The affidavit of Edmund I. Martin, a special agent with the Internal Revenue Service, quotes a source known as "CS-2" as saying that it was Waters who stole the equipment and bonds. Waters' attorney, Ganne, identified CS-2 as Patti Jo Steffens, Waters' former girlfriend. The affidavit says that according to Steffens, Waters tried to use the computer "and to negotiate the bonds but failed and he ultimately destroyed the computer and the bonds."
Emboldened by his successful heist of the bonds and computer, Waters, who was now working as the atheists' office manager, set his sights on the organization's bank accounts. In 1994, while the three atheists were in California defending themselves in a $6 million lawsuit brought against them by a lawyer representing the estate of deceased atheist James Hervey Johnson, Waters began pilfering their bank accounts. Between March 30 and April 8, 1994, Waters wrote checks to himself totaling $54,415. When the atheists returned from California and found what Waters had done, they were outraged. They immediately went to the Austin police. But according to a July 1995 article in the American Atheist Newsletter, written by Madalyn Murray O'Hair, "the police were reluctant to make an investigation. Everything had to be undertaken by American Atheists." O'Hair continued, writing that although Waters' name was typed on every check he had cashed, "the police simply refused to pick him up. If Mr. Waters had stolen this amount of money from any church, or had invaded the home of any minister, he would have been arrested within hours, tried and convicted within days, and would even now be serving a term in the Texas state penitentiary."
Rosemary Lehmberg, first assistant in the Travis County District Attorney's office, confirms that investigators were less than zealous in their investigation of the theft. Lehmberg says police "had to satisfy themselves" that the O'Hairs hadn't participated in the theft. Whatever the reason for the delay, O'Hair's article shows that the DA and the APD repeatedly delayed their investigation and prosecution of Waters. For instance, Waters was not indicted for the theft until July of 1994. At that time, he posted a $10,000 bond even though a grand jury had recommended setting the bond at $50,000. Over the ensuing 10 months, Waters' trial date was reset 14 times. "On two of these occasions, Mr. Waters' attorney did not even bother to come in to court, but the trial was set over each time anyway," wrote O'Hair.
Finally, on May 22, 1995, Waters appeared in court and pleaded guilty to theft. According to Lehmberg, the O'Hairs realized that if Waters were sent back to prison (a habitual criminal, Waters had numerous prior convictions, including murder, assault, and forgery), they would never see the $54,000 again. So they asked that he be ordered to pay restitution instead. Lehmberg says prosecutors agreed.
But in the end, Madalyn Murray O'Hair was apparently far from pleased with the disposition of the case. Waters was given deferred adjudication, meaning that if he paid back the money and stayed out of trouble for 10 years, the theft charge would be removed from his record. O'Hair was infuriated. "We hope you understand," she wrote in the newsletter, "how betrayed we have felt; how discouraged with 'law and order' this makes us feel."
O'Hair couldn't get even with the police, but she did try to get even with Waters. In the same article in the newsletter, she detailed every one of Waters' prior crimes, including a 1977 battery charge in which Waters beat his own mother. O'Hair called the incident "especially chilling" and said it "included his beating her with a broom handle, breaking wall plaques over her head, cursing, urinating in her face and demolishing her apartment."
O'Hair may have enjoyed writing about Waters, but her poison pen may have cost her her life. According to agent Martin's affidavit, Steffens -- Waters' former girlfriend -- said that after the article appeared, "Waters had serious change of attitude [sic] regarding the O'Hairs. Waters mentioned that he would like to get revenge for what had been written and expressed fantasies of killing Madalyn. He spoke about seeing Madalyn suffer and snipping off her toes."
The affidavit makes Waters out to be the mastermind of a plot to kill the atheists. It says that less than three months after O'Hair's article appeared, Karr and Fry were in Waters' apartment, cooking up plans to separate the atheists from their money. On August 28, 1995, a note appeared on the door of the atheists' headquarters saying that the O'Hairs had left town on a trip. Over the next five weeks, the affidavit alleges, Waters and Karr stole half a million dollars worth of gold coins from the atheists, killed them, killed Fry, and then went on numerous shopping sprees. They also checked into the Four Seasons Hotel in Austin for an overnight stay.
But Waters had a problem: He had to convince the cops that he was innocent of any wrongdoing in the disappearance of the O'Hairs. And for nearly four years, he was successful. Looking back on the episode, Lehmberg says, "Waters fooled everybody, including the police and us."
The question is: Why were they snowed so easily? The easiest answer is that Waters is a skilled liar. Last fall, during interviews with the Chronicle, he gave three or four different responses to the same question and was always able to somehow make them sound plausible. In addition, Waters was able to cloud the investigation from the beginning by showing investigators documents indicating that the O'Hairs had stashed money in a New Zealand bank. Lehmberg says Waters also showed investigators credit card receipts and letters that seemed to indicate that the O'Hairs had been planning to disappear.
But why didn't APD investigators look harder? Spike Tyson, the former office manager at the atheist headquarters, told me last fall that the APD only talked to him once. And when they did, "They asked me if I knew where the O'Hairs were," said Tyson. "And I said no. That was it." Tyson knew many of the details regarding friction between Waters and the O'Hairs. He also knew many details about the condition of the O'Hair's home immediately after the disappearance. But the police never asked Tyson about the condition of the home, or any of the details concerning their last days at the office.
Police also apparently discounted the O'Hairs' fear of Waters. In her article in the newsletter, O'Hair wrote that she, Jon, and Robin had asked authorities to issue a restraining order against Waters, but according to O'Hair, the judge in her case refused to issue one.
Up until August of last year, the APD may have been justified in their approach to the O'Hair case. There was no proof that foul play was involved -- little evidence at all, in fact -- and it appeared quite possible that the O'Hairs could have simply decided to disappear on their own.
But several events occurred last August that should have changed the APD's approach. First, APD investigators were given a complete dossier on the O'Hair disappearance by an anonymous source, who provided names, dates, and contact information for all of the principal players in the plot to rob and kill the O'Hairs.
Then, on August 16, John MacCormack of the San Antonio Express-News ran a story that at all but named Waters as the lead suspect in the case. The story detailed Fry's disappearance and noted the number of phone calls Fry had made from Waters' apartment. About the same time, federal authorities met with APD investigators to discuss the case. The federal agents laid out their theories in the case and asked if the APD wanted to get involved in the investigation. But the APD's Olfers, who was not at the meeting, says the meeting still did not give APD investigators enough information to proceed. "There were a lot of theories presented, but no evidence," Olfers said.
At that meeting, the federal authorities quickly became exasperated. "Their attitude was, if you want to be a part of the investigation, fine. If not, we are going to go on with our investigation," Olfers said. And that's exactly what happened: the FBI, IRS, and ATF pushed their investigation, which has already resulted in Waters' conviction on the weapons charge.
Karr and Waters are in prison and both will likely stay there for a long time. Waters was arrested on March 24 after federal agents found 119 rounds of ammunition in his apartment. A convicted felon, Waters is prohibited from possessing firearms or ammunition. Karr, also a convicted felon (kidnapping, armed robbery, indecency with a child) who knew Waters while both men were incarcerated, was arrested on March 25 in Michigan and will go on trial next month on charges of possessing stolen property.
Waters faces up to 20 years in prison and a fine of up to $500,000 on the weapons charge, to which he pleaded guilty. Sentencing is scheduled for July 30. But he could also be brought back into state court here in Travis County for violating the terms of his deferred adjudication in the theft of the $54,000 from the O'Hairs. And according to Lehmberg, a local district court judge could sentence Waters to any length of time in prison for the theft. Meanwhile, federal and state authorities are hoping to convict Waters of murder. But while both Waters and Karr are suspects in the presumed murder of the three atheists, federal authorities have a problem: They don't have any corpses. A Good Friday search of a ranch near Camp Wood with dogs and a backhoe found nothing. The FBI returned to the same site, west of San Antonio, last month, but again, came up empty-handed.
However, Gerald Carruth, the assistant U.S. attorney for the western district of Texas, appears unconcerned. Speaking on the steps of the federal courthouse after Waters pleaded guilty on the weapons charges, Carruth said, "I hope justice was served here today." He refused to discuss the O'Hair case or the damning affidavit. But he reminded reporters that there is no statute of limitations on murder. When asked about the lack of corpses in the O'Hair case, he casually mentioned the name of Colleen Reed, a 28-year-old Austin woman who was kidnapped and presumed murdered. Kenneth Allen McDuff was executed last November for the 1991 abduction and slaying of Reed, an accountant. McDuff was convicted of the murder in 1994, even though Reed's body had not been found. Reed's remains were finally found last October in a shallow grave near Marlin. But prosecutors may not have to go that route; if Waters is charged with murder any time soon, it will likely be for the murder of Fry. In that case, authorities have a body, and according to the affidavit, they appear to have some other physical evidence. They also have strong circumstantial evidence linking Waters and Karr to Fry shortly before Fry disappeared.
But even if Waters is indicted for murder in the O'Hair or Fry case, the charge won't be made by the APD. Instead, the prosecution will come from federal authorities or the Dallas County Sheriff's Office. And that angers William Murray. Murray, the chairman of the Religious Freedom Coalition in Washington, D.C., said he is gratified that the mystery surrounding the disappearance of his mother, brother, and daughter appears to be coming to a resolution. But he says that resolution has nothing to do with any effort put forth by the APD. The APD, says Murray, "treated this case as if they were investigating the disappearance of a prostitute."
But pinning all the blame on the APD may be too easy. The O'Hairs' fellow atheists also deserve some blame. Right after the three atheists disappeared, Ellen Johnson, the new head of American Atheists, assured reporters that nothing was amiss. "Madalyn is just fine," she said. "This has nothing to do with her health."
And neither Johnson nor Tyson ever asked the APD investigate the disappearance. That was left up to Murray, even though he lives a thousand miles away, in the Washington, D.C., area. Of course, some of the atheists' reluctance may have been due to their strained relationship with the APD, but it shouldn't have precluded them from demanding that the police do a thorough investigation.
Certainly, there is plenty of blame to go around. And APD's Olfers said he is sorry to hear of Murray's disappointment in his department's work. But, he says, "hindsight is always 20/20." That is certainly true. But it's also clear that the APD is having a hard time explaining why it virtually ignored one of the most publicized murder mysteries of the past decade.
The Madalyn Murray O'Hair Archives:
Naked City: A Mysterious Disappearance (11-17-95)
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