The FACTS are Very Simple ….. The Massive Realty Crimes / Dirt Dealing can NO LONGER BE SECRETED or COVERED UP …. The Government Did It
For Texas and The Golden Hammer of MONKEY COUNTY TEXAS Read It and Weep
USA Inc. Is a Gargantuan Crime Syndicate
ON THE STRETCH OF INTERSTATE 30 THAT LINKS Dallas to Lake Ray Hubbard, about 19 miles away, Dallas County is a work of urbanization still in progress.
Here, there are no tinted towers, glitzy high-rise rehabs or tony supper clubs. Instead, there are condominiums. Thousands of them. Row upon row upon row. Some are inhabited, lined with the banners of bankrupt real estate (”Now Leasing! No Deposit! Six Weeks Free!”). Others are dark and deserted, with windows of cardboard or no windows at all. Still others are dilapidated and skeletal. And even where there are no condos, there are slabs for condos: flat concrete gravestones for a building boom that died five years ago.
This is not a place one would associate with the go-go times of Texas savings institutions. Gone are the helicopters from the powder-blue helipad on Lake Ray Hubbard and the fleet of Rolls-Royces and Mercedes-Benzes parked outside the nearby Wise Circle Grill. But it was here – on this I-30 condo corridor between the bedroom communities of Garland and Mesquite – that Federal regulators got their first whiff of the disaster brewing in the nation’s thrifts.
According to court records, these condominiums and slabs of condominiums were the end product of a massive land-investment scam engineered by a small network of savings institutions headed by the Empire Savings and Loan Association of Mesquite. At Empire, a handful of local developers – captained by D. L. (Danny) Faulkner, a former house painter turned condominium developer – relieved the nation’s thrift system of more than $500 million in what one Federal regulator called ”one of the most reckless and fraudulent land-investment schemes” his agency had ever seen.
When Empire was closed by Federal regulators on March 14, 1984, it was the first closing openly attributed to fraud in the 50-year history of the federally insured thrift system. So far, more than 100 people have been convicted for their involvement in the scheme.
On the day Empire was shut down, its chairman, Spencer H. Blain Jr., was banned from the savings and loan business. In April 1987, Blain settled a civil racketeering suit with the Federal Savings and Loan Insurance Corporation (F.S.L.I.C.) for $100 million.
Danny Faulkner as well as Blain and five other key figures – said by Federal prosecutors to have made a total of $112 million in bogus condominium deals financed by Empire loans – are on trial in Lubbock, Tex., on racketeering and conspiracy charges. Clifford Sinclair, a Faulkner associate, has been sentenced to 13 years in prison and he plans to testify against Faulkner and the others. Those on trial plan to place much of the blame for fraud at Empire on Sinclair.
The Federal charges center on the relationship among Faulkner; his partner, James L. Toler, and Blain. Through Blain, the Government contends, Faulkner and Toler essentially controlled lending at Empire, though neither held any post at Empire nor any significant stock. None of the accused deny making substantial money from the I-30 condominium deals, or that widespread fraud took place in connection with the Empire loans. But each denies having done anything illegal. The fraud, they say, was committed by others who had worked for them.
Today, the $279 million Federal deposit insurance payout at Empire pales beside other thrift losses and failures. The 1986 closing of just one Texas institution, for instance, cost $1.3 billion. In the five years since Empire was shut down, about 500 of the nation’s savings institutions have been closed or merged, or are scheduled to be closed or merged, by regulators.
The bailouts have bankrupted F.S.L.I.C., which, in 1984, had $6.1 billion for such emergencies. Last year alone, when F.S.L.I.C. began wholesale closings, it committed $37 billion in bailouts. Many more thrift insolvencies are expected, and industry experts now estimate that the cost to American taxpayers of all these failures will exceed $100 billion.
ALTHOUGH THE DISASTER at Empire Savings gave Federal regulators their first glimpse of fraud as a major cause of thrift failures, the role fraud played was, until recently, consistently underrated – by regulators, by Congress, and certainly by the savings and loan industry itself. Sagging economic conditions in Texas and euphemisms like ”speculative lending” or ”imprudent management” served to mask the seriousness of the thrift debacle.
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And a Network of MILLIONS
Family and Friends Who Stood By Me and Mother and Dad for Raising Me RIGHT
The Bankster Gangster SLOBS and Their Government Partners in Crime can NO LONGER HIDE …. The Truth is Loose
Nov 27, 2004 – Community blames regulators in wake of bank fraud … But in this farming community in one of Utah poorest counties, where many are … to a bank unwittingly instrumental in its looting, the Far West Bank of Provo. … Title, which held sometimes astronomical sums at the Bank of Ephraim for real-estate deals.
Sep 24, 2017 – Utah’s largest polygamous church owes millions in court judgments … is expected to owe $1 million in restitution to taxpayers for food stamp fraud. … The bulk of the FLDS Church’s assets is in land across many states. … for their long history of abusing children and in the hopes that the FLDS Church will …
The GREATEST LAND FRAUDS AND BANK LOOTINGS IN WORLD HISTORY …. THE GREAT FINANCIAL FRAUD LOOTING AND LAUNDERING MACHINE. AHankJob … Once a prominent Utah real estate investment guru, Rick Koerber …
Jan 27, 2008 – Vickers studied the Florida land boom and bust of the 1920s, and … in the 1920s,” said Gary Mormino, a professor of Florida studies at the …
For the period between 1984 and 1987, according to a Congressional study released last fall, thrift losses due to fraud were placed at $8 billion to $11 billion. At least three-quarters of thrift insolvencies during the same period were linked, by this study, to some significant level of misconduct or abuse.
”It was the most widespread, reckless and fraudulent era in this nation’s banking history,” says Edwin J. Gray, who presided over the disaster when he was chairman of the Federal Home Loan Bank Board, the nation’s chief thrift regulator.
The very mechanics of white-collar crime – the misapplication of the legitimate tools of business – have transformed a sleepy industry into a regulatory nightmare, making fraud hard to define, harder to detect and harder yet to contain.
In Texas, a special fraud task force of 75 full-time investigators – from the Federal Bureau of Investigation, the Internal Revenue Service and Federal regulatory agencies – has been investigating widespread banking corruption from a list of more than 500 names, including large numbers of prominent Texans.
So far, the focus of fraud has been on Texas and California. At times, the hand wringing over the thrift disaster suggests that post-deregulation thrift failures were the result of economic acts of God. But thrifts like Empire failed, for the most part, because those who managed them killed them. And they were able to kill them because deregulation – the national policy that sought to save them – provided the motive, the opportunity and the means.
ON OCT. 15, 1982, RONALD REAGAN strode into the Rose Garden to sign the Garn-St. Germain Depository Institutions Act. Following earlier deregulation legislation in 1980, Garn-St. Germain was the final step in the process of deregulating the nation’s federally chartered financial institutions.
The 14,000 or so commercial banks were generally solvent, but the 3,000 or so thrifts were, by all accounts, in terrible condition. Thrifts were spending more than they could collect. High interest rates had forced home lending to a standstill. Mortgage payments from older, low-interest home loans were providing increasingly inadequate income. (Although state-chartered savings institutions virtually obliterated the boundaries between banks and thrifts, federally chartered thrifts were still required to lend primarily for housing, even after Garn-St. Germain.) Deregulation in general sought to restructure savings institutions by allowing them to invest in shorter-term enterprises, including direct investments in real estate, stocks and securities, as well as the ability to make commercial loans. It also allowed thrifts to pay market rates for deposits. What was little noticed at the time was a contradictory effort to strengthen the safety net: the Federal insurance on deposits was raised from $40,000 to $100,000 per account.
”All in all,” said the President in the Rose Garden, ”I think we hit the jackpot.”
The ones to hit the jackpot, however, were not the people the President or Congress or Federal regulators had in mind.
Even before Garn-St. Germain reached the Rose Garden, deregulation was in full swing at Empire Savings, a state-chartered thrift. Operating out of a small shopping center, Empire seemed to be making a fortune bankrolling condominium developments in the I-30 corridor.
Since the late 1970’s, state-chartered savings and loan institutions in Texas had been able to participate in real-estate development in precisely the manner envisioned by deregulation. In fact, the performance of deregulated Texas institutions like Empire had been used as a basis for regulatory studies supporting Garn-St. Germain.
When Spencer Blain became chairman of Empire Savings in March 1982, the thrift was a small, sluggish local home-lender. Almost overnight, Blain transformed it into a regional economic force. Between December 1981 and September 1982, loans at Empire more than quadrupled while deposits tripled.
The cash for loans was generated by another creature of deregulation – brokered funds, which are usually large deposits placed by commissioned middlemen on behalf of such cash-rich clients as credit unions and pension funds. By offering higher interest rates – often two percentage points higher than other thrifts and commercial banks – Empire could attract millions. And because of the security of Federal deposit insurance and the efficiency of computer technology, those millions could be generated overnight by brokers.
Empire’s startling transformation, however, was inextricably tied to the fortunes of one man – Danny Faulkner.
Even in Dallas, where the making and breaking of millionaires is routine, Faulkner was special.
He was at the center of a condo culture in the I-30 corridor. While high interest rates had brought home-building to a near standstill in other parts of Dallas, real-estate development was booming here because Faulkner, through Blain, made it happen – and he made it happen because he was brash enough and savvy enough to capitalize on the deregulation of thrifts. Each Saturday morning at the Circle
Grill, people in fancy cars pulled in early for breakfast with Danny Faulkner, who was noted for his generosity. By late 1982, a roomful of insiders, politicians and would-be Danny Faulkners rang up tabs for as much as $1,000 a week on the Condo King.
Faulkner was an unabashed sort. When his son was married, the Tulsa Philharmonic was hired to play the theme from ”Rocky.” En route to the north Dallas reception, a uniformed guard stood at the tollway with a large sack of quarters, tossing in the fare for Faulkner’s guests.
A rough-hewn developer with a penchant for Rolls-Royces and Rolexes, Faulkner was a sixth-grade dropout from Kosciusko, Miss., and he professed not to be able to read or write. In the 1950’s, he picked cotton in Louisiana and Arkansas. In the 1960’s, he painted houses in Corpus Christi and Dallas. But by the early 1980’s, Danny Faulkner was rich and living in a sprawling ranch home on Lake Ray Hubbard.
Like most developers, Faulkner was a creature of credit. As a painting contractor in the 1960’s and 70’s, he relied on loans to bridge his business from contract to contract. His first real-estate venture was a collection of small rental houses bought with borrowed money. To cement his relationship with his creditors, he began buying small amounts of stock in the savings and loan associations that lent him money. By 1979 – the year when he built Faulkner Point, his first condominium project on Lake Ray Hubbard – he was part of a group of close friends and associates that controlled, through stock ownership, at least three thrifts, including Empire Savings.
By fall 1982, however, Faulkner was no longer developing his own condominiums. Although he had developed the handful of condo projects along the I-30 corridor that gave the initial impetus to the boom, he and Empire Savings were the source of the inspiration and the cash for the building frenzy. He and James Toler, a former Mayor of Garland, bought land on option and then sold it at much higher prices to condominium investors. Built around the concept of so-called ”Faulkner communities,” a loosely associated network of I-30 developments, Faulkner began offering to sell and build turn-key projects that defied real-estate conventions.
According to real-estate records, investors put up no cash of their own. In exchange for their signatures, Faulkner and his associates would provide land, appraisals, financing, architectural plans, construction, marketing and sales, and the borrowers became the bank’s development partners. Moreover, Empire and the other close-knit lenders provided 110 percent financing, which included a cash ”bonus” to investors signing the note.
For many with modest prospects, the deal was an overwhelming temptation. In exchange for a single set of signatures, a secretary or a carpenter could become a condominium developer, getting as much as $43,000 in cash from Empire Savings as a bonus. What these investors didn’t seem to know, or didn’t care to acknowledge, was that the bonus was not a gift at all, but part of the overall money they were borrowing.
Hidden from the investors were the land flips that they were financing. Real-estate documents reveal that a parcel of land, purchased by Faulkner and Toler at a low price, would be appraised at a higher price, often as much as 10 or 20 times its cost. The title to the land would pass from Faulkner to Toler, often through representatives, then to close associates. Each time the land changed hands, the price would spiral upward, until finally the land could be divided and sold to investors at the inflated price. As a result, the unwary investors were obligating themselves to loans for land that was grossly overvalued. At every stage of the land flip, Empire provided the money.
No money actually changed hands among Faulkner, Toler and their associates. Their profits, often millions at a time, were provided from money borrowed by the investors at Empire. Empire was paid interest, commissions and fees from the proceeds of those loans. The borrowers, namely the investors, paid for everything – including legal fees, appraisals, taxes and title costs. Some of these investors took part not once but as many as six times, each ending up with debts at Empire of $12 million or more.
When the loans came due, and investors could not pay, and the land was not worth what was paid for it, scores of borrowers/investors who had greatly exaggerated their personal worth to get their loans ended up in jail. It then became apparent that the ultimate victim of the land flips was not the investor but Empire Savings and Loan, which was drained of all its assets.
SPENCER BLAIN’S RISE IN THE Texas thrift system had been a relatively smooth one. The balding, button-down executive had headed a thrift on the Gulf Coast of Texas before being recruited at the Austin-based First Federal Savings and Loan Association. He was in his third term as a director of the Federal Home Loan Bank of Little Rock, the regional thrift regulator. And because of his tenure in the industry, he was slated to become president of the Texas Savings and Loan League, the state’s industry organization.
As president of First Federal, Blain had met Faulkner in 1980, when First Federal agreed to invest in an expansion of Faulkner Point. The next year, when Faulkner and Toler purchased a 69-acre tract across the street, First Federal became a partner, guaranteeing a $3 million bank loan.
But by late 1981, according to a former director of First Federal, the thrift’s directors had become disenchanted with Blain for problems associated with a computer-services venture the thrift had started at his urging; and when Blain walked away from his second wife and a failing $3.05 million personal real-estate venture, he and the board agreed to part ways.
In December 1981, as Blain prepared to leave his job at First Federal, Faulkner offered him a post at Empire. Empire’s president, S. A. Bieler, was leaving to invest in condominium projects of his own.
Still deeply in debt, Blain moved into a lakeside condo leased from Faulkner. His divorce was negotiated by one of Faulkner’s attorneys.
Unknown to regulators at the time (and it was only discovered when thrift examiners combed through Empire’s transactions), Blain started purchasing control of Empire from Faulkner and his associates shortly after he arrived in March 1982. To pay for the stock, he borrowed a total of $830,763 from Faulkner and Toler. Five months after he joined Empire, Blain owned more than 67 percent of the thrift’s stock, and named himself chairman of the board. In the meantime, Blain had approved at least $40 million in loans for Faulkner-Toler projects.
Like any banking institution, Empire still made money by making loans. But suddenly the perspective was radically different. Where savings institutions like Empire once made money over the long term (from the clockwork conservatism of middle-class mortgage payments), they now made money over the short term (from investments and commissions and fees). The more and bigger the loans, the more and bigger the fees.
In a matter of months, the demand for I-30 condos was dwarfed by Empire’s supply of federally insured, brokered cash. Moreover, through its wholly owned real-estate subsidiary, Statewide Service Corporation, Empire was beginning to become a warehouse for I-30 projects, selling participations in Empire loans to other savings institutions, and refinancing loans made by other thrifts for I-30 deals. By October 1982, the land-flip business had become a juggernaut, so efficient that one high-level participant called it ”a money machine.”
Blain’s activities did not go unnoticed by Federal regulators. In October 1982, Federal Home Loan Bank Board examiners appeared for their regular examination of Empire.
Thrift institutions had long had one mission – to provide long-term mortgage lending for single-family homes. But as deregulated thrifts departed more and more from their traditional mission, there developed not only new pressures on the examining process, but a growing impatience with the process of regulation itself.
This was particularly true in the region served by the Federal Home Loan Bank of Little Rock (the bank was moved to Dallas in late 1983), a five-state area that included Texas, Louisiana, Mississippi, New Mexico and Arkansas. Here, where deregulation began in the late 1970’s, underpaid and overworked examiners trained in consumer-lending practices were suddenly forced to analyze such complex business transactions as stock mergers, land swaps and development loans.
Before the regulatory system was finally overhauled in July 1985, there were only 116 examiners available to patrol the 510 thrifts under the Little Rock bank. As late as 1984, a new examiner could expect a starting salary of $14,000 a year, $5,000 less than his or her banking counterpart. As a result, turnover in the region was high.
Nonetheless, the examiners scratched hard on Empire’s veneer of growth and stability, and what they found did not look good. In their report, the examiners deemed Blain’s overconcentration on condominium investments along I-30 a ”risky” strategy. His dependence on brokered funds was troublesome, they said. A large number of Empire borrowers owed sums that were beyond Empire’s limits. Often, real-estate loan files contained no appraisals. Construction funds were disbursed without proper controls.
The examination was not completed until mid-December 1982, and not filed until a month later. It would be April 1983 before Blain and Empire responded. By that time, Blain had lent at least another $200 million in condo deals.
AS FAULKNER’S I-30 MARKETING APPARATUS became more complex, so did the land flips. Such was the disdain toward regulation in the newly liberated environment that, even as examiners poked through Empire’s books, the thrift’s land flips became their most frenzied. Although the transactions appeared to follow perfectly legal business practices, Federal prosecutors said they were fraudulent for several reasons: the real-estate appraisals were inflated; the financial statements of investors were artificially boosted to show greater personal worth, and the same handful of men and women bought from and sold to one another.
According to real-estate records, land purchased in the morning on paper for $100,000 might pass through as many as five different buyers before being sold that same day in small parcels to investors for $1 million in Empire loans. At the beginning of the chain of buyers were Faulkner and Toler or people representing them. At the end of the line were the investors who received up to $43,000 for signing their names to the deals. (Investors were willing to pay the high prices not only for the immediate ”bonus” but because they were led to believe that what they were paying were still bargain prices.) For instance, on Oct. 6, the day before Federal examiners began their audit of the thrift, its real-estate subsidiary, Statewide, purchased 82 acres on I-30 for approximately $1.86 million, or 52 cents per square foot. The same day, Statewide sold the 82 acres to Faulkner and Toler for $3 million, or 85 cents per square foot. Faulkner and Toler then sold 18.6 acres of the property to one of their associates who, in turn, sold the property – now appraised at $8.50 to $12 per square foot – in seven plots to investors for $5.6 million, or $6.95 per square foot. In one day, Faulkner and associates ended up with approximately $3.74 million in profits, and the remaining 63.4 acres of raw land free and clear. Court records reveal that another spectacular series of transactions in November 1982 generated millions in personal profits for the bankers involved with Faulkner. On Nov. 19, Faulkner and Toler spent $5 million for 117 acres of land along I-30 known as the Greens. In the space of a few weeks, Faulkner and Toler flipped the land through a series of associates, finally selling it to investors in 62 tracts for $47.3 million financed by four savings and loans.
Faulkner and Toler collected an estimated $16 million from the sales. But on Nov. 27, several days after Empire had lent at least $8.4 million to investors in the Greens, Clifford Sinclair, a Faulkner associate, paid Blain $1.4 million in four separate $350,000 checks. In a deposition, Blain acknowledged that the cash came from ”the generosity of Danny Faulkner.”
In the same series of transactions, First State Building and Loan Association, of Mountain Home, Ark., lent $10.8 million to the investors. Two of the thrift’s officers were paid $2 million from the proceeds of the scheme. To hide the transaction, the cash was placed by Sinclair in a secret bank account designated for the ”Lucky Two.” (In June 1987, one of the men pleaded guilty to criminal charges in connection with the loans.) The cash proceeds were not limited to bankers. Real-estate and court records show a spreading of wealth by Faulkner and his friends. The head of the title company that closed the real-estate transactions received $600,000 in a land flip. The regional head of the Federal National Mortgage Association received a Rolex wristwatch, while his wife – a ”Faulkner communities” employee – received a Mercedes and a mink coat.
From the December 1982 land flip known as the Fountains, Texas Attorney General-elect Jim Mattox, an old Faulkner friend, received $200,000 in cashier’s checks (made out to his sister and his brother), for which, Faulkner later testified, Mattox had done nothing at all.
WHEN THE FEDERAL HOME LOAN Bank Board received the Jan. 12, 1983, report of its examiners, it caused few waves in Washington. The report was transmitted to the Federal Home Loan Bank of Little Rock, which in turn wrote Empire a letter asking for Empire’s response.
In the curious dual system that governed savings institutions in 1983, Federal examiners reported directly to Washington. But any supervisory actions that developed from their examinations were handled regionally. For four years, between 1979 and 1982, Spencer Blain had been a director of the Federal Home Loan Bank of Little Rock; in 1982, while the examiners were auditing him, Spencer Blain was chairman of the bank’s executive committee.
When a supervisory letter was mailed to him on Jan. 14, 1983, outlining the regulatory complaints, Blain ignored it altogether. He also ignored a second and a third. (In the meantime, he made $14.9 million by selling a parcel of land he had purchased from Faulkner and Toler to close Faulkner associates.) When he finally answered in April 1983, he simply denied that Empire had done anything wrong.
Like any pyramid enterprise, Empire was able to continue only so long as it could maintain a spectacular rate of growth. And once regulators moved to slow Empire’s condo loans, the end of Empire was simply a matter of time. In May 1983, the Texas thrift regulator forbade Empire to make any further I-30 land loans. By September 1983, when many of the old loans came due, investors couldn’t pay. And in November 1983, when details of the scheme were published in The Dallas Morning News, Empire found it impossible to find new investors. ON THE MORNING OF MARCH 14, 1984, EDWIN Gray, chairman of the Federal Home Loan Bank Board, gathered with his two board members for a staff presentation on Empire Savings and Loan. The purpose was to review the evidence for the proposed closing of Empire, which had suddenly become a fiscal wreck.
Gray had been on the bank board for a year. As a former press secretary for Ronald Reagan during his California governorship and a former thrift executive, he had been an ardent supporter of deregulation. But during his first year with the bank board, he started feeling uneasy about some of the trends that were emerging from his daily reports. In California, Florida and the Southwest – particularly Texas – thrifts were becoming swollen with brokered deposits, which were being converted into questionable loans.
Gray and the board heard the staff statistics. By mid-1983, Empire’s assets had swollen to $276 million, most of which were now loans to the I-30 projects. Assets grew to $308.9 million by January 1984, with more than 85 percent of the deposits coming from deposit brokers.
But what shook Gray that morning was a videotape prepared for the bank board by an appraiser who had surveyed the I-30 condominiums.
”I couldn’t believe what I was seeing,” says Gray, now president of the Chase Federal Bank in Miami. ”It was like watching a pornographic movie. I had to turn away.” The condo projects, he said, were ”half-built, dilapidated, poorly constructed. It was a mess.” Gray says he knew the risk to the thrift system presented by such commercial ventures. He knew the problems at Empire. But until that moment, it had all been academic.
”I couldn’t believe anything could be so crooked. And then it hit me: What if it was happening somewhere else?”
The scheme, however, had already metastasized. As many as nine Texas savings institutions had lent millions to the I-30 developers, some of them for projects outside the I-30 corridor. Groups of I-30 investors, inspired by the Empire formula, ”did” deals in other cities in Texas and in other states.
PERHAPS THE BEST MEASURE OF deregulation is the bitter irony of what it has become. Although it had been designed to preserve home lending, its perverse practitioners all but abandoned the home loan in favor of office towers, condominiums and shopping malls. Deregulation was intended to preserve thrift deposits;, instead, it is witnessing record runs.
Deregulation is now a vigorous and necessary reregulation, as Federal agencies become custodians of hundreds of financial institutions, stockholders-in-due-course of bankrupt companies, and owners and liquidators of one of the nation’s largest portfolios of real estate, including the I-30 condos owned by Empire Savings.
Having substituted rigid regulations with the laws of the marketplace, deregulation fostered a wave of white-collar criminality that may take another decade to resolve. Instead of saving the thrift system, deregulation has instead raised the legitimate question of whether the thrift system will survive at all.
Photo of collapse site of a unfinished condo (Paula Nelson/The Dallas Morning News) (pg. 30); D.L. Faulkner (Tony Pilkington/Lubbock Avalanche-Journal) (pg. 31); Spencer Blain Jr, Empirer’s former chairman (Richard Michael Pruitt/The Dallas Morning News) (pg. 32); James Toler, former Mayor of Garland (Richard Meichael Pruitt/The Dallas Morning News) (pg. 34)
That’s 1986 Folks about 20 Years BEFORE The Bubble Poppings in 2006
Good Old Montgomery County Texas …. Head of the Snake , Heart of the Frauds
WOW Just Like The Houston Chronicle’s and Houston Posts, Conroe Courier Stories from the 1980s …. EXACTLY Like Monkey Counties Red Flag COLONIAS
The Austin American Statesman Says
Posted: 2:17 p.m. Friday, May 13, 2016
Seeking a place to retire from his corrections officer job in California, Juan Alvarado fell in love with the rural Caldwell County land as soon as he saw it. The parcel lies just beyond a gated subdivision entrance marked by a replica Statue of Liberty flanked by wildflowers. A dirt road winds under spreading oaks to fields covered fence to fence with a lush carpet of grass.
Responding to an ad promising only a $500 down payment for the 9 acres, Alvarado signed an owner-financed contract for the remaining $98,000. In June 2014 he packed up and moved from the Fresno area with his wife to Century Oak Estates, a subdivision in the far east corner of the county.
But after hiring a contractor to construct his dream home, Alvarado received devastating news. County officials refused to issue his building permit. Their reason: Century Oak Estates, in its entirety, was in violation of the law. “Everything that is out there is illegal — everything,” said Kasi Miles, who manages subdivision permitting for Caldwell County, referring to the property’s missing legal foundation.
“I was stunned,” Alvarado said. He and his wife passed the sweltering summer in a small trailer — “a living hell” — before finding another place to live in nearby Luling.
His isn’t the only complaint. Some Century Oak Estates landowners say they have tried to sell their property in recent years only to find out it was impossible because it had never been surveyed.
Many of the properties — mobile homes, primarily — have been tied into a single untreated and unlicensed well. Century Oak’s owner, Richard Burns, has threatened to turn off residents’ water for violations of his subdivision rules, or even late checks. Anyone with delinquent payments “will be disconnected from the water system,” a December 2013 letter warned.
Local inspectors routinely encounter land-use violations, particularly in rural areas, where isolated properties and a live-and-let-live attitude can combine to produce an occasional skirting of the rules. But those familiar with Century Oak said it appears to be of a higher magnitude: an entire development created and sustained for a decade with apparent disregard for state and county land-use laws. The absence of records means the county is even uncertain of how many people live there; Miles says it could be as many as 300.
Reached at his home outside of Houston, Burns insisted he had followed development rules and that he is working with residents and county officials to satisfy their concerns. “I’ve not been a villain to any of these people,” he said.
He added that if there are legal issues with Century Oak, Caldwell County shares the blame. “If they had a problem, why did this sit for 10 years and nobody ever say anything?” he said. “They’ve got my phone number.”
Indeed, what angers Century Oak residents nearly as much as learning they may be stuck inside a legal quagmire is that many of their troubles could have been prevented. While officials today say they are scrambling to clean up the mess, local government has been aware of Burns’ community for years yet did nothing to address it.
Miles said she contacted Caldwell prosecutors more than six years ago seeking criminal charges. When they failed to act, she said she stopped looking into the isolated community. “I knew it was illegal,” she said. “So there was no point in me going back.”
Hugo Maldonado made payments on his property in Century Oak for two years before leaving — which, under the terms of his owner-financed contract, meant he forfeited any built-up equity. During that time, he said he also contacted various county officials, to no avail.
“Why the county was letting him get away with that, I don’t know,” he said. “I lost a lot of money out there.”
Where wild things were
Not all residents are unhappy at Century Oak.
“I’ve had no problems with Mr. Burns,” said Debbie Hurst, who moved there in 2012.
Burns said he developed Century Oak Estates according to his understanding of land-use laws, hiring an engineer and lawyers to assist him. Any regulatory glitches, he said, are their fault. He also said it was difficult to keep up with government regulations: “We didn’t know all these rules existed. Nobody told me.”
He added that he sold lots using contracts for deed — a type of owner financing the state has discouraged in recent years as predatory — to help people who couldn’t otherwise qualify for bank financing. “There are a lot of poor people around here who can’t afford to buy land, and we were trying to help them,” he said.
Burns has butted heads with the government in the past. Soon after he purchased the 1,368-acre ranch in Harwood in 1988, he opened a wild game park called Noah’s Land. Visitors could drive thorough the property and view everything from exotic deer species to tigers and a rhino.
A popular local attraction, it also drew the attention of regulators, and in 1995 the facility was investigated for violating federal rules to protect the animals. Burns auctioned off many of the species soon after, although the park remained open under different management until the mid-2000s before closing for good.
Burns said he decided to enter the real estate business soon after shutting down the wildlife park, focusing on lower-income buyers: “I didn’t go and try to sell to rich guys.” He divided up an approximately 330-acre portion of the property and called it Century Oak Estates.
State law requires a collection of lots under 10 acres to be platted as a subdivision, which includes a survey identifying boundaries, flood zones, drainage and common improvements, among other features. County records show Burns submitted a preliminary application to Caldwell County in 2004.
Miles said it was returned for several deficiencies, including a lack of survey and utility plans and a substandard road. Burns said the county “never, ever told me” he needed to do more to plat the property. Either way, Miles said that was the last official communication with Burns.
‘We are unprepared’
Why and how Caldwell County lost track of Richard Burns even as his project grew is as much a saga of a Central Texas county transitioning from a slow-paced rural enclave into a bedroom community on the edge of one of the fastest-growing regions in the country as it is a story of a single developer’s alleged misdeeds.
Between 2010 and 2015, Travis County’s population jumped more than 14 percent. To Caldwell’s west, Hays County exploded by 23 percent over the same period.
Caldwell’s population grew only 6 percent, yet officials say they can see the storm approaching.
Miles, who has worked in her position for more than 20 years, said that between 2008 and 2010, she handled about 100 permits annually. By comparison, last February alone — usually her slowest month — she received 96. “It’s blowing up with development,” she said.
Officials concede the county has struggled to keep pace. “We really have been isolated,” said Fred Weber, a Luling native who was elected Caldwell’s district attorney at the end of 2014 after working in Travis and Hays counties. “We are unprepared for the growth that will occur.”
Nowhere is that more apparent than in the county’s land development oversight. Miles, hired originally to do septic inspections, said she took over subdivision regulation about 10 years ago.
Today, Miles on her own also handles all of Caldwell County’s commercial and residential building permitting and septic and flood plain regulation. For the 14 pending subdivision applications, which range in size from five to 90 parcels, she reviews the applications, prints out public hearing notices and stuffs the envelopes. She says she fields as many as 200 phone calls a day.
Neighboring Hays and Bastrop counties, by comparison, each employ 20 people in their Development Services departments.
Miles said her schedule means she seldom has opportunity to do little more than scan paperwork to make sure the right forms have been filled out. So when Burns’ subdivision application stalled, it quickly dropped out of sight. “Honestly, I probably get to Harwood about once a month,” she said.
“Our staff is overloaded,” County Judge Ken Schawe acknowledged. “And we’re getting ready to see a lot more work.” He said the county has struggled with falling revenue, including a big drop recently in oil and gas taxes, but that officials were “looking into” hiring more development staff.
Poor man’s mortgages
Miles said she also never heard complaints from any Century Oak residents — a silence Commissioner Eddie Moses, whose precinct includes far east Caldwell County, in part attributes to the type of people who choose to live in his isolated jurisdiction. “People who live out in this area just don’t want you to know they’re there,” he said.
Like tropical stalks, purple fence posts — legally accepted no trespassing signs in Texas — punctuate the southeast Caldwell County landscape, including on property inside Century Oak Estates.
Yet some residents also said they have been afraid to complain for fear of being evicted. Fredie McKinney said he bought into the subdivision two years ago after filing for personal bankruptcy. According to his contract, he will receive title to his property only after making monthly payments of $1,031 for 25 years.
McKinney, a disabled veteran, said he fears losing his property because recent letters from Burns informed residents they need to install their own wells — a cost he can’t afford. Burns also has said failure to install the systems would be considered a violation of residents’ contracts and grounds for him to evict them from the premises.
Burns said he hasn’t acted on the threat. Still, housing advocates say eviction is a legitimate concern to residents because of the antiquated purchase contracts. Also known as poor man’s mortgages, the seller-financed contract for deed means a buyer receives title to the property only after paying the seller in full, typically over many years with high interest rates — 10 percent at Century Oak.
Unlike standard bank mortgages, in which a buyer’s payments build equity, payments in contracts for deed add up to nothing until the final one is made. Sellers also can evict residents rather than use the foreclosure process. A 2012 University of Texas study of the contracts in some Texas counties found a 45 percent failure rate for buyers.
Over the past two decades, Texas lawmakers have added a series of protections for buyers, who typically are poorer, often Hispanic, and less sophisticated than those who use bank loans. Yet the Texas study showed the laws are not always followed. “There’s still lots of opportunity to be exploited,” said Heather Way, a law professor and study author.
“Contracts for deed, no matter how written, are bad. Nothing good comes from one,” added Robert Doggett, an attorney for Texas RioGrande Legal Aid who has helped craft state laws recently to add buyer protections.
Doggett noted Century Oak’s contracts used decade-old language that did not reflect many of the legal protections now afforded buyers in contracts for deed, such as longer grace periods for default payments. It also contained an early prepayment penalty of 5 percent — a practice Doggett said was voided in non-border Texas counties in 2001. Burns said even though the provision was in the contract, he has not used it.
Caldwell County officials and local Realtors say — and appraisal records show — that Century Oak Estates is hardly alone. “Contracts for deed are still real common out here,” said Miles, including in several entire subdivisions.
Cases ‘just languished’
Miles said she first learned of unpermitted activity in Century Oak in the mid-2000s, when a gravel delivery worker reported septic tanks being installed but Miles could find no permits on record. She said that at least six years ago, she turned over her files to then-District Attorney Trey Hicks to criminally charge Burns.
But nothing was done until August 2014, when Hicks finally charged Burns with four counts of illegal subdivision of land — a Class B misdemeanor. Even then, no court dates were scheduled until the following spring.
“The cases just languished,” Weber acknowledged. Now in private practice in Luling, Hicks did not return calls.
Miles said she brought the long-pending cases to Weber’s attention soon after he took office in January 2015. Weber said he has tried to work with Burns since then but is running out of patience.
“The business practices of Richard Burns give not only the appearance of being predatory in nature but also show a complete disregard for state law; his conduct victimizes the residents of the subdivision,” he said. “We anticipate either a plea or a jury trial in the near future.”
Weber also alerted the Texas Commission on Environmental Quality, which licenses and monitors community water systems. Two months ago, the agency issued a notice of violation, concluding Burns had operated an illegal public water supply system and that untreated water was being distributed to residents.
In response, Burns informed residents that he would cut off their water in six months, so they needed to find another source of water — even though “water was supposed to be supplied” as part of the purchase price, said Alvarado; Burns disputes that.
Miles said she anticipates sorting out the Century Oak mess will take time: “It’s all been out there so long. It’s hard to make so much wrong right.”
(Theory) The question about why the Reagan Administration put the Iran-Contra scandal at such a high level of exposure-the limited hangout- may be answered by postulating an attempt to cover a bigger scandal. Some say the S&L scandals were covered by the Iran-Contra scandal.
(Theory) Since John Connally politically supported and participated in many covert operations, Connally may very well have provided support for the Contras through his loans and through his social influence to encourage others to do likewise.
A disproportionate number of Texans were found to be contributors to the various private covert action funding schemes.
The Contra Supporters:
James Bastion, Southern Air Transportation; associated with CIA;
Jim Bath, a Houston airplane company owner(Skyways International, Atlantic Aviation and Buffalo Airways); CIA asset; front man for rich Saudis; associated with Reza Pahlavi, the Shah’s son, and business partner with Lan Bentsen, the senator’s son, and George W. Bush, the President’s son; borrowed from Lamar Savings and Mainland Savings; a stockholder in Charter NB with Barry Munitz and others
Herman K. Beebe Sr., Louisiana financier with offices in Dallas, convicted felon and Mafia associate; many connections to the intelligence community; godfather of the dirty Texas S&L’s; did nine months in Club Fed; Charles Hurwitz introduced Beebe to B G Wylie, half-brother of Carroll Kelly; funded start-up of Contra related Palmer NB
J Bruce Belin Jr, his father was first cousin to Jake Belin; a Houston developer financed by San Jacinto Savings and Hurwitz’ USAT.
Jake Belin, former head of the largest private landowner in Florida, St Joe Paper Co, which was owned by the A I Dupont Trust (until 1987), now controlled by Carl Lindner’s American Financial Corporation; protege of Ed Ball, right-wing fanatic and most powerful man Florida has ever known; Belin liked doing business with fellow Florida redneck Mike Adkinson; he also liked the $80 million St Joe got from Hill Financial Savings.
John M Bennett, Texan, backer of Contra related Gulf and Caribbean Foundation; a John M Bennett Jr, longtime resident of San Antonio died in 1993; A John M Bennett retired in 1982 from the directors of the American General Corp, an affiliate of Lindner’s AFC; A John M Bennett, resident of Houston, a US Department of Justice protected witness, scam artist who kited tens of millions in checks and was given a $1,000 fine.
Lloyd Bentsen, senior Democratic senator from Texas, now Secretary of the Treasury; an owner of three Texas S&L’s that later ended up in the hands of CIA or Mafia associates; an owner of the S&L that ended up in the hands of Charles Hurwitz; close to Walter Mischer.
David G Bird, Grand Cayman Island attorney, partner with Alstair J N Loudon, Cayman Corp Service Inc; set up Intel Co-operation (Intelligence Co-operation?) used to funnel funds to the contras.
William Blakemore, Midland Texas oilman and fierce Contra supporter; President (1984) of Gulf & Caribbean Foundation, set up to lobby Congress for aid to the Contras; good friend of George Bush; his Iron Mountain Ranch the site of paramilitary training and alleged transshipment of weapons.
Inman Brandon, Atlantan, contributor to the contras.
William Casey, provided many links between the intelligence community, PR firms and the business community.
Carl “Spitz” Channell, ran several PAC’s supporting the Contras including Anti-terrorism American Committee, National Endowment for the Preservation of Liberty, American Conservative Trust; helped to defeat Rep. Michael Barnes(Maryland) in his Senatorial bid,1986
Peter Dailey, CIA counsel, discussed setting up private groups to campaign to support Contras
Malcolm Davies, associated with Intel, Intel Co-operation
Richard DuPont, Summit Aviation owner, used to provide aircraft to CIA operations in support of the contras; family controls Wilmington Trust which interlocked Hurwitz’ USAT with Paul’s Centrust.
David Fischer, Whitehouse aid until 1985′ hired by IBC, a PR specialist.
Ellen St John Garwood, rich Texas widow, contributed to the NSC inspired POW-LAOS scam and to the contras
Thomas Gaubert, big Democratic fundraiser from Dallas; former head of Independent American Savings, which purchased 20 branch offices from Hurwitz’ USAT; owned a piece of Sandia Federal Savings in Albuquerque; head of Telecom; A right-wing flag waver.
Frank Gomez, associated with Richard R Miller in promoting contra PR campaign.
Manichur Gorbanifar, among other things Gorbanifar was used for included funneling money to the Contras; a business associate of John H Roberts Jr.; Southmark’s San Jacinto Savings; director of Gaubert’s Telecom.
Mohammed Hadid, a business associate of Connie Armstrong, John H Roberts Jr, Stanley Rosenberg, Adnan Khashoggi and Manichur Gorbanifar
Stefan Halper, co-founder with fellow George Bush supporter Harvey McLean of Palmer National Bank, which was financed by H K Beebe and funneled private donations to the Contras; former son-in-law of past CIA deputy director Ray Cline; helped set up legal defense fund for Oliver North. Peter Munk also an investor in Palmer NB
Paula Hawkins, a Florida senatorial candidate supported by Kuykendall
Curtis Herge, Attorney for Channell’s organizations
Raymond Hill, Houston attorney and scion of old, rich Houston family; owner of Mainland Savings, which lent money to Mafia associates and CIA operatives, also lent money to Rosenberg associates John H Roberts and Mohammed Hadid; did business with Walter Mischer,”his mentor”; close friend of James Baker III.
Sen Gordon Humphrey (R-NH), may have worked with Walter Raymond Jr.
Bunker Hunt, wealthy Texan backed by Connally related First City NB contributor to contras.
Bert Hurlburt, contributor into Pow-Mia (Laos) scam
Linas J Kojelis, set up meetings for Reagan with contra supporters, an assistant to RR
Adnan Khashoggi, Arabian arms dealer, Iran-contra middleman and borrower at Raymond Hill’s Mainland Savings and Lamar Savings. A business associate of Mohammed Hadid and John H Roberts Jr
Daniel Kuykendall, Texan, Republican Representative from Tenn 1967-75, political advisor to Carl “Spitz” Channell; organized Gulf and Caribbean Foundation with 28 people, rounded up 25 rich Texans to contribute to the Contras.
Michael Ledeen, Sr fellow at the Center for Strategic and International Studies; disinformation specialist in Italy in 1976.
Carl Lindner, Cincinnati conglomerateer, controls American Financial Corp, gave Charles Keating his start; associate of Michael Milken and Marvin Warner; business ties to Walter Mischer and Charles Hurwitz; owns Ocean Reef club on Key Largo where cocaine was brought in from Columbia.
Alstair J N Loudon, Georgetown, Grand Cayman Island; Cayman Corp Services Inc, partner with David Bird.
H Joachim Maitre, dean at Boston University, formerly with the Hoover institute; published many articles thought to be part of intelligence communities’ domestic disinformation campaign regarding contra-related foreign policy
Lawrence Martin, born Ladislav Bittman, a Czech; disinformation specialist
Peyton McKnight, powerful louisianan, an associate of Beebe and a partner with Charles Hurwitz, Stanley Rosenberg and Tom Benson in a Rosenberg deal.
Harvey McLean, Shreveport, Louisiana businessman and close associate of H K Beebe; owned Paris (Texas) Savings and Loan; co-founded Palmer National Bank with Stephan Halper and Beebe’s money.
John Mecom Sr and Jr, Houston oilmen; Sr. organized a charitable foundation that laundered money for the CIA; Jr, a graduate of the University of Oklahoma with Larry Mizel and Charles Hurwitz; allegedly associated with New Orleans mobsters.
Arthur G B Metcalf, a director of Boston University, owner of Electronic Corp of America, John Silber also a director of ECA.
Jonathan Miller, with the office of Public Diplomacy during contra campaign.
Richard R Miller, with International Business Communications [IBC] which sent money to Intel Corp in support of contra PR campaign,with the Gulf and Caribbean Foundation and the Institute for North-South Issues; pled guilty to tax fraud and was pardoned by Bush.
Walter Mischer Sr. Houston developer, banker, power broker, who headed Allied Bank (Charles Hurwitz’ Federated Development Company’s primary bank); Corson’s former father-in-law; did business with the Mafia and CIA; fourth largest landowner in Texas; owns 12% of Caribbean nation of Belize with partners (where Dupont and Hurwitz’ creation MCO Resources are also large landowners); friend and fundraiser for Lyndon Baines Johnson, Lloyd Bentsen, Ronald Reagan and George Bush, among many others.
Peter Munk, a Canadian businessman, investor in Palmer NB; an associate of H K Beebe; business partner with Adnan Khashoggi; an associate of John H Roberts Jr and John P Holmes Jr in Goldome FSB
Richard Precup, attorney for Richard R Miller
John Ramsey, from Wichita Falls, Texas; a contra supporter.
Walter Raymond Jr, Ex-CIA disinformation specialist; implemented psy-ops campaign for Casey.
John Silber, president of Boston University, supported Maitre’s work; made money as director of Electronic Corp of America; has property in Austin
Max Singer, ex-director of the Hudson Institute; president of the Potomac Organization.
Ellison Trine Starnes Jr, Houston con man and son of a famous evangelist; borrower at Mischer’s Allied Bank; second largest borrower at Silverado; associate of John Riddle; borrowed from Carroll Kelly’s Continental Savings; one of the biggest contributors to the Contras; a stockholder in Charter National Bank with Bob Lanier, James Bath, Barry Munitz (longtime Hurwitz crony and President of USAT) and Joe Russo.
Allen Weinstein, head of the center for the Study of Democratic Institutions and a director of the Center for Democracy
Cliff White, took part in discussions with Dailey and Casey regarding setting up private groups to campaign to support Contras.
Charles Z Wick, head of the USIS and a friend of Silber.
David Witz, Treasurer(1984) of Gulf and Caribbean Foundation
Unknown,Dallas attorney for Gulf and Caribbean Foundation, member of the Association of Former Intelligence Officers.
H B Zachry, San Antonio businessman, H B Zachry Co, large paving contractor doing many government contracts world-wide; member of Gulf and Caribbean Foundation,
(Theory) A disproportionate number of Texans were found to be contributors to the various private covert action funding schemes. This disproportion may have derived from the Casey-Bush-Connally relationship and from the support Texas financial institutions and legal firms gave to members of the BCCI’s organization, its frontmen and to the members of the Middle Eastern States’ intelligence community which simultaneously had a string of business ties to ex-CIA members.
For our purposes the fact that Connally, Hurwitz and GHW Bush lived in The Houstonian with Bush and Hurwitz reportedly across the hall neighbors during the late 80’s could be valuable.
S&L: SAVINGS AND LAUNDERING?
Posted on July 12, 2012
By Ellen Ray
On February 4 Pete Brewton of the Houston Post broke an astounding story which had been percolating in Texas for many months (p. A1). It was becoming abundantly clear that a large number of savings and loan associations – many of them based in Texas – which were rapidly going bankrupt, were not merely badly or fraudulently managed. They had been deeply involved with organized crime, the Central Intelligence Agency, the Nicaraguan contras, money laundering, and drug and weapons trafficking.
While the New York Times and the Washington Post have contented themselves with articles about the pluses and minuses of the multi-billion dollar federal bailouts, the wire services and many newspapers around the country have given their readers the unfolding drama.
Brewton’s story-with the Houston Post’s continuing added details – was carried by Reuters on February 4, by the Associated Press on February 6 and 8, and by United Press International on February 17. It was in Newsday, the Los Angeles Times, and the Washington Times on February7. As LOOT goes to press, it has still not been covered in the New York Times or the Washington Post.
Why? While these two papers have been devoting page after page to real and perceived corruption in the socialist world, one of the biggest scandals in America continues to brew. Houston court documents indicate that senior officials of many of the failed S&Ls were laundering money for both the CIA and the Mafia. They were transporting vast sums of cash for the CIA, running guns, smuggling drugs, and transferring funds secretly to the contras.
The Incredible Details
A follow-up story by Juan R. Palomo in the February 6 Houston Post (p. AI) indicated CIA and organized crime links “in the failure of at least 22 S&Ls.” The article carried a brief denial from the CIA: “The CIA does not violate U.S. laws and would not participate in fraudulent activities.” But, as a former federal prosecutor quoted by Brewton in his first article observed, “How do you expect the government to investigate itself?” On February 8, Brewton disclosed (p. A1) that various related federal investigations had been thwarted because of CIA claims of national security. These probes suggested links to CIA proprietaries, major Mafia families, anti-Castro Cubans and Bay of Pigs veterans, Adnan Khashoggi, Colombian drug kingpins, Sgt. Samuel Doe of Liberia, the Iran/contra players, and a number of known former CIA officers. It is hard to believe that the two most influential newspapers in America saw nothing fit to print. Last summer, President Bush signed a $150 billion bailout of the S&Ls. Could this former Director of the CIA be trying to protect his spy organization? And are the New York Times and the Washington Post complicit?
This entry was posted in 1990 by LOOT.
Subject: more S&L links CIA money laundering
Keywords: more of Pete Brewton’s uncovering of CIA-MOB-S&L connections
The following article appeared in the August edition of “The Monthly
Planet, a publication of the Nuclear Weapons Freeze of Santa Cruz
County, Box 8463, Santa Cruz, CA 95061, 408/429-8755. This is a
very useful and informative alternative media source offering an 11-
issue/year subscriptions for $15. ($10 for student/senior/low income)
CIA Links to the Savings & Loan Scandal
by Joseph A. Palermo
The federal government is now just beginning to sift through the
wreckage of what appears to be the largest crime in American history.
The Office of Thrift Supervision, which oversees the nation’s savings
and loans, is barely able to record the collapse of over 1,300
financial institutions, let alone do anything to arrest it. Congress
has done little to spotlight the full scope of the savings and loan
fraud, even though it has estimated the cost to taxpayers will be $500
billion over the next 40 years. In other words, it will cost every
American man, woman, and child at least $2,000 to pay for what “Time”
magazine called “a decade-long orgy” of wild spending and speculation
resulting in the establishment of government guarantees that
“privatized profits and socialized losses.”
The Justice Department estimates that massive fraud caused the
failure of 450 savings and loans seized so far by the federal
government. It also estimates that it will take over five years to
prosecute the 100 institutions on its priority list. Most of the
money lost in S&L failures has yet to be traced to its ultimate
destination. Worthless loans, kickbacks, false appraisals, and
insider fraud have accounted for much of the misspent funds. Federal
and congressional investigators who have the subpoena power to trace
the money have shown little interest in doing so. Federal regulatory
agencies have suffered enormous cutbacks in recent years as part of
the Reagan-Bush legacy of deregulation, and are hopelessly
understaffed and underfunded to take on a financial crisis of this
magnitude. Most of the billions of dollars “lost” have been so
expertly laundered or tied to assets through shell companies and off-
shore banks that the Justice Department predicts that hundreds of
cases will go unprosecuted. Criminal activity was the primary cause
in the collapse of two of every five S&Ls that failed.
A significant number of insolvent thrifts which could cost taxpayers
as much as $75 billion have been linked to the activities of organized
crime figures and CIA operatives. In a series of articles published
in the “Houston Post” earlier this year, investigative reporter Pete
Brewton unearthed numerous ties with the CIA, the Mafia, or both in
the failure of at least 25 savings and loans, including 16 in Texas.
Some of the players have also been involved in gun-running, drug-
smuggling, money laundering, and covert aid to the Nicaraguan Contras.
Fraud was the key factor in the failure of each of these S&Ls.
Richard Brenneke, a CIA contract agent for eighteen years and a
Portland, Oregon arms dealer, testified during a federal court trial
in Denver in 1988 that the CIA effort to raise money for covert
operations involves a number of schemes to siphon funds from financial
institutions “at the expense of an insurance company,” meaning the
federal deposit insurance program. After the trial, Brenneke told the
“Houston Post” that banking and S&L officials involved in such schemes
were required to sign “secrecy agreements” with the CIA.
Evidence obtained from court documents, sworn testimony, law
enforcement records and interviews with government investigators and
prosecutors suggests that the CIA may have used part of the proceeds
from S&L fraud to help pay for covert operations and other activities
that Congress was unwilling to support. Brewton following an 18-month
investigation, also found evidence that the CIA may have intervened in
criminal investigations involving agency operatives accused of S&L
Lloyd Monroe, a former prosecutor with the Justice Department’s
organized crime strike force, said federal agencies responsible for
investigating S&L fraud are “being precluded from investigating
wrongdoing that is possibly being conducted in the name of national
security.” The former prosecutor said he was told by FBI agents to
drop an investigation of one individual connected to bank failure
because that individual had “CIA connections” and therefore held a
“get-out-of-jail-free card.” A former FBI agent has corroborated the
Brewton’s articles in the “Houston Post” eventually caught the
attention of Rep. Frank Annunzio (D-IL) who chairs the financial
institutions subcommittee of the House Banking, Finance and Urban
Affairs Committee. The subcommittee has jurisdiction over all
legislation affecting banks, thrifts, credit unions and the federal
agencies that regulate them. Annunzio has asked CIA Director William
Webster to appear before the panel in a closed-door session to address
the evidence of CIA involvement in S&L fraud. But CIA Director
Webster has refused to testify before Annunzio’s subcommittee and the
CIA has only provided vague denials of its involvement through its
public relations office.
In response to the allegations, CIA spokesperson Mark Mansfield said
that S&L fraud “would be a violation of U.S. laws, and we do not
violate U.S. laws.” CIA Public Affairs Director James Greenleaf sent
a letter to the “Houston Post” in response to Brewton’s article of
February 4, 1990, which first made the connection between the CIA and
some failed thrifts, stating that “for the record, such a claim is not
true; the CIA would not participate in fraudulent activities.”
Because CIA Director Webster refused to testify and because Rep.
Annunzio’s subcommittee staff is limited, Annunzio has asked Rep.
Anthony Beilenson (who chairs the House Permanent Select Committee on
Intelligence, which has jurisdiction over the CIA) to undertake a
complete investigation of the various allegations involving the CIA
and failed financial institutions. Annunzio wrote to Beilenson: “In
the face of the billions of dollars that are being paid to protect
depositors, we cannot allow any suggestion that the Central
Intelligence Agency was behind the failure of any financial
institution not to be investigated.” Annunzio also wrote referring to
the derailed criminal investigations, “I do not think a well-respected
former justice Department prosecutor and a former FBI agent would make
up something so serious as the CIA charges.” The CIA has promised to
“fully cooperate” with any investigation by the intelligence
If the intelligence committee decides to pursue a serious
investigation, a number of connections between individual CIA
operatives, organized crime figures, and failed financial institutions
will have to be explored. For example, Robert L. Corson, a Houston
developer connected with the fraud-related failures of several S&Ls,
has been identified by a former CIA operative as a “mule,” meaning
that he carried large sums of unaccountable cash from country to
country for the agency. The CIA would neither confirm nor deny whether
Corson had a relationship with the agency, a common agency practice.
Lawrence Freeman, a lawyer who helped engineer a fraudulent Florida
land transaction that caused the collapse of two savings and loans,
allegedly has ties to both the CIA and organized crime. Freeman, a
twice-convicted money launderer, has ties to the CIA dating back to
the early 1960s when he worked with the late Paul Helliwell.
Helliwell was a top officer in southeast Asia in World War II with the
Office of Strategic Services, the wartime predecessor of the CIA, and
was a close associate of the late William Casey, Reagan’s CIA
director. Helliwell was a founding member of the CIA and participated
in many covert operations including efforts to overthrow Cuban leader
Fidel Castro. Freeman and Helliwell were senior partners in Castle
Bank and Trust in the Bahamas during the early 1970s when it was used
by the CIA and organized crime to launder money. Freeman pleaded
guilty to laundering money for a convicted drug smuggler and was
sentenced to three years in prison. He is now out on parole but is
barred from practicing law.
Freeman and Helliwell’s Castle Bank and Trust folded in 1977,
following Helliwell’s death. According to journalist Jonathan Kwitny,
the author of “The Crimes of Patriots,” it was then that the CIA and
the Mafia turned over their money laundering operations to the
infamous Nugan Hand Bank in Australia and to companies in the English
Channel tax haven of the Isle of Jersey. Freeman allegedly wired
millions of dollars to shell companies on the island as part of the
land transaction that played a role in the failure of two thrifts.
Some of the money from this deal may have been diverted for use in
CIA-sponsored covert operations. Officers of these companies were
also reportedly used by Freeman to launder drug smuggling proceeds.
But Freeman’s biggest money laundering client, according to Florida
Department of Law Enforcement records, was an organized crime figure
called “the Cobra” by Freeman and his associates. Law enforcement
sources in Florida and Texas have identified “the Cobra” as Mafia boss
Santo Trafficante of Tampa, who died in 1987. Trafficante’s
involvement in the CIA’s attempt to assassinate Fidel Castro in the
early 1960s is well documented. During this period, he was also
involved with Helliwell in CIA-sponsored anti-Castro activities.
A close associate of Trafficante who also participated in CIA anti-
Castro plots was New Orleans Mafia boss Carlos Marcello. Marcello has
extensive business ties with fellow Louisiana organized crime figure
Herman Beebe. Beebe pleaded guilty to fraud in connection with a loan
at State Savings in Dallas and has twice been successfully prosecuted.
He was involved in a scheme in the early 1970s to smuggle guns and
explosives to anti-Castro Cubans operating in Mexico. Beebe also had
business dealings with Edward “Fast Eddie” Susalla, whose son Scott
pleaded guilty to possession of cocaine in 1985 in one of the largest
drug busts in southern California history.
It was Herman Beebe who provided the seed capital for the creation
of Palmer National Bank in Washington, D.C., which was controlled by
two officials of the George Bush 1980 presidential campaign, Stefan
Halper and Harvey McLean. Halper was policy director for Bush’s 1980
campaign, while McLean was southern finance chairman and a Bush
fundraiser. McLean became a major player in a number of failed
savings and loans in Texas where fraud was a factor and has been
placed in involuntary bankruptcy. McLean owned Paris Savings and Loan
in Paris, Texas, which failed in 1988 and was merged with 11 other
insolvent Texas S&Ls at a total cost to the federal government of $1.3
billion. The “New York Times” and the “Washington Post” reported that
Palmer National Bank actively arranged loans for wealthy, right-wing
Republicans and their pet projects. Halper and McLean first met while
they were working on the Bush 1988 presidential campaign. Palmer
National loaned money to individuals and organizations that were
involved in covert aid to the Nicaraguan Contras.
In February 1985 the National Endowment for the Preservation of
Liberty (NEPL), a conservative foundation run by Iran-Contra figure
Carl “Spitz” Channell, secured $650,000 from Palmer National to
illegally purchase weapons for the Nicaraguan Contras. Channell was
one of the few private citizens convicted of crimes in the Iran-Contra
scandal. He was the first to plead guilty to illegal activities in
the scandal, and was placed on two years’ probation for illegally
using NEPL to help Oliver North raise donations for military supplies
for the Contras. Channell recently died of pneumonia while recovering
from a car accident.
The money went through NEPL’s account at Palmer National to a Swiss
bank account used by North for Contra funding and the secret arms
deals with Iran. NEPL raised about $10 million for the Contras after
Congress had banned such military aid. While Stefan Halper was
helping NEPL secure loans at Palmer National to buy guns for the
Contras, his father-in-law Ray Cline, a former deputy director of
intelligence in the CIA, was an adviser to a firm associated with
retired Major General John Singlaub, one of the principal leaders of
private efforts to supply the Contras.
In addition, the National Conservative Political Action Committee
(NCPAC) borrowed more than $400,000 from Palmer National, as did
political action committees for Senator Bob Dole (R-KS.) and then-Rep.
Jack Kemp (R-NY). Palmer National co-founder Halper also helped set
up Oliver North’s legal defense fund. Halper’s name appears in
North’s final entry in his White House notebook the day he was fired
by the president on November 25, 1986, under the heading “Legal
Defense Fund.” “Ollie is a friend of mine and at the time I thought
we might be able to help him,” Halper later recalled. Finally, Palmer
National, although still solvent, held a $250,000 note on a California
beach house that was used by organized crime associates and figured in
the criminal convictions of two savings and loan figures.
Halper’s connections to the intelligence community were primarily
through his former father-in-law Cline, a career CIA officer. Cline
became a top foreign policy and defense adviser to George Bush during
the 1980 campaign. According to an article which appeared in the
“Village Voice” in 1988, when Bush was seeking the Republican
presidential nomination, Cline boasted during the 1980 primaries that
he intended to “organize something like one of my old CIA staffs” to
help Bush win. The “New York Times” reported that Bush, who was CIA
director from January 1976 to January 1977, received offers of
campaign assistance from many former CIA officials. The “Village
Voice” reported that even active CIA agents may have worked for the
Some key operatives who were linked to the CIA and played
significant roles in failed thrifts in Texas also worked for George
Bush’s Presidential campaign. For example, Halper, in addition to
being a co-founder of Palmer National Bank and policy director for the
Bush campaign, was allegedly part of the Reagan-Bush election team
that participated in the October 1980 Paris negotiations with
representatives of Iran that has come to be known as the “October
Halper worked with long-time CIA official Robert Gambino in an
intelligence operation guided by Reagan-Bush campaign director William
Casey (who went on to become CIA director). According to former CIA
agent Richard Brenneke and several independent researchers, there was
a secret effort by the Reagan-Bush campaign to make contacts with
Iranian government officials to offer arms and other concessions if
Iran agreed to hold the American hostages until after Jimmy Carter’s
defeat in the November 1980 election, thus avoiding an “October
Surprise” release of the hostages. William Casey, Richard Allen (who
became Reagan’s first National Security Adviser), George Bush, and
Stefan Halper were all allegedly involved in the plan, which involved
super-secret meetings in Paris in October 1980.
Halper also emerged as a key figure in the so-called “Debategate”
scandal. A House subcommittee concluded that James Baker, who was in
charge of the Reagan debate group, obtained then-President Jimmy
Carter’s briefing materials for the upcoming debates with Ronald
Reagan from William Casey, who was then the Reagan-Bush campaign
director. Someone within the Carter White House pilfered Carter’s
debate briefing notes and passed them on to the Reagan-Bush team.
Halper allegedly played a role in both the “October Surprise” and
“Debategate,” and was rewarded after the election with the appointment
of Deputy Director of Politico-Military Affairs for the State
Department. William Casey went on to become CIA director, James Baker
became Reagan’s chief of staff, then Treasury Secretary, and then
Bush’s Secretary of State. Baker was instrumental in first bringing
Halper into the Reagan-Bush campaign.
Meanwhile, charges of conflict of interest against Neil Bush, the
President’s son, will be taken up at a September hearing by federal
regulators. The younger Bush served on the board of directors of
Silverado Banking, Savings and Loan Association of Denver, Colorado,
which collapsed in December 1988 at an estimated cost to taxpayers of
$1.3 billion. The charges accuse Bush of voting to loan over $100
million to business associates who subsequently defaulted, and failing
to properly disclose the extent of his business dealings with the
borrowers. Federal regulators may file a $200 million lawsuit against
Neil Bush and other Silverado directors and officers. The Office of
Thrift Supervision released documents stating that the 34-year-old
Bush was “unqualified and untrained” to be a director of Silverado.
“He had no experience managing a large corporation, especially a
financial institution with almost $2 billion in assets,” the OTS
With the president’s son involved in the failure of one of the
larger S&Ls, the crisis has received more attention in Washington and
in the media. So far both Democrats and Republicans have pointed the
finger at each other. Democratic National Committee Chair Ron Brown
said that Republicans cannot escape the fact that “George Bush, Ronald
Reagan and their high-roller friends ran the government, designed the
S&L policy and handpicked the people that gutted the oversight
agencies. They are now being forced to take responsibility for the
greatest rip-off in American history.” It will be difficult for the
Republicans to skirt this issue in the upcoming mid-term elections and
therefore the savings and loan crisis may have immediate political
effects. Time will tell whether or not the American taxpayer will be
able to bear the burden of yet another expensive scandal.
Joseph A. Palermo teaches United States History at Hartnell
Community College in Salinas, and Gavilan Community College in Gilroy.
The following article, summarizing Pete Brewton’s, (“Houston Post’s”
investigative reporter) continuing examination of CIA and organized
crime involvement in the failure of various S&Ls, appeared in
“IN THESE TIMES”, July 18-31, and is reprinted here with permission
One White House many gates
By Joel Bleifuss
The “Houston Post”‘s Pete Brewton continues to report on CIA and
organized crime involvement in the failure of 25 federally insured
financial institutions, the bailout of which will cost the taxpayers an
estimated $75 billion. Though this time the money trail leads straight
to the White House door, the papers of record–the “New York Times,”
“Washington Post” and “Los Angeles Times,” upon which we must
unfortunately depend to set the national agenda–continue to ignore the
“Houston Post” series. Brewton’s latest installment details the story
of a solvent institution, the Palmer National Bank of Washington, D.C.
Founded in 1983 by two men active in George Bush’s failed 1980
presidential campaign, Palmer was the bank of choice for right-wing
organizations and Republican officials. The National Conservative
Political Action Committee borrowed more than $400,000 from Palmer. It
also lent money to PACs headed by Republicans Sen. Bob Dole of Kansas
and former Rep. Jack Kemp of New York. And Palmer was one of the
financial institutions where convicted Irangate felon Oliver North’s
contra-aid network stashed its cash. Palmer has assets of less than
$100 million, a surprisingly meager amount for a bank that occupies a
modern 11-story building three blocks from the White House.
IRANGATE: Brewton reports that in February 1985, the contra-support
organization National Endowment for the Preservation of Liberty (NEPL)
opened its first of four accounts at Palmer. In April 1986, NEPL
transferred $650,000 from one of those accounts to a Swiss bank account
that North used to deal arms to Iran and thus fund the contras. NEPL
was founded by the late Carl “Spitz” Channell, who died this year of
pneumonia. This crack fundraiser brought in about $10 million for the
ClA’s anti-Sandinista army, including $5 million that Channell charmed
out of two right-wing dowagers whom he code-named “Dog Face” and “Ham
Hocks.” As a token of NEPL’s appreciation, large donors were able to
meet privately with then-President Reagan. After the Iran-contra
scandal broke, it was discovered that not all the NEPL money had reached
the contras–some of it had been siphoned off for Channell’s and his
boyfriend’s personal use. But Channell was not sentenced to two years’
probation for this diversion of funds. (Contra dollars were used to
purchase silk underwear and a condo, among other things.) He was
convicted for helping the Reagan-Bush White House arm the contras at a
time when Congress had outlawed such military support.
A HALPER HAND: Brewton reports that a former high-level Palmer employee
told him that Channell established his NEPL accounts at Palmer with the
help of Stefan Halper, one of the bank’s two founders and a friend of
North’s. Halper was policy director of Bush’s 1980 presidential
campaign. Halper was connected to the intelligence community through
his father-in-law, Ray Cline, a former CIA deputy director who also
advised Bush during his 1980 campaign. The “Village Voice” reported in
1988, “Any inquiry into the 1980 Bush campaign would have to begin with
Dr. Ray S. Cline. … Cline boasted during the primaries that he
intended to ‘organize something like one of my old CIA staffs’ to help
DEBATEGATE: Well, Bush didn’t win, but the Reagan-Bush ticket did.
When Reagan named Bush as his running mate, Halper was brought on the
1980 Reagan-Bush campaign by another former Bush campaign official,
James Baker, current secretary of state. According to a 1983 story in
the “New York Times,” Halper’s role on the campaign was to gather
intelligence on then-President Jimmy Carter’s foreign-policy objectives.
The “Times” reported that Halper was assisted by retired CIA officers
and quoted an unnamed source in the 1980 Reagan-Bush campaign as saying,
“There was some CIA stuff coming from Halper, and some agency guys were
hired.” Halper was particularly interested in Carter’s attempts to gain
the release of the 52 American hostages held in Iran prior to the
November election. (Hostagegate: It has been alleged that the 1980
Reagan-Bush campaign cut a secret arms-for-hostages deal with the
government of Iran to keep the hostages held in Iran until after the
election to prevent Carter from benefiting from their pre-election
release. See “In Short,” June 24, 1987, Oct. 12, 1988, and “The First
Stone,” May 9 and 16). Halper’s intelligence-gathering work during the
1980 Reagan-Bush campaign apparently involved the theft of the Carter
campaign’s debate briefing books, a scandal that came to be known as
Debategate. The Reagan-Bush campaign used these books to prepare its
candidate for the 1980 presidential debates. The man in charge of the
Reagan debate team was Baker, whose name has come up as a likely
Republican candidate for president in 1996.
A BANK IS BORN: After the 1980 election, the Reagan administration
appointed Halper deputy director of the State Department’s Bureau of
Politico-Military Affairs, the division of the State Department
responsible for international weapons-trading and military exercises
oversees. Brewton reports that Halper left the State Department in 1983
to become chairman of Palmer National Bank. Halper founded Palmer with
Harvey McLean Jr., a man he had met during the 1980 Bush campaign. The
“New York Times” has described McLean as “a Dallas real-estate developer
who was Southern finance chairman for George Bush’s campaign for the
Republican presidential nomination in 1980.” Halper and McLean came up
with their idea for Palmer National Bank during a State Department
business trip to Southeast Asia on which McLean accompanied Halper.
Halper told Brewton the following story: “Somewhere over the Pacific,
we got into a conversation about banking. Now, mind you, I had never
been a banker. I was one of those guys who had a checking account with
$71.38 in it, and banks frightened me a little bit. But Harvey said,
‘Well, got to have a good bank in Washington.’ He was sort of bemoaning
the fact that banks were not as strong or responsive as they should be.
And as the conversation unfolded, he basically said, ‘Look, if you’ll
create the bank I’ll put up the money.’” McLean certainly had access to
money at that time. Brewton reports that McLean owned Paris Savings and
Loan of Paris, Texas. During the ’80s McLean also borrowed more than
$38 million from three other S&Ls–Vernon Savings and Independent
American Savings in Dallas and Continental Savings in Houston. All four
later failed, and the latter three are included on Brewton’s list of
failed S&Ls that had links to the mob and the CIA. In 1989 federal
receivers placed McLean in involuntary bankruptcy.
S&LGATE: Brewton reports that when Palmer National Bank was founded, it
was not McLean who put up the money but Herman K. Beebe Sr., a shadowy
Louisiana organized-crime figure who was a close friend and business
associate of McLean. Brewton reports that Beebe has numerous
connections to New Orleans Mafia boss Carlos Marcello, associations with
Mafia families in New York and California and links to the Teamsters.
In 1983 Beebe loaned McLean and Halper $2.8 million from his Bossier
Bank and Trust in Shreveport, La. This loan provided the majority of
the money that was used to initially capitalize Palmer. A 1985 report
by the comptroller of the currency listed Palmer as one of 12 national
banks that Beebe has possible influence or control over. Further, Beebe
has been implicated in the failure of at least 12 savings and loans
(including Vernon Savings in Dallas and Continental Savings in Houston).
In April 1985, just after Beebe had been convicted of defrauding the
Small Business Administration and two months before the Federal Deposit
Insurance Corporation shut down Bossier, the $2.8 million loan from
Bossier that established Palmer was transferred to San Jacinto Savings
of Beaumont, Texas.
GOING, GOING …: San Jacinto, a subsidiary of the Dallas-based real-
estate investment firm Southmark Funding, is now on the verge of
collapse. When San Jacinto topples, federal regulators say its bailout
could cost taxpayers more than the estimated $2 billion that was paid to
bail out Charles Keating’s Lincoln Savings of Irvine, Calif., which
currently holds the honor of being the most expensive S&L failure.
Brewton reports that in September 1988 an S&L regulator in Dallas wrote
to Darrel Dochow, a federal bank regulator, expressing concerns about
the “significant number and volume” of loans between Silverado Savings
of Denver (Neil Bush’s failed S&L) and M.D.C. Holdings of Denver (owned
by Colorado GOP fundraiser Larry Miezel) and between San Jacinto Savings
of Houston and Lincoln Savings of Irvine, Calif. The regulator also
said he was concerned about “the apparent shifting of such loans among
ANOTHER HALPER HAND: Brewton reports that Halper left his position as
chairman of Palmer early in 1985 to become chairman of National Bank of
Northern Virginia. Halper, however, did not sever his ties with his
friend Oliver North. In the last entry of North’s diary–dated Nov.
25, 1986, the day that the lieutenant colonel was fired by the president
he had served so faithfully–North wrote “Legal Defense Fund–Stefan
Halper, Chris Lehman [a Halper associate].” As Halper told Brewton, “We
got trustees and put it in place.”
George W. Bush & Brother Jeb Bush, Caught on Videotape “PICKING UP KILIOS OF COCAINE” In 1985 BY REALITIES WATCH · APRIL 6, 2015
CC – The Bush Drug Sting, The Sins of the Father, The Sins of the Son and — The Smoking Airplane
Why Does George W. Bush Fly in Drug Smuggler Barry Seal’s Airplane?
It has all the makings of a major box office thriller: Texas Governor and Republican Presidential contender George W. Bush and his brother Jeb, allegedly caught on videotape in 1985 picking up kilos of cocaine at a Florida airport in a DEA sting set up by Barry Seal.
George W. Bush & Brother Jeb Bush
An ensuing murderous cover-up featuring Seal’s public assassination less than a year later by a hit team the members of which, when caught, reveal to their attorneys during trial that their actions were being directed by then, National Security Council (NSC) staffer – Lt. Colonel Oliver North
And a private turboprop King Air 200 supposedly caught on tape in the sting with FAA ownership records leading directly to the CIA and some of the perpetrators of the most notorious (and never punished) major financial frauds of the ’80s. Greek shippers paying bribes to obtain loans from American companies that would never be repaid. An American executive snatching the charred remains of a $10,000 payoff check from an ashtray in an Athens restaurant Swiss police finding bank accounts used for kickbacks and bribes.
Add to this mix the now irrefutable proof, some of it from the CIA itself, that then Vice President George H.W. Bush was a decision maker in illegal Contra support operations connected to the “unusual” acquisition of aircraft and that his staff participated in key financial, operational and political decisions.
All these events lead inexorably to one unanswered question: How did this one plane go from being controlled by Barry Seal, the biggest drug smuggler in American history, to becoming, according to state officials, a favored airplane of Texas Governor George W. Bush?
Three months into an exhaustive investigation of persistent reports dating to 1995 that there exists an incriminating videotape of current Republican Presidential front-runner Bush caught in a hastily-aborted DEA cocaine sting, the central allegation remains unproven.
But some startling details have been confirmed, amid a raft of new suspicions emerging from conflicting FAA records. Those records, along with other irrefutable documents, point to the existence of far more than mere happenstance or dark “conspiracy theorist speculations” in the matter of how George W. Bush came to be flying the friendly Texas skies in an airplane that was a crown jewel in the drug smuggling fleet of the notorious Barry Seal. Those documents reveal – beyond any doubt – that in the 1980s Barry Seal, with whom the CIA has consistently denied any relationship, piloted and controlled airplanes owned by the same Phoenix Arizona company, Greycas, which in a 1998 bankruptcy filing, was revealed to have been a subsidiary of the same company that owned the now defunct CIA proprietary airline Southern Air Transport.
The investigation started with a lead into the history of the aircraft (a 1982 Beechcraft King Air 200 with FAA registration number N6308F – Serial Number BB-1014). The handwritten tail number was found in records kept by Seal’s widow and later linked to other “hard paper” records left by Seal after his 1986 assassination by “drug traffickers” who were subsequently connected to Oliver North. Those records, including leasing agreements, insurance policies and maintenance records, exhibit a deliberately-confusing “paper trail” of convoluted ownership recalling the ‘glory’ days of the Iran Contra hearings, where the machinations of American covert intelligence operators were unmasked before a disbelieving public.
Combined with revelations in a 1998 CIA Inspector General’s report of Contra-era cocaine trafficking in which the CIA admits to “briefing” then Vice President Bush on how it lied to Congress about cocaine trafficking by its agents, it becomes clear that father and son have common secrets to conceal from the American public. That report, Volume II of the CIA Inspector General’s report into allegations of Contra cocaine trafficking can be viewed at http://www.cia.gov/cia/publications/cocaine2/index.html. A detailed discussion of that report, along with relevant excerpts is available at http://www.copvcia.com.
Unraveling the plane’s tangled and colorful history requires, first, a brief look backwards at the momentous year of 1982, when President Reagan first introduced the public version of “Project Democracy,” in which he called for a “crusade for freedom.”
What it became instead was a license to murder, loot and steal. This climate was the nursery into which N6308F was born.
“The War of ’82”
The detonations had rumbled like Armageddon along the rocky course of the Rio Negro in Nicaragua throughout the night of March 14, 1982… Concrete bridges groaned suddenly under their own weight, crashing in avalanches of black dust in a dark landscape seen through night-vision goggles In Washington D.C., it was time to break out the champagne. War was breaking out in Central America. Just two days later Barry Seal took possession of the first of many planes supplied to him through CIA Director Bill Casey’s “off-the-books” Enterprise.
There were more than 100 U.S. advisers in Honduras by March of 1982. In April, the chief of the Honduran Army, General Gustavo Alvarez, said that his country would agree to U.S. intervention in Central America if it were the only way to “preserve peace.”
“Up to March 1982 you could still change your policy,” recalled a member of the NSC Core Group In Charge as he spoke to reporters later. “The issue was still the question of support for El Salvador’s rebels. If that ended, so could pressure on Managua. But once the first forces of Nicaraguan exiles were trained and set in motion, any real negotiating became much harder. The blowing of the bridges was an announcement.”
Throughout 1982, Democrats, fearing that President Reagan was pushing the United States into another Vietnam-style quagmire, tried to cut off aid to the Contras. It was precisely at this time, the height of CIA Director Bill Casey’s frenetic efforts to ward off these Congressional efforts, that Barry Seal acquired use of not one but several brand new Beech Craft King Air 200s. Ownership of the planes had been deliberately obscured through a number of convoluted transactions involving Phoenix-based corporations suspected of being “fronts” for General John Singlaub’s “Enterprise” activities. Based in Phoenix, Arizona, Retired Major General Singlaub organized in early 1982 an American chapter of the World Anti-Communist League (WACL), called the United States Council for World Freedom (USCWF), with a loan from Taiwan. Funding for Seal’s planes would come from sources close to those efforts.
“Jack” Singlaub had a long history of involvement in covert operations, beginning with service in the World War II Office of Strategic Services (OSS). He had served as CIA Desk Officer for China in 1949 and Deputy Chief of Station in South Korea during the Korean War, and during the Vietnam War he commanded the Special Operations Group Military Assistance Command, Vietnam–Studies and Observation Group (MACVSOG), which participated in the CIA’s Operation Phoenix assassination program.
Singlaub’s efforts, and Seal’s as well, had been necessitated by the shocking scandals of the 1970s combined with drastic reductions in “official” CIA capabilities in the Carter years. Until then, the CIA. had controlled a huge network of planes, pilots and companies for use in paramilitary situations. But with the end of the Vietnam War and the public revulsion at disclosures of out of control CIA covert operations, many of those assets (such as the infamous Air America) were dissolved or sold off.
Consequently, when the Reagan Administration sought to expand covert paramilitary operations in Central America and elsewhere, the Agency was forced to rebuild much of its capabilities illegally, relying frequently on outside assets, usually retained under contract, like Barry Seal. The Contra war put everything into high gear.
The CIA and the Army jointly agreed to set up a special aviation operation called “Seaspray,” New York Times reporter Seymour Hersh revealed in 1987. [This was old news to local and state police in affected areas. Cops had already seen the cynical (and perhaps intentional) manipulation of this operation flooding America with a river of drugs. When law enforcement authorities debriefed convicted “drug smuggler” Seal in late 1985, one of the cops present brusquely began by stating, “We already know about Seaspray.”]
Everybody Will Be There.
The “boys” were getting ready to go to war in the Spring of 1982:
CIA agent Dewey Clarridge put a proposition to Contra leader Eden Pastora. “He would become the star of the second revolution as he had been the star of the first,” — John Hull, whom Congressional sources said worked for the CIA since at least the early 1970s, rented a Contra safe house in San Jose, Coast Rica at CIA request. — Retired Air Force Major General Richard Secord began managing an operation in which Israel shipped weapons captured in Lebanon to a CIA arms depot in San Antonio, Texas, for re-shipment to the Contras. — Felix Rodriguez drew on his Vietnam experience and wrote a five-page proposal for the creation of an elite mobile strike force, called the Tactical Task Force (TTF), that would “be ideal for the pacification efforts in El Salvador and Guatemala.”– And at this exact same time, in the Spring of 1982, Barry Seal began flying private planes into a then-obscure airport in the secluded mountains of western Arkansas known as Mena. He moved his base of operations from Louisiana to hook up with the CIA, which was anxious to use Seal’s fleet of planes to ferry both legal and illegal supplies to Contra camps in Honduras and Costa Rica.
Rodriguez dubbed the search and destroy units “Pink Teams” and advocated using napalm and cluster bombs to give them “more destructive power.” Rodriguez’s proposal included a map of Central America which indicated that Nicaragua would be a target of Pink Team operations (based in El Salvador and Honduras).
Favorably impressed, Vice President George (Poppy) Bush’s National Security Advisor Donald Gregg sent Rodriguez’s Pink Team plan to then Deputy National Security Adviser Bud McFarlane on March 17, along with a secret one-page memo on “anti-guerrilla operations in Central America.”
This was also, according to later Iran-Contra testimony of Medellin Cartel money man Ramon Milian Rodriguez, when he began to launder, at Felix Rodriguez’ request, $10 million from the cartel for the Contras. In secret, sworn testimony to the Senate Foreign Relations Subcommittee on Terrorism, Narcotics and International Operations, Milian Rodriguez claimed that he had been solicited by his old friend Felix Rodriguez.
Also early in 1982 a new covert unit of the Armed Forces was set up by General Richard Stilwell. Known as the Intelligence Support Activity (ISA), it became a separate entity in the Army’s secret world of special operations, with its own commander, a Col. Jerry King. The army’s involvement in secret operations would first became known to the House and Senate intelligence committees in early 1982, when they discovered a project known as Yellow Fruit, which ferried undercover Army operatives to Honduras, where they trained Honduran troops for bloody hit-and-run operations into Nicaragua.
Through private front companies, like the ones that supplied Barry Seal with his fleet of smuggling aircraft, Operation Yellow Fruit ferried weapons like rapid-fire cannons to CIA operatives. It was these same operatives who later mined Nicaragua’s harbors and raided oil depots, all in violation of Congressional legislation barring the Defense Department and the Agency from taking any action aimed at overthrowing the Sandinistas.
The Army went to outside businessmen and arms dealers to make off-the-books airplane purchases, with funds that had been “laundered” through secret Army finance offices at Fort Meade, Md. More than $325 million was appropriated for the Special Operations Division of the Army between 1981 and the autumn of 1983. Had any of these operations become public then it would have caused enormous political damage to the Reagan Administration’s campaign in Central America, according to a 1987 New York Times report by Seymour Hersh.
“Enter CIA Agent Adler Berriman Seal” The flight plans for Seal’s drug enterprise provided the perfect cover for the illicit resupply missions. Seal’s planes would fly from Mena to Medellin Cartel airstrips in the mountains of Colombia and Venezuela, make refueling stops in Panama and Honduras, and then return to Mena, where, en route, the planes would drop parachute-equipped duffel bags loaded with cocaine over Seal-controlled farms in Louisiana.
“His well-connected and officially protected smuggling operation based at Mena accounted for billions in drugs and arms from 1982 until his murder four years later,” said Dr. Roger Morris and Sally Denton in their book Partners in Power. They also reported that coded records of the Pentagon’s Defense Intelligence Agency (DIA) showed Barry Seal on the payroll beginning in 1982.
“My investigation established a conspiratorial period, chronologically, with a first overt act and a last overt act. The first overt act was April 12, 1982,” stated Arkansas state criminal investigator Russell Welch, who was charged, he thought, with digging into Seal’s Mena activities. Between March and December 1982, according to law enforcement records, Seal fitted nine of his aircraft with the latest electronic equipment, paying the $750,000 bill – as was his custom – in cash.
The effects of Barry Seal’s efforts to take weapons one way and bring drugs the other were soon visible, in ruined lives in the U.S. and in the maimed bodies appearing all over Central America.
“Riding the Elephant Herd” Barry Seal was not alone. When small private planes began to bomb the Nicaraguan capital, resulting in the crash of a Cessna 404 at the Managua airport, an account of how three Cessnas were secretly transported from the New York Air National Guard to Central America for the raid on Managua reached the press. It was later learned that custody of a number of additional planes were moved from the U.S. Air Force in a top-secret Joint Chiefs operation code-named “Elephant Herd,” on to the CIA, via a Delaware aviation company where they were armed, and then transferred to their ultimate destination, the Contras.
A senior administration official admitted that small noncombatant military aircraft had been transferred from the Air Force to the Contras through the CIA. One company involved, Summit Aviation, was doing regular business with Barry Seal according to records in his widow’s possession. In addition, according to Congressional sources, Summit, known to do Contract work for the CIA, had former CIA personnel on the payroll, and was linked through ownership records to the Cessna that crashed while bombing Managua.
That aircraft, according to FAA records, was purchased by Summit Aviation in October 1982 from Trager Aviation Center in Lima, Ohio. On the same day that Summit purchased the plane, the company sold it to Investair Leasing Corp. of McLean, Va.. Investair, which has an unlisted telephone number, does Contract work for the CIA, according to Congressional sources. Bruce W. Trager, who sold the Cessna to Summit for $308,872, says the deal was “put together” by Patrick J. Foley, Summit’s “military director.”
In addition to its work for Investair, Summit maintained and modified planes for Armairco, another company involved in covert government projects. Armairco, organized in 1982, also bought several multimillion-dollar Beechcraft King Airs, like Barry Seal’s. Those aircraft were purchased directly from Beech in a procedure normally used only for military projects, according to Beech officials and aviation experts.
When asked whether Armairco’s government work included activities in Central America, an Armairco official said, ”That may well be.”
The Beechcraft King Air 200 has been in production since the mid 1970’s. A little less than seven hundred of them have been manufactured to date. The twin engine turboprop has a pressurized cabin capable, with different configurations of seating up to nine passengers. It has a cruising speed of approximately 330 mph and a cruising range of more than 1,800 miles. New plane prices in1982 started at around $1,700,000 based on equipment.
The convoluted, pretzel-like paper history of the airplane that once belonged to Barry Seal and is today used by Texas Governor George W. Bush begins when the title to the brand new aircraft was first recorded by Portland, Oregon dealer Flightcraft, Inc.
Flightcraft’s President, David R. Hinson, a former military and commercial airline pilot active in the Republican Party in Oregon, was, according to The Oregonian, at the time under consideration to head the FAA. The paper stated that Hinson had met with Transportation Secretary Elizabeth Hanford Dole to express interest in the job after travelling to Washington to promote himself for the post. Helping Bill Casey subvert the will of Congress, presumably, did nothing to hurt his chances.
N6308F was spoken for, several times over, even before it arrived at Flighcraft’s facilities in the Spring of 1982.
“I don’t think we’re going to help you – I mean “be able” to help you said a nervous Phil Carrell of Flightcraft, Inc. when contacted for information by FTW. Carrell, a sales executive who was working at Flightcraft when “Zero-Eight-Foxtrot” was originally sold, told FTW that as far as he knew any records of the aircraft were no longer in existence. He referred us to the FAA title records for answers. We wish that answers were what we had found.
According to records located by Dan Hopsicker in his investigation, a now defunct Lake Arrowhead, California firm, Ken Miller Aircraft Sales, entered into leasing agreements with developer Eugene Glick in February 1982, two months before the manufacturer’s title was transferred to Flightcraft. Ken Miller Aircraft appears nowhere in the FAA title history of the plane. Ken Miller Aviation is also no longer in existence. Nonetheless, in February 1982, Ken Miller Aviation entered into a leasing agreement with real estate magnate Eugene Glick for the brand new aircraft. In that agreement, Glick and his wife agreed to make eighty-four monthly payments of more than $37,000 ($2,835,672) for the airplane which had a new purchase price of $2,010,556. No record linking Ken Miller Aviation to Flightcraft is known to exist.
On paper at least, according to Contracts dating from February of 1982, the plane was owned by a Greyhound Bus Lines subsidiary, Greycas, which in turn leased it to a mysterious Phoenix firm in close proximity to John Singlaub’s Enterprise operations named Systems Marketing, Inc.” Systems Marketing then leased it to Continental Desert Properties which was the firm owned by Glick. In the final step, Glick leased the plane over to Barry Seal.
In a Contract dated March 21, 1983 N6308F was leased by Continental Desert Properties to Seal’s firm Baton Rouge Aviation . Insurance policies found in Seal’s private papers confirm that Barry Seal subsequently purchased an insurance policy on the aircraft.
What, exactly, was the purpose of this convoluted ownership record? What was it designed to conceal? The answer lies in the very definition of “tradecraft,” a term for what it is that spies and covert operators do to operate in the dark. The “front” companies were in place to act as “cut-outs,” layers of insulation, between the spy agency — in this case Bill Casey’s CIA–and the covert operative–, in this case, Barry Seal.
FAA ownership records show that Gene Glick, who lived on Hope Ranch near Ronald Reagan’s Rancho del Cielo in Santa Barbara, California, leased “Zero-Eight-Foxtrot” as well as several of Barry Seal’s other planes during the same years that Seal was most active in drug and weapons smuggling 1982-5. Other documents located by Hopsicker confirm that Glick was also actively helping Seal purchase ocean-going vessels for use in drug smuggling activities and as stationary platforms for the CIA to use off the coast of Nicaragua in covert operations.
An FBI agent had dismissed Glick’s importance to Dan Hopsicker, which fueled his suspicions early on. “He’s just a money launderer,” said Delbert Hahn, who was the Special Agent in Charge of an Inter-Agency Organized Crime Drug Task Force looking into Barry Seal’s organization back in the middle 1980s. At least in this case, Glick’s behavior was consistent with Iran-Contra “bust out” operations because the lease defaulted in two years. The plane was repossessed.
According to FTW contributing editor Catherine Austin Fitts who, as a former Wall Street investment banker and Assistant Secretary of Housing, served on the Resolution Trust Corporation in the wake of the S&L scandal, “This could have been a substantial cash pay-off to the concerned parties.” Fitts, who also served on the “clean-up” committee for BCCI (a bank with abundant connections to CIA covert operations, financial fraud and drug trafficking) observed that the pattern here is typical of those seen by enforcement officials in that era.
“It is worth researching to see if there were substantial cash pay-offs to the concerned parties,” said Fitts. “If the lease were insured at or near its full value and defaulted early as it did here in around two years; if the total value of lease > payments were $2.8 million and if the lessor had paid only $2.1 million for the aircraft then any insurance pay-off or “write down” after only a year or two could have netted a profit of a half million dollars or more for the covert operators. This type of insurance fraud was used routinely during Iran-Contra to finance covert operations”
The CIA Gets Busted – Yet Again
The circle was completed with the discovery that “Zero-Eight-Foxtrot,” as well as several other planes used by Barry Seal, was in reality owned by the same company revealed in 1998 bankruptcy proceedings to have owned the notorious CIA airline Southern Air Transport (SAT). Congressional and public records from the era establish Southern Air as a legendary CIA proprietary – second only to Air America – and as being connected to Secord, Singluab, Rodriguez, Casey and George H.W. Bush.
Among its long list of dubious “achievements,” Southern Air had owned the C123 used by Seal in the Nicaragua sting operation which made Barry Seal famous. That same aircraft was later shot down over Nicaragua in 1986 and the lone survivor Eugene Hasenfus was captured alive by Sandinista soldiers.. That is what started the Iran-Contra scandal to begin with. No one knew–or admitted knowing–just who owned Southern Air Transport back in 1986, although government officials all swore up and down that it wasn’t the CIA.
Southern Air’s ownership by Greyhound Leasing, which became the entity called Finova, was only disclosed after no one was looking, when SAT went into bankruptcy in 1998. This is the first time the holding company, Finova, has been revealed for what it clearly is, an Agency front, set up in Arizona and headquartered in Canada to escape American financial disclosure requirements.
Suddenly, on June 14, 1984, after passage of the second Boland Amendment and the consolidation of Contra operations under Oliver North the plane was sold twice in one day. According to journalist, producer and author Dan Hopsicker, “This was at a period in time when Barry knew he was on the way out.” The plane went first to a mysterious Morgan B. Mitchell of Vale, Oregon, and then to Chevrolet Dealer Merrill Bean of Ogden Utah. Bean, curiously, gave the Dover, Delaware address of the “Prentis Hall [sic] Corporation” on his FAA registration.
Students of the CIA have long been aware of the Agency’s affinity for hiding its assets in Delaware shell corporations. But, to be fair, many other companies do so for reasons of convenience. In an interview Bean stated that he had incorporated in Delaware as a legal necessity because of the needs of his investors. “Delaware is a very convenient place for many kinds of corporations to incorporate and many large corporations and multi-nationals do so,” Bean told FTW. “Because other companies I was in partnership with were incorporated there I chose to do so also. It was much easier that way and it was a requirement of the partners who were investing.”
However, Delaware officials in the Secretary of State’s office said that Bean’s company, Prentis Hall [not Prentice Hall], does not exist. And in the FAA records connected to Bean’s ownership of “Zero-Eight-Foxtrot” we find yet another unexplained gap in FAA records. Whenever major mechanical repairs are made on an aircraft, the involved mechanic is required to complete an FAA Form 337. In December 1989, FAA certified mechanic Irvin Strayer installed some routine de-icing equipment on the plane. The mechanic, reviewing what should have been original ownership documents, listed the owner as United Insurance of Ogden Utah. Nowhere in FAA title paperwork does United Insurance appear as an owner. And a spokesman for the Utah State Department of Insurance told FTW that there had never been a United Insurance licensed to do business in the state.
“It was an insurance company that a group of car dealers had formed to handle title and financing and other insurance for car sales,” said Bean. “I bought the other guys out of the airplane and had some repairs done before I sold to Corporate Wings.”
Someone should have told the FAA. Or perhaps someone changed the FAA’s records. Stranger things have happened. Bean does not recall if he changed the records to reflect this or not.
A Likely Suspect
In what will become a long litany of links between Barry Seal’s activities and the financial fraud of the 1980’s, Merrill Bean was also involved in what The Salt Lake City Tribune called “the worst financial disaster in Utah since the Great Depression.” That disaster was the en masse 1980s failure of Utah thrifts — hybrid financial institutions that offered high interest rates and consumer loans — and the collapse of the insurance fund that was supposed to protect their deposits.
Because Utah’s thrifts were heavily underinsured, the actions of Bean’s thrift, Western Heritage Thrift and Loan, left a trail of broken hearts, and broken people.
“We had just moved to Utah from California two years ago,” 58-year old Irene Culver told The Salt Lake City Tribune in 1986. “My husband Kent was an aircraft mechanic but he has Parkinson’s Disease. We put half our savings in there [Western Heritage] and bought a little fixer-upper with the other half. When the State closed everything, I thought, ‘I suppose we’re lucky.’ My Social Security should start in four years. We were going to put a new roof on and install a gas furnace because the electricity’s expensive. Now we can’t do it, so we’ve got half the house closed off.”
Bean told FTW, “I was Director of that failed thrift. I came aboard when it was almost going under. And I poured some money into it to try to save it and it didn’t happen. I was hoping that my $75,000 that I put into it would help revive it.” While admitting that he was on the Board of Directors of Western Heritage, Bean stated emphatically that he was not “a Honcho.”
FTW wonders how an obviously savvy businessman who owns several aircraft and car dealerships believed that $75,000 would turn around a failing savings and loan. In “The Mafia, The CIA and George Bush,” Texas journalist Pete Brewton documented how much of the S&L scandal was connected to Iran-Contra operations and illegal covert operations of the CIA. In many of those schemes a $75,000 or similar “buy-in” might have secured the mighty a seat at a highly-lucrative but completely criminal feeding frenzy.
Following the “paper trail” of Barry Seal’s King Air 200 revealed connections to some other unsavory perpetrators of the major financial frauds that — like the S&L scandal — marred the 1980s. Greyhound Leasing, or “Greycas” for short, was at the center of a huge and seemingly inexplicable financial fraud that, like the half-trillion dollar S&L scandal, no one seemed too concerned about unraveling. The corporation was openly and eventually very publicly looted. Afterwards, company management pretended to be “baffled” as to how it could have happened.
It went down like this:
Greycas Inc. and another Greyhound unit, Greyhound Leasing & Financial Corp., were bilked of over $ 75 million by one Sheldon Player, a former Vernal, Utah, resident assumed to be in the machine and oilfield equipment sales business, who gained the money through fraudulently obtained loans from Greyhound. Greycas then devised an elaborate cover-up scheme to prevent disclosure of details about the loss.
This episode began at the beginning of the 1980’s with one $ 600,000 loan. Player and his companies would sell Greycas heavy machine tools, lease them back and then pretend to sublease the expensive devices to end-users. In most cases the machines, which were collateral for the loans, were non-existent.
By 1984, Player had borrowed nearly $ 8 million from Greyhound in the same scheme. That year he asked for $ 40 million in new loans to continue his transactions. A total of $23.5 million had been disbursed by the time the company first got suspicious and confronted Player. He was told the company wanted to inspect the machinery that it was supposed to have owned. Remember, this was a company owned by the CIA front Finova. Player resisted, leading some company executives to wonder about the “integrity of the transactions with Player.”
Then, incredibly, despite the company’s doubts about Player’s credibility and integrity, and in spite of Greycas’ inability to make inspections of the equipment, the company lent Player another $ 24 million. In the ensuing months lucky Sheldon Player drew $66 million on the credit line authorized by the company.
This was an Iran-Contra bust-out.
Nice Work if You Can Get It
Anyone who has ever borrowed money for a car or home must admire the chutzpah of Sheldon Player, whom the business press took to calling an “admitted con artist.” Yet Player had no history of financial fraud that we could discover before this, which took place at the same time that officers of a Swiss-based subsidiary were defrauding Greycas of another $120 million, in a purportedly unrelated scandal that sent shock waves from Athens to Phoenix.
“Many borrowers failed to make even the initial monthly payment,” court documents state. The company’s accountants wrote that “fraudulent and dishonest acts . . . resulted directly in a loss of $119,684,598.” Not so, said the company’s hapless General Counsel, who responded, weakly, that the loss has been reduced to a mere $72 million.
The fraud included checks written as bribes on napkins in Swiss restaurants and then set afireÉ the reported possibility that one of the participants was blackmailing other participants and some mighty upset shareholders who filed lawsuits in Phoenix urging the Greyhound board to take legal action against top officials. The troubling question that puzzled business reporters never were able to answer was this: Why were they giving money away down at Greyhound during the 1980’s?
Being Connected Means Never Having To Say You’re Sorry The disposition of the resulting criminal trial of Sheldon Player is an illustration of the maxim that in George Bush’s America, “Being connected means never having to say you’re sorry.”
When Sheldon Player was sentenced, he received a five-year sentence. Yup. Five years — one year for each $13 million he stole. This is clearly a deal that, if offered to regular Americans–as opposed to the CIA-related kind who killed Barry Seal –would have people lining up around the Phoenix Federal Courthouse to sign up. After receiving this draconian sentence Mr. Player was given additional time to settle personal affairs before entering prison. No one can say American justice is not compassionate. And prison, for Mr. Player, consisted of the Lompoc Camp, a minimum-security facility known as one of 10 to 12 “country club” institutions in operation around the nation, according to Dick Murray, community programs manager for the U.S. Bureau of Prisons in Phoenix.
Former Greycas official Robert Bertrand, who apparently covered up for Player’s fraud, lucky fellow, never went to prison. Instead he resigned his position at Greyhound in 1986, and was soon appointed the new President and Chief Executive Officer of Finalco Inc. [Sounds like Finova doesn’t it?], an equipment finance and brokerage company which just happens to be based in McLean, Virginia, the home of the CIA.
(Back?) Into the Hands of the Guvnah
Merrill Bean, the Utah Chevy dealer who acquired “Zero-Eight-Foxtrot” in 1984 sold the plane in May of 1990 to Corporate Wings of Salt Lake City. Two days later Corporate Wings sold it to Gantt Aviation of Georgetown, Texas, which a month later sold it to the State of Texas Aircraft Pool where it resides today. Johnny Gantt, President of Gantt Aviation told FTW that he probably knew that the State of Texas had a bid out when he acquired “Zero-Eight-Foxtrot”. At the time the Governor of Texas was Bill Clements and George “W”, a good friend, was owner of the Texas Rangers.
A genial Gantt explained that he had probably been aware that the State was “putting out a bid” for a King Air and scooped up the plane. Press clipping show that Gantt Aviation is a large dealership with a long history of providing planes to the State of Texas. It was a done deal within weeks and Zero-Eight-Foxtrot found the home where it lives happily today.
At the beginning of this article we outlined briefly how a tail number in Barry Seal’s papers started this investigation. It actually began when author Terry Reed announced at a Los Angeles public gathering in July, 1999 that a video tape might surface during the 2000 Presidential campaign “showing George W and Jeb arriving at Tamiami Airport in 1985 to pick up two kilos of cocaine for a party. Said Reed, “They flew in on a King Air 200.” Subsequent statements made by Barry Seal and recorded in Reed’s 1995 book Compromised recount how Seal bragged about how he had video of “the Bush boys” doing coke. Other witnesses located by both writers of this story, who were in relevant official positions in 1985, have confirmed that the described Tamiami sting took place. All, in fear for their lives, have refused to go on the record.
Does George “W” use Zero-Eight-Foxtrot? According to Jerry Daniels, Executive Director of the Texas State Aircraft Pooling Board, “He used to fly on that airplane all the time. He stopped when he became a Presidential candidate because the State won’t let you fly its aircraft for political purposes.” But FTW learned that if and when Dubyah is back in the state and on state business, he probably will because Dubyah is a licensed pilot and Zero-Eight-Foxtrot is one of his favorites though he doesn’t get to pilot much any more.
Said one savvy Pol of George W, “The last thing we need in this country is another President with lingering drug scandals in his past–and maybe present.”
By: Daniel Hopsicker and Michael C. Ruppert
Daniel Hopsicker is the producer of a business news television show airing internationally on NBC called Global Business 2000. That is, he was the Producer until Dan produced a 2-hour special on the CIA and drugs, Mena, Arkansas and Barry Seal called “The Secret Heartbeat of America.” Dan was told by his biggest friend in Hollywood, “Your show will not air while Clinton is President.” When a subsequent attack in broad daylight on Wilshire Boulevard outside the Federal Building in Los Angeles confirmed his friend’s judgment and prediction, Mr. Hopsicker began work on a book called “Barry and ‘the boys,” due to be finished by the end of 1999.
- The Beebe Network
- The Cast Of Characters
- The History
Ben Barnes, former Texas Lt. Governor; business associate of Herman K Beebe, Walter Mischer and John Connally.
Herman K. Beebe Sr., Louisiana financier with offices in Dallas, convicted felon and Mafia associate; many connections to the intelligence community; godfather of the dirty Texas S&L’s; did nine months in Club Fed; Charles Hurwitz introduced Beebe to B G Wylie, half-brother of Carroll Kelly; funded start-up of Contra related Palmer NB.
Tom Benson,a partner of Stanley Rosenberg in Groos Bank(influenced by H K Beebe) and Bank of Leon Springs;a Beebe associate;partner with Peyton McKnight and Charles Hurwitz(?) in Culebra/1676, a Rosenberg boondoggle.
John Connally,former Texas governor;Connally’s law firm, Vinson-Elkins had Walter Mischer as a client; Charles Keating worked on his 1980 Republican presidential race; he and his partner Ben Barnes, borrowed tens of millions of dollars from dirty S&L’s; served on Hurwitz‘s Maxxam Inc’s board of directors from 1988 until his death in 1993. Participated in several CIA related covert actions.
Thomas Gaubert,big Democratic fundraiser from Dallas;former head of Independent American Savings, which purchased 20 branch offices from Hurwitz‘ USAT;owned a piece of Sandia Federal Savings in Albuquerque;head of Telecom; A right-wing flag waver.
Joseph Grosz,Chicago mob associate;worked for Gouletas family;ran Southmark’s San Jacinto Savings;director of Gaubert‘s Telecom.
Stefan Halper,co-founder with fellow George Bush supporter Harvey McLean of Palmer National Bank, which was financed by H K Beebe and funneled private donations to the Contras;former son-in-law of past CIA deputy director Ray Cline;helped set up legal defense fund for Oliver North.Peter Munkalso an investor in Palmer NB.
J B Haralson,former head of Mercury Savings and Ben Milan Savings,where he was fronting for his old associate George Aubin;old Surety Savingshand,which Hurwitz attempted buy in 1977;managing officer of two other Texas S&L’s which that failed; partner of B G Wylie et al in the purchase of Brazaport S&L from Lloyd Bentsen.
Charles Hurwitz,controlled now defunct USAT, majority stockholder of Maxxam Inc; longtime friend of most Houston elite including John Connally; a Milken Insider; often accused of fraud and other security related schemes; knew H K Beebe.
Charles Keating,S&L looter;spawned by Carl Lindner;worked on John Connally‘s 1980 presidential campaign as Westcoast fundraiser;controlled Lincoln Savings and Loan (the first big deal Lincoln did was with Connally);Lincoln involved in a daisy chain with Larry Mizel’s MDC Holdings,Silverado and San Jacinto;his chief pilot in 1979 was CIA operative Ken Qualls.
Carroll Kelly,who epitomized his Kappa Sigma fraternity;owner of Continental Savings and associate of H K Beebe (I’m Beebe‘s man in Texas,” he bragged to S&L regulators.)
Ed McBirney,”Fast Eddie” from Dallas;former head of Sunbelt Savings;associate of H K Beebe, Jarrett Woods and George Aubin;attempted to buy branch offices from Hurwitz‘ USAT; funded Hurwitz associates including Rosenberg.
Peyton McKnight,powerful louisianan, an associate of Beebe and a partner with Charles Hurwitz, Stanley Rosenberg and Tom Benson in a Rosenberg deal.
Harvey McLean,Shreveport,Louisiana businessman and close associate of H K Beebe;owned Paris(Texas)Savings and Loan;co-founded Palmer National Bank with Stephan Halper and Beebe‘s money.
Peter Munk,a Canadian businessman, investor in Palmer NB; an associate of H K Beebe; business partner with Adnan Khashoggi; an associate of John H Roberts Jr and John P Holmes Jr in Goldome FSB
Clint Murchison Sr. and Jr.,Dallas oilmen and wheeler dealers;Sr was involved in business in Haiti with a CIA operative;Jr purchased Mischer’s interest in sawmills in Honduras;Jr was involved with a CIA operative in Libya and did business with H K Beebe and Adnan Khashoggi.
David Saks,business associate of Stanley Rosenberg; partner of Doyle Spruil, both convicted felons;borrowed from Beebe controlled S&L’s
Doyle Spruil, business partner of David Saks and Stanley Rosenberg; a convicted felon; borrowed from Beebe controlled S&L’s
Beebe connections to Barnes-Connally, to Hurwitz, to S&L’s, to Mafia
(Source: References are in “Inside Job”)
Beebe starts American Motels, Inc. (AMI); invests in Holiday Inns. (231)
Beebe & Barnes develop complex business association (232)
Beebe controls Bossier Bank and Trust, Bossier City, CA
Barnes invests in Holiday Inns
Barnes, then Lt. Gov. of TX, involved in Bank & stock fraud scandal. In ’71 a grp of TX banks looted a network of businessmen who bought & sold stock in a business owned by Frank Sharp. (358)
Connally bribe to cover indictment led to indictment of Connally; acquited (368#6)
Jul. Beebe & Barnes from banking and insurance assoc. by 1976 B/B control 19 banks & S&L’s in TX & CA
Prior to Ch. Keating a ExecVP & Director of Carl Lindner’s American Financial Corp. (AFC); also a founding partner in AFC’s law firm Keating, Muething & Klekamp
Lee H. Henkel, a Republican, was Treasurary Dept. & IRS Counsel in the Nixam Admin. Later a tax attorney and real estate developer in Atlanta
Jul. 02 SEC v. Keating, Muething & Klekamp a judgment against Lindner, Keating & Klekamp enjoins self-dealing in an Ohio bank subsidiary.
Keating buys Continental Homes of Phoenix, Inc. from Lindner & renames it American Continental Corp. (ACC)
Henkel & Keating are `Connally for Presidents’ East & West Coast financial chairs. Henkel is Keating’s attorney.
Oct. ACC buys Lincoln Savings with DBL issued junk bonds
Lincoln makes $70mm loan to Connally on a land deal near Austin, TX and $134mm loan to Henkel; Connally defaulted leaving Lincoln (and not the taxpayers) holding a $70mm loss (Nation 11/19/90)
Herman Beebe associate Ben Barnes in partner-ship with Connally borrows from 17 S&L’s in 3 states ($40mm from Vernon S&L and some unknown amount from Credit Banc (where Barnes’ son worked)
ACC employed Mark Connally son of John Connally
Aug. Press reports Beebe & Marcelolo control Continental S&L (Houston). Fails in 1988.
Feb. 13 WSJ reports Lincoln S&L made at least $61.9mm in loans to corporations & partnerships in which Henkel had an interest
In mid-August 1987 the records of the records of Southmark, San Jacinto SA, Strauss, Barnes, Connally and about 200 others were seized according to the Dallas Times Herald. Southmark had done about $90 million in business with Beebe who held 62% of its Series E Pfd according to Southmarks 10K85. Southmark bought Bebe’s nursing homes and also owned 37% of Pratt Hotels. Beebe did business with Morris Shenker and also was related to many Contra figures. Southmark also purchased the Beebe built AMI tower in or before 1988. AMI had 17 subs and 14 affiliates.
SEC v. MDC Holdings, MDC (has close ties with Silverado), is caught in shady deal with Lincoln S&L. Neal Bush is loaned $550m for a house.
Connally elected to Maxxam BOD
And Yes Of Course LOTS LOTS MORE ON HOUSTON and CONROE / WOODLANDS
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