DALLAS -- A judge found Dallas County District Attorney Craig Watkins in contempt of court Thursday and threw out mortgage fraud charges against an Hunt oil fortune heir, citing the DA's refusal to answer questions about his office's handling of the case.State District Judge Lena Levario said it was clear to her that Watkins was "calling the shots" when his office investigated defendant Al Hill III. Attorneys for Hill argued that Watkins targeted their client as a favor to attorney Lisa Blue, who was entangled in a multimillion-dollar fee dispute with Hill.Watkins appeared briefly in a packed courtroom Thursday morning. He stood silently as one of his attorneys told Levario that Watkins would not testify about the case on two grounds: attorney-client privilege and the privilege that allows prosecutors to withhold some notes and other materials in developing a case.Watkins then took the stand, and one of Hill's attorneys asked him two questions. Watkins refused to answer either. Levario then declared him in contempt but said she would not impose an immediate penalty. He left the room through a back entrance.Later, she offered prosecutor Russell Wilson III, who was arguing on Watkins' behalf, time to ask Watkins again if he wanted to testify. Wilson came back and said Watkins had declined again. Shortly afterward, Levario dismissed the charges against Hill.Having the case dropped was a major, public blow to Watkins and his office, which pursued a case for months against Hill, the great-grandson of oil titan H.L. Hunt. Watkins has won national praise for his work to free wrongfully convicted inmates, but he faces local controversy over the Hill case just as he gets ready to run for re-election next year.Prosecutors introduced evidence to suggest that Hill had signed false paperwork to obtain a $500,000 loan by listing a home he did not fully own as collateral. His attorneys argued that he paid back the loan before a case was filed and that no criminal activity took place. They also say prosecutors pursued the case only when they were tipped by Hill's father, who has fought his son for years in a federal civil lawsuit.Hill's defense team pointed to records of calls between Watkins and Blue around the time the case was taken to a grand jury, as well as campaign contributions.Blue refused to testify last month, invoking her Fifth Amendment right not to incriminate herself. Her attorney said Blue is also involved in a federal investigation in which the Hill case could play a role. An FBI spokeswoman has declined to comment.Debbie Denmon, Watkins' spokeswoman, said afterward that "we clearly disagree" with Levario's ruling. "This is an example of rich people manipulating the system," she said in an email.Three prosecutors involved in the case testified Thursday about how it was handled, including a "pitch meeting" before Watkins to discuss it before it went to a grand jury.Terri Moore of Fort Worth, Watkins' former top deputy, said she couldn't remember Watkins mentioning conversations with Blue. Moore also said Watkins did not intervene in the Hill case."Mr. Watkins wasn't anywhere around," Moore said. "Ms. Blue wasn't anywhere around. It was based on what they were finding out in the investigation."But Stephanie Martin, the prosecutor who took the case to a grand jury, said she remembered Watkins asking several questions during the pitch meeting, particularly about title documents.Levario said Martin's testimony helped change her mind about what to do. She said she wasn't swayed much by Moore's testimony because of Moore's business and personal relationships with Blue and Watkins."All of this evidence makes it smell really bad," Levario said.