economic death penalty through the Chapter 7 conversion. Trustees now are authorized to seize all of her property, with the exception of a few exempted items, and sell them to placate creditors.
Although her opponents and accusers feel satisfied with Ms. Hoffman's fraud conviction, they say their quest is not yet complete.
"The bankruptcy case kept us from going forward with our case," says Jim P. Barklow, a Dallas sole practitioner who represents her stepchildren in a state suit in Dallas accusing her of using mind control to profit from the deaths of their father and others. "We'll have to wait and see now what happens with the Chapter 7." Hoffman v. Hoffman, 89-2649-D.
Ms. Hoffman is scheduled for sentencing January 14th on the fraud case. She faces the prospect of five years in prison and a $250,000 fine on each count.