A state district court judge explains in a recent order that she dismissed Dallas County District Attorney Craig Watkins' indictments against a wealthy Dallas heir after concluding that the prosecutor levied the charges "to assist" plaintiff lawyer Lisa Blue.

But Blue, of Dallas' Baron and Blue who is involved in a multi-million dollar attorney fee dispute with the heir, says she's done nothing wrong.

Lena Levario, judge of the 204th District Court, dismissed several mortgage fraud indictments against Albert G. Hill III on March 7th, partly because Watkins refused to testify about why he prosecuted Hill. Hill moved to quash the indictments, alleging that Blue, a prominent donor to Democrats, exerted influence on Watkins to bring the charges. [See " State Judge Dismisses Fraud Indictments Against Albert G. Hill III, Holds Dallas DA Craig Watkins in Contempt," Texas Lawyer, March 8, 2013, page 1.]

Blue had represented Hill in a dispute over a family trust that was litigated in federal court and Hill later refused to pay Blue's legal fees [See " BAM! Counsel Win $21 Million in Fees From Clients Who Wouldn't Pay," Texas Lawyer, Jan. 30, 2013, page 1.]

Levario also found Watkins in contempt for his refusal to testify, which is the subject of ongoing litigation.

In her August 2 findings of fact and conclusions of law on Hill's motion to quash, Levario found among other things that:

· Leading up to the indictments, Watkins was in close and frequent contact with Blue, received contributions and other favors from her shortly before the indictments were returned and discussed the indictments with her on at least two occasions before they were obtained.

· The indictments were obtained shortly before Blue's $50 million fee trial against Hill.

· There were internal doubts in the Dallas DA's Office about bringing charges against Hill and the office conducted a limited investigation before proceeding with charges.

"This, along with other evidence in this case, including Mr. Watkins refusal to testify at the evidentiary hearing on Defendant's motion, strongly supports this Court's conclusion that Mr. Watkins approved the indictments against the Hills in order to assist Ms. Blue" in her fee dispute with Hill, Levario wrote.

Through his spokeswoman, Watkins declines comment.

"The grand jury said there was probable cause," says Watkins spokeswoman Debbie Denmon. "You have a DA who doesn't turn a blind eye to the rich and lets the process play out."

Blue says in an interview that she's done nothing wrong and her political relationship with Watkins is of no note.

"I don't understand what being close to a politician has to do with it," says Blue, who says that she and her late husband Fred Baron who founded the Dallas plaintiff's law firm Baron & Budd, had been prominent political donors for two decades and supported the last two Democratic U.S. presidents. "The irony is, I asked Craig Watkins on two occasions to not indict [Hill] and it shows what little influence I have with him."

During a February hearing on Hill's motion to quash, Blue refused to testify, asserting her 5th Amendment privilege on advice of her lawyer.

In an August 9 pleading Blue filed in her federal fee dispute in Lisa Blue/Baron et al. v. Albert G. Hill III et al., Blue explained that she asserted her 5th Amendment privilege after she learned she was the subject of a federal investigation and that "the investigation regarding Blue concluded with no evidence of a federal criminal violation."

However, Shamoil Shipchandler, an Eastern District of Texas assistant U.S. Attorney whom Blue's lawyers allege they've communicated with about the investigation in attachments they included along with Blue's pleading, says he can neither confirm or deny that there was an investigation involving Blue.

Russell Wilson, an assistant Dallas County district attorney who represents the state in the Hill case, says he will appeal Levario's decision dismissing the indictments to Dallas' 5th Court of Appeals.

"Our reaction is continued disappointment with what we believe is a failure by Judge Levario to follow the law," says Wilson, who says the indictments against Hill "was the result of a very lengthy and thorough grand jury investigation."

"And Mr. Hill has previously claimed that Ms. Blue have influenced these indictments. Those allegations have been rejected by two federal judges and as recently as last week, the U.S. Attorney for the Eastern of Texas," Wilson says.

Davilyn Walston, a spokeswoman for Eastern District of Texas U.S. Attorney Malcolm Bales, says he declines to comment on the matter.

George Milner III, a partner in Dallas' Milner Finn Price who represents Hill in the criminal case, also declines comment.