It was Raymond, but that explanation isn't exactly correct. Raymond wanted Bobby to deal guns to the gang and Bobby refused.

It's a subplot that's not related to the main plot, but it helps to solve it because then Bobby's sister will tell you about the "Pretty" woman in a red dress (Yeah I don't know why people thought she was pretty either)

Daryl F. Bates ;)

I was pretty ignorant of Daryl F. Gates and his controversy when I first played this, actually in 2000, a while after its release. I got as far as I could without looking up solutions in the internet. So you encounter Mitchell Thurman....well basically it's "Bates Cinema" instead of "Bates Motel". The moment Thurman said that the red dress belonged to his mother, I thought "well that's not very original, Psycho is only one of the most famous horror films". When I got stuck and read that I had to find an old piece of rope lying in the street and tie it to a dog who'll then pull me to the killer's house....I should've deleted the game right there.