Posted: Oct. 7, 2004

THE BILL LEE NO ONE KNOWS

By Celia Cohen
Grapevine Political Writer

When William Swain Lee re-entered politics to run for governor four years ago, he materialized as a white knight.

Bill Lee was the Superior Court judge transformed into a hero for lassoing in Thomas J. Capano, preventing him from turning a murder trial into a circus and condemning him as a "ruthless murderer" and "malignant force" in sentencing him to death.

Lee ran a joyous insurgency campaign, capturing the Republican Party's imagination and respect when he fell a breathless 44 votes short of the nomination in the 2000 primary.

It made Lee the consensus choice to run for governor this time. He was the ex-judge with a populist streak, the defender of what is right, the reborn politician with a winning style.

This is the Bill Lee everyone knows.

There is another Bill Lee, though, the Bill Lee no one knows.

This Bill Lee endured a turbulent 1970s. His parents died in a murder-suicide that rips him apart to this day. He and his law partner were engulfed in million-dollar financial and legal problems that not only dragged on and on until 1986 but landed him in the inferno of the failing, state-owned Farmers Bank, arguably the worst crisis in Delaware history. By the time the matter ended, he and his wife divorced and lost their house.

When Lee went on the bench in 1977, it was an act of self-preservation.

As he told the Newark Rotary Club last year, without going into the details, "It's hard to explain. I never wanted to be a judge . . . [but] I needed a way to discipline myself."

A decade earlier, Lee appeared to be living one of those sky-is-the-limit lives. Born to a doctor father and socially-involved mother on Dec. 18, 1935, he went to the right schools -- Wilmington Friends, Duke University and the University of Pennsylvania law school -- and served his country as a Marine Corps lieutenant and his state as a deputy attorney general in Sussex County.

By 1969 he was married and settling into a law practice in Georgetown with A. Dean Betts, and that was wonderful, too. "A small law practice is like a marriage. I adored Dean," Lee said.

Lee also loved politics, maybe above all else, and he had the perfect pedigree for it.

The Swains, who were Republicans, had been in Sussex County for 300 years, and his grandfather William J. Swain was elected treasurer and insurance commissioner.

The Lees, offshoots of the famous Lees of Virginia, arrived in Delaware almost 200 years ago and did their politicking in lower New Castle County. They were Democrats, and grandfather Walter Lee was a legislator, getting there by running against his own father-in-law shortly after the wedding.

Bill Lee was a Republican. When he went to register to vote in Grandfather Lee's stomping grounds, the registrar was aghast that young Lee was going against his grandfather's party. She tracked the elder Lee down by telephone at a barber shop before she would take the registration, and he said, "Register the boy. It's his mother's fault."

Lee threw himself into Sussex County Republican politics, eventually serving as the county chairman from 1973 until he became a judge. Dean Betts was a prominent Democrat, the law firm as mixed as Lee's family background, and at one point the partners traded being the county solicitor, the post going to whoever's party was in power.

Tragedy came on Oct. 18, 1970, at the Middletown home belonging to Lee's parents. Dr. Walter H. Lee Sr. shot his wife Virginia with a 12-gauge shotgun in their second-floor bedroom and then shot himself. She had been in failing health, and he was depressed about it, a doctor feeling the responsibility.

"I may cry," Lee said during an interview as he talked about his parents, and he did. He said he had stopped by the house the day before. It was locked up, although he knew they were there, and finally he just left.

"There's always a little guilt -- if you should have persisted," Lee said. "You never stop grieving."

Financial and legal problems followed when Lee and Betts decided to venture into real estate in 1973.

They bought 313 acres known as Walter's Bluff on Indian River Bay for about $1.5 million, waterfront they expected to sell in turn to the Robino-Ladd Co., a development firm that would build a marina, motel, restaurant and houses. As part of their financing, they borrowed $400,000 from Farmers Bank, which was virtually the lending institution for downstate Delaware.

Nothing went right.

The economy soured, there was an energy crisis, and the real estate market went south, too. "Things went from bad to worse in a real hurry. Condos in Ocean City were going for 10 cents on the dollar," Lee said.

Even worse, Farmers Bank was imploding. The Delaware government's official bank since 1807, it held all the state's deposits and the life savings and pensions of thousands of Delawareans, and it was riddled with mismanagement, cronyism and sweetheart lending arrangements.

In the economic downturn, Farmers Bank was collapsing under a landslide of $40 million in bad loans, threatening the state with financial disaster and its customers with personal ruin.

Lee and Betts had one of those bad loans. Lee blamed the bank. Robino-Ladd also used Farmers Bank for financing and was failing to make payments, so Lee said the bank never should have lent the money for the Walter's Bluff project, knowing Robino-Ladd was too shaky to see it through.

"Robino-Ladd disappeared on us," Lee said.

The project was abandoned. Years of tedious litigation ensued from 1976 to 1986 as Lee and Betts were dunned for the money, first by Farmers Bank and then by the Federal Deposit Insurance Corp., or FDIC, an agency that insures bank deposits and took over a mass of the bank's problem loans in a bailout negotiated by state officials.

The lawsuit involved some of the best lawyers in Delaware. Max S. Bell Jr. of Richards Layton & Finger represented Farmers Bank. David A. Anderson of Potter Anderson & Corroon represented the FDIC. Andrew B. Kirkpatrick Jr. of Morris Nichols Arsht & Tunnell and his colleague Donald F. Parsons Jr., now a vice chancellor, represented Lee and Betts.

The case finally was settled when Lee and Betts agreed to pay $1 million to clear the loan and the interest that had built up over the years. By this time, Lee also was dealing with a divorce from his wife Mary, and their house, which was probably going to be sold, anyway, went as part of the settlement, he said.

Lee had been a judge for seven years when the matter ended. He had gone on the bench reluctantly, turning down an appointment to the Family Court in 1976 from Gov. Sherman W. Tribbitt, a Democrat whose family physician had been Lee's father, before accepting one in 1977 from Gov. Pierre S. du Pont, a Republican.

Lee said he really preferred to practice law, but he disliked the business side of a small firm, worrying about the taxes being paid and so on, and he was letting politics consume him. A judgeship was a way out.

"I loved Family Court," he said. "No matter what you do, you feel like you're bringing order to chaos."

The assignment on the Family Court was complicated by Lee's own divorce, so he took advantage of an opening on the Superior Court and a compliant governor and state Senate to switch. Gov. Michael N. Castle, a Republican now in the Congress, nominated him for the Superior Court, and Lee went there after Senate confirmation in 1986.

"I loved Superior Court. It's where I practiced all my life. Superior Court was a coming-home party for me," Lee said.

Castle promoted him in 1989 to resident judge, responsible for the administration of the Sussex County Courthouse. Lee settled in as a respected judge -- courteous, firm, good-humored, and not afraid of cantankerous cases.

He was a natural to handle the trial of Tom Capano, the wealthy and well-connected lawyer, for the 1996 murder of Anne Marie Fahey, the vivacious 30-year-old scheduler for Gov. Thomas R. Carper, now a Democratic senator.

"I always just thought that was coming my way. I felt the rumble on the rails," Lee said. "It was going to be the judicial challenge of a lifetime."

It also was going to make William Swain Lee a household name. That is pure gold in politics, and Lee knew it.

Going on the bench had meant giving up the political life he loved, but it had come full circle. It gave him the chance to get back into politics, his record cleansed, the Bill Lee everyone knows eclipsing the Bill Lee no one knows.

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