Waterfront Scandal : Biloxi Blues: Bitter Feud Poisons City

December days in this Gulf Coast resort city are spectacularly sunny and bright, but the civic atmosphere is dark and sinister, poisoned by enough hatred, fear and suspicion to fill a Faulkner novel of raging Southern passions.

One of the oldest cities in America and one with a history of conflict among French, Spanish and English invaders, Biloxi became famous as a wide-open, good-time town with an easy tolerance for gambling and other recreational vices. More recently, it has suffered from the ravages of economic decline and unsettling social change.

And now, just when some had hoped it would be rebounding, Biloxi has been plunged into a paralyzing melange of grand jury investigations, personal feuds and charges and countercharges as thick and murky as the local seafood gumbo.

Special Vulnerability

Biloxi’s plight illustrates a small city’s special vulnerability to civic conflict: Large metropolitan areas can shrug off scandals, but in communities where almost everyone knows almost everyone else and the cast of characters remains constant, such crises leave scars that shadow the future long after the reasons for them have faded.

“The investigation has hurt Biloxi tremendously,” said Dianne Harenski, an independent member of the City Council who fears the current upheaval will discourage outside investment and crush hopes for an economic revival of the city’s worst-off neighborhoods.

At the center of Biloxi’s present trouble are two men:

--Gerald Blessey, the activist liberal mayor who has been the moving force behind a plan to revive the economy by redeveloping Biloxi’s rundown waterfront.

--Royce Hignight, a hard-charging FBI agent who has led an all-out investigation into allegations involving Blessey, his associates and the waterfront project.

Opinions Split Town

Opinions about Hignight and Blessey and about the current state and federal grand jury investigations of the waterfront scheme cleave Biloxi like an ax.

So savage has the atmosphere become, Blessey said, that he is the subject of constant rumors of the most lurid sort, including suggestions--publicly rejected by the police--that he was linked to the unsolved, hit-style slayings of a Biloxi judge and his politically active wife in 1987.

Blessey and his supporters portray the controversy as a reflection of long-simmering tensions that are endemic to the city and the region: the New South versus the Old South, the “outs” versus the “ins,” reformers versus good old boys, advocates of change versus defenders of the status quo. And, in their view, the racism that has haunted Mississippi almost since its beginnings still dogs it today.

Since Blessey’s student days at the University of Mississippi in the 1960s, he has been at the forefront of civil rights battles. Now considered the most liberal officeholder in the deeply conservative state, he takes pride in his political alliance with the black community and what he describes as his commitment to social change.

His loyal supporters view him as a progressive leader whose efforts to energize a stagnant community have earned the enmity of racists, conservative ideologues and FBI agent Hignight.

“Gerald is a victim of his progressive ideas and liberal ideas toward all people,” Dr. Gilbert Mason, a black leader in Biloxi who strongly supports the mayor, said.

That is one view. Blessey’s critics paint quite a different picture.

City Councilman Robert A. Carroll, the mayor’s most vocal opponent, portrayed Blessey as a self-serving politician who throws city business to bankers, lawyers and auditors who contributed to his campaign.

Considered Arrogant

Peter Halat, a Biloxi attorney who has known Blessey since grade school and plans to run for mayor himself, considers Blessey to be arrogant. “I’ve never heard Gerald admit that he’s made a mistake,” Halat said.

Audrey Lamey, who once worked for Blessey, declared: “He can be overbearing sometimes--when he thinks he’s right he’ll do almost anything to uphold his principles.”

The present furor was set in motion two years ago, when Blessey had a brainstorm.

He had been to Boston and seen a marvel of economic rejuvenation called Quincy Market--a collection of spruced-up warehouses and old brick office buildings that became a bustling tourist haven filled with trendy shops and restaurants.

Why not, Blessey asked, do something like that with Point Cadet, the oldest, most rundown section of the Biloxi waterfront?

The mayor and others set to work. They drafted the blueprint for an economic Christmas tree of stores, boutiques, up-scale restaurants and a 200-room hotel for tourists and conventioneers--with port facilities for an offshore gambling ship thrown in for good measure.

They pursued and won a $500,000 grant from the federal Housing and Urban Development Department, put together the Greater Biloxi Economic Development Foundation and the Point Cadet Development Corp. to carry the project forward and scheduled hearings to present the plan to the community.

As Blessey and his supporters, especially the city’s blacks, described the plan, it was the answer to Biloxi’s prayers: more jobs, more opportunities for the business community and more tax revenue for local government--all to be brought into being with the help of dollars from distant Washington.

“This blend of commercial and recreational interests will preserve the history and culture of Biloxi while providing 1,400 jobs,” the mayor said, adding that it would bring the city an additional $1 million a year from real estate and sales taxes.

Not everyone was convinced, however.

City Council critic Carroll derided the idea of putting a new 200-room hotel and French-style marketplace in a waterfront location he calls “the stink zone,” especially at a time when some of the city’s largest privately owned hotels are on the edge of bankruptcy because of the slump in tourism.

Well-Off Residents

The project also continues to be opposed by some of the more well-off West Beach and North Biloxi residents, who would rather see municipal funds spent to repave streets and fill potholes than to support Blessey’s scheme.

It is not political opposition, however, but yearlong federal and state investigations of the waterfront project that have kept Biloxi in turmoil--the investigations plus a heated controversy over FBI agent Hignight’s tactics.

The federal investigation has focused on whether city officials acted without federal approval when they released $160,000 of the HUD grant to cover the developer’s start-up costs. Biloxi officials say federal officials told them they could make the move, but that they never received written authorization.

Thus far, the investigation has yielded two indictments:

--In mid-October, Reba Capers, the executive director of the Greater Biloxi Economic Development Foundation and a strong supporter of Blessey, was charged with lying to a grand jury about federal approval of the release of the $160,000.

--Charles Adams Jr. of Syracuse, N. Y., who worked for the Northwest Investment Co., one of the firms formerly involved in the project, also was indicted on perjury charges in connection with the expenditure.

Blessey, 46, said the Internal Revenue Service audited his records in an inquiry that began when two IRS agents arrived at his Biloxi home at 9 o’clock one evening last spring. After months of checking over his personal finances, he said, the IRS found nothing wrong with his tax returns.

Nick Montgomery, the IRS agent who headed the inquiry, said he could not comment on the mayor’s statement.

No one has yet been charged with improperly profiting from the waterfront project, although that accusation percolates just below the surface in the rumors and innuendo swirling through Biloxi.

“They say I’m absconding with money,” Blessey said in an interview, “but the fact is that I’m broke.” As evidence, he produced a financial statement showing that his net worth as of Aug. 15 was only $1,889.88.

City Councilwoman Harenski, who has ties to Carroll as well as Blessey and supported the waterfront project, praised the mayor’s personal integrity: “To say that Gerald Blessey took something for his own personal gain--I don’t believe that. . . . We have gone 100% above and beyond to make sure that all the i’s were dotted and all the t’s were crossed.”

The real problem, Blessey and others contend, is not improprieties on their part but the bias of Hignight.

As Blessey sees it, Hignight is cooperating with the mayor’s political adversaries--who include Harrison County Dist. Atty. Glenn Cannon and Pete Johnson, recently elected state auditor--in an effort to discredit the mayor and his political ally, Mississippi Gov. Ray Mabus.

Describing her experience with Hignight, Capers said in an interview: “He lacks knowledge to understand what we’ve done. His lack of understanding has been staggering, but the worst thing--it’s unthinkable--is his personal bias. . . . He makes it clear by his bearing, accusatory and sarcastic.”

Capers denied any wrongdoing. “I am not going to be intimidated, and I look forward to a fair hearing on these charges,” she said.

Blessey has complained to the FBI that Hignight has been conducting a personal vendetta against him rather than an objective inquiry. And many of those Hignight has interviewed--some but not all of them Blessey associates--describe him in terms that bear little resemblance to the conventional image of the professionally dispassionate FBI agent.

Bob Landry, executive director of the Point Cadet Development Corp., the corporation formed to manage the waterfront development, said that Hignight was “arrogant and intimidating” in his contacts with the office. “He flashed his badge and said: ‘I want you to account for every penny of federal dollars spent in Biloxi on this project,’ ” Landry recalled.

Quizzed for 3 Hours

Shirley Thornton, a petite, red-haired woman who is co-owner of The Factory Restaurant included in the waterfront plan, said that Hignight arrived unannounced one morning and quizzed her for three hours.

“He sat me down and just pounced on me,” she said. “He just really was antagonistic. He had me in tears once or twice. He’s very rough and gruff, sort of a Gestapo-like atmosphere. . . . He told me I’d better make up my mind which side I was on, and if I picked the opposite side, I’d be harassed.”

“The opposite side,” she said, meant Mayor Blessey and his advisers on the waterfront project.

Biloxi City Clerk Harry Evers recalled Hignight upbraiding him for criticizing the broad scope of a federal subpoena of city records.

“Mr. Hignight was very irate,” Evers said in an interview. “He did threaten me, saying: ‘If you don’t come up with the copies we’ll haul your ass in front of the grand jury.’ Later, he cooled down.”

Sam La Rosa, the city auditor, said that he voluntarily turned over records and his own work papers to Hignight after the FBI agent assured La Rosa that he could have access to them at any time. Later, when the auditor reminded Hignight of his promise and asked to look at the files, La Rosa quoted the FBI man as denying having made any such statement.

“He just lied,” La Rosa said. “I know how people in Germany felt under the Gestapo, dealing with Royce Hignight.”

Robert Simmons, the city director of community development, said Hignight warned him that he could be sentenced to 5 or 10 years in prison unless he decided to “come clean” with information about Biloxi corruption. Simmons asserted that he knew of nothing improper.

“The real tough part was at the grand jury. It was threatening,” Simmons said in an interview. “Hignight pounded the desk, saying: ‘You’re not telling us all you know.’ ”

Sheriff’s View

Larkin I. Smith, the Republican sheriff of Harrison County, made a point without mentioning any names: “There’s a problem with FBI agents who remain in an area a long period of time and become involved in local politics and express opinions not based on fact, but on rumor and innuendo. The FBI should see to it that it doesn’t take place. If if does, they should take appropriate action.”

On the other hand, federal authorities, former FBI associates and other defenders of the bureau insist that while Hignight’s style can be bruising, he is a very capable agent who has done excellent work in years-long investigations of corruption among major political figures in Mississippi.

In Washington, FBI sources said Hignight has a reputation for tenacity: “He never lets go.”

A former prosecutor in Biloxi said that Hignight, 43, uses an authoritarian manner and deep voice to good effect in his interrogations. “Royce Hignight thinks he’s the only honest man left,” said the prosecutor, who asked not to be named. “Except for his John Wayne syndrome, I’d say Royce is what you want” in an investigator.

“It’s a case of the white hats against the black hats who have held power for so long,” Biloxi Councilman and Blessey-critic Carroll said in an interview. Blessey’s charges of a one-man FBI vendetta, he said, fail to take into account the supervision of the U.S. attorney’s office for Mississippi and the Justice Department in Washington.

“I don’t feel that the Feds are dragging their feet,” Carroll added.

For his part, Hignight, interviewed at the FBI office in the adjacent town of Gulfport, grinned as he told a reporter: “I’m still here. I haven’t been reprimanded.”

He refused to comment on specific allegations or other aspects of the controversy.

“I have no side of the story,” he said. “I can’t comment on anything. There’s really not much I can say--that’s bureau policy.”

But, with his voice rising in anger, he rejected a suggestion that he might run for public office after he retires from the FBI.

Career Agent

“I’m a career FBI agent,” he said. “I make good money and I’m six years from retirement. I make more money than these politicians do anyway, so why would I want their jobs? That’s ridiculous.”

Perhaps the most Faulknerian--and poisonous--twist to the controversy over Blessey and the waterfront project is the way critics have spread the idea that both are somehow linked with two yet-unsolved murders in Biloxi: the killing of Vincent and Margaret Sherry.

Vincent Sherry was an interim circuit judge, a former criminal defense attorney who had represented many persons accused of drug dealing before he was named to the bench. Active in politics, he called himself a conservative Democrat.

Margaret Sherry, a conservative Republican gadfly who narrowly lost to Blessey in a bitter mayoral election in 1985, had been expected to run for the office again next July, when Blessey plans to retire. She often said she had evidence that would “blow the lid off” City Hall, but never made any major allegations.

The Sherrys were found dead with .22-caliber bullet wounds in their heads--the telltale mark of a murder-for-hire. No weapon was found and there were no clues. After exhaustive inquiries, police admit they have no motive, no suspect and little hope of finding the killer now that the trail is cold.

The crimes still haunt Biloxi, especially its political leadership, since the Sherrys were very prominent in its public life.

‘Hated Each Other’

“Gerald and Margaret hated each other,” was the way their associates described their political and personal antagonisms. Blessey has said that the couple had a “war of words and a war of ideas, and that was all.”

Coincidentally, Hignight lives across the street from the Sherrys’ home and reportedly had ties to Margaret Sherry both when she was a member of the City Council from 1981-85 and after her election defeat.

Hignight joined the police task force investigating the murders, but George Saxon, public safety director of Biloxi, said the FBI man accepted assignments but never reported any findings and, two weeks later, dropped off the team, saying FBI agents were not allowed to take part in such joint efforts.

Shortly after the slayings, a member of the City Council said, Hignight tried to link the crimes with the Blessey Administration by asking: “Don’t you think that control of a $36-million budget is enough to commit murder over?”

The council member asked not to be named for fear of retaliation, saying: “I don’t want to do battle with Royce Hignight.”

Other law enforcement officers, including Sheriff Smith, a Republican recently elected to Congress, have said repeatedly that there is no connection between the Sherry murders and Blessey or the city Administration.

The Sherrys’ son and daughter, however, have hinted darkly in news interviews that there must be some link, and have even advocated polygraph tests for the mayor and all members of the City Council.

Blessey expresses outrage over the vicious nature of the rumors.

Other less sensational but equally lurid rumors flourish. According to one false story, Blessey said in an interview, he was locked in his office, overdosed on cocaine, and city firefighters had to climb through the windows to rescue him. The mayor said recently there were at least 2,000 such rumors on the streets of Biloxi.

“The whole investigation is so irrational, it just doesn’t seem fair,” he said recently. “The truth is on my side. I’ll be exonerated.”

As his time in office dwindles and the waterfront project remains under a cloud, Blessey admits he is growing morose.

“Impatience,” he said with a sigh, “is the worst of my many faults.”