Part 6 of Land and Loot

Lamar Hotel in Houston, since demolished

In 1978 Houston was in the center of a real estate boom. At the same time that the corporation created by a consortium of Suite 8F Crowd interests and Dillon Read investors (TexasEastern Transmission Corp. which in 1947 had bought the government-constructed pipelines carrying natural gas from Texas to the northeast) was making plans with Canadians to build a commercial real estate project in downtown Houston, called the Houston Center, the stock of a local construction company, General Homes, was sold under a purchase agreement to CFGH-Texas, Inc., a wholly owned Texas subsidiary of a Delaware corporation, Cadillac Fairview U.S., Inc., whose ultimate parent was Cadillac Fairview Corp., Limited, an Ontario, Canada corporation.   

On January 7, 1981 the new General Homes, now a public corporation, executed a loan agreement to secure $50 million of financing from Bank of Nova Scotia and Toronto-Dominion Bank, both Canadian chartered banks, and Capital Bank, N.A. of Houston (later called MBank, then BankOne, before it became insolvent) [Harris County File No. J615338].[1]   

As part of the IPO that occurred, various transactions took place. On December 17, 1982 the Canadian banks transferred their rights in the notes and liens to American Savings and Loan Assn. of Florida [Harris County File No. J645338].[2]  In January 1983 the purchase agreement with Cadillac Fairview was cancelled by means of the following transactions described in the Notes to Consolidated Financial Statements contained in General Homes’ SEC filing:

In January 1983, GHMC [General Homes Management Corporation] acquired 545,104 shares of the Company’s redeemable Preferred Stock and all of its outstanding Common Stock for $5,000,000 from CFUS [Cadillac Fairview U.S.].  GHMC contributed the redeemable Preferred Stock to the Company, and it was retired.  The Company repaid loans due CFUS in the amount of $15,000,000 plus accrued interest of $5,078,000 and redeemed 714,646 shares of its redeemable Preferred Stock for $6,431,000, $1 per share less than its par value.  Also the Company’s $15,132,000 current tax liability to CFUS was forgiven.  The Company and GHMC agreed to indemnify CFUS and its parent for any liabilities arising from agreements consummated while it was a stockholder.

In 1979-80 General Homes sold $25 million in mortgage loans, payable to its subsidiary, FGMC, Inc. [abbreviation for “First General Mortgage Corp.”], to American Savings & Loan Assn. of Florida (“ASLA”) and retained a 20% participation interest.  These notes were transferred by FGMC, Inc. to American Southern Mortgage and then to ASLA.  In January 1983 General Homes entered into a revolving credit agreement with Bankers Trust Co. of New York for a $24.5 million line of credit with payment due by January 1988, said debt secured by $28 million in U.S. Treasury notes pledged by American Savings & Loan Association.  General Homes gave ASLA a security interest in life insurance policies and a 75% participation interest in the Bankers Trust line of credit.  With this new credit arrangement, General Homes stock was reissued, with all stock owned by Cadillac Fairview being transferred to General Homes and ASLA.  Cadillac Fairview, in return, on January 5, 1983, executed a release of lien on a $4 million note retained in a July 25, 1979 sale of land to General Homes [H796081],[3] and by corporate resolution attached thereto, Cadillac agreed to use other proceeds from the stock sale to “repay indebtedness of General Homes to The First National Bank of Chicago pursuant to that certain Loan Agreement dated as of August 31, 1978.”[4]

Shearson Lehman was the managing underwriter of the public offerings of stock and also purchased secured notes from General Homes which were used in some form of derivative securities backed by mortgages.[5]  Until 1983 ASLA was controlled by Shepard Broad and his son, Morris Broad, in Miami, but in December 1982 the Broads signed a voting trust agreement relative to control of ASLA with Marvin Leon Warner, a Cincinnati businessman, allowing Warner to purchase $13 million of the stock.  Warner's Warner-Kanter Construction Co in Cincinnati had been investigated by the FBI in 1954 for suspicious FHA loan transactions in Canterbury Gardens in suburban University City outside St. Louis.

Warner had been a large donor and fun-raiser for Jimmy Carter in his presidential campaign in 1976 and was appointed in January of 1977 as Ambassador to Switzerland. After serving two years in that post, he resigned and returned to Ohio in May 1979 to marry a well-known beauty, the former wife of Barry Goldwater, Jr.  According to other news items, however, it appears they were married no more than a year.

 One month later, ASLA acquired 43% of General Homes stock.  In January 1984 Warner took over as chairman of the board and CEO of ASLA.[6]  Jeffrey Payson, whose Houston construction company had just been taken public, served on ASLA’s board, and Morris Broad joined GH’s board.

Ohioan Marvin Warner’s history reveals a fascinating connection between his banks and the laundering of drug profits, according to certain evidence brought out in Pete Brewton’s book, The Mafia, CIA and George Bush, as well as Jonathan Kwitny’s book, The Crimes of Patriots.   

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December 14, 1982  The New Mexican, Santa Fe, NM and also appeared in THE STARS AND STRIPES, December 16, 1982

MIAMI (AP) - A bank accused of laundering more than $97 million in drug profits
transferred funds by wire as far as Switzerland and disguised cashier's checks as nonexistent loans, a federal indictment charges More than 400 transactions to  launder proceeds from Colombian narcotics, in amounts ranging from $18,000 to
$837,530. were made by the Great American  Bank of Dade County over a 14-month period, according to the indictments revealed Monday. The defendants include the bank, former head teller Carlos Nunez; his former assistant, Elaine Kemp;
and a former vice president, Lionel Paytuvi of Hialeah. who is already in jail awaiting trial on unrelated federal charges of distributing methaqualone and filing false statements to the Internal Revenue Service. If convicted on all 21 counts of currency violations, the bank could be fined more than $7 million. 

Officials said it is the first time a south Florida bank has been charged with participating in a money-laundering operation in the billion-dollar drug market. Great American attorney Michael J Madigan said the bank was "extremely disappointed" by what he called an unwarranted  indictment, and said the Institution would demand "an immediate trial" to establish its innocence. "The truth of the matter is that the bank was a victim of what the government apparently alleges was a money-laundering scheme which occurred almost three years ago," Madigan said. But Assistant Treasury Secretary John Walker told a Washington press conference that money laundering "was, in effect, a bank practice .... not an isolated employee." The indictment alleges the deals took place in the 14 months before February 1981. The grand jury, working with information from an investigation called Operation Greenback, also indicted five Miami residents described as Colombian nationals, who worked with bank officers and allegedly sent $5.4 million through the institution to disguise its source. They were identified as Isaac Kattan, Jaime Escovar Balayar. Victor Tesone Kassin. Luis Viera and Jaime Diaz. Kattan is already serving in federal prison on a drug trafficking conviction. Kattan and other currency exchangers, including Interfil Inc. and Latina Export and Import Inc. acted as middlemen
between Colombian drug dealers and the bank, the indictment alleges.

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Convicted Medellin cartel associate, Fernando Birbragher, a Russian Jew from Colombia, pled guilty to laundering money in 1980-81 through Warner’s Great American Bank in Miami. 

In addition to banking, Warner had made investments in race horses and sports teams in the late 1950s.  Shortly after Warner returned from Switzerland, the Great American Bank was hit by a money-laundering scandal.  Warner sold the bank to Barnett Banks just prior to December 1982, when Birbragher was indicted, the same month Warner and the Broads signed the voting trust agreement for General Homes.  Warner was himself convicted in 1987 in Ohio for fraud involving Home State Savings and E.S.M. Securities.[7]

While Warner was in Switzerland, he was replaced at Great American Bank by Donald E. Beazley, who had previously worked for Guillermo Hernandez-Cartaya, a banker who started at Citizens & Southern in Atlanta before organizing the Republic National Corporation (incorporated by CIA lawyer Walter Sterling Surrey), which later became World Finance Corp.   

According to an AP article carried December 16,1977 in various news outlets:

The Miami News reported in August that Hernandez-Cartaya's financial empire was threatened with collapse after the tiny Arab state of Ajman, a member of the United Arab Emirates, closed the Ajman Arab Bank, of which WFC owns 22 percent. Hernandez-Cartaya's tangled finances, according to the Times, affect dozens of banks in the United States and abroad as well as various foreign governments. The newspaper said his affairs also are under investigation by banking offiicials in Panama, Colombia and the United Arab Emirates.

The Times said the investigation was triggered in May when two Dade County policemen uncovered evidence while sifting through garbage of a suspected large-scale narcotics trafficker. The Times said the evidence reportedly showed financial transactions involving hundreds of thousands of dollars connected with WFC [WFC Group, Inc., a private holding company] corporate accounts.

During Beazley’s tenure at the Miami bank, he negotiated a deal with an individual from Nugan Hand Bank of Australia to sell a Great American subsidiary, Second National Bank, which had connections to Paul Helliwell. 

When Beazley left Great American after Warner’s return, he became CEO at Nugan Hand.  Warner’s undoing came about as a result of fraud involving his son-in-law, Stephen W. Arky, who had been a lawyer in the SEC under Stanley Sporkin, later general counsel for the CIA, who characterized Arky as “one of my finest young men.”[8]

Birbragher described how he engaged in drug smuggling and how Warner’s bank aided him in laundering his profits.  He set up a shell corporation called International Finance Company,[9] which had an account at the bank.  His partner in Colombia furnished him drugs, which were flown to Miami by pilots, Jack DeVoe, William Sundback and Warren Bullock, and delivered to Birbragher, who then sold them.  The cash was deposited directly into the bank.  DeVoe, who was convicted of cocaine smuggling, has stated that he flew into the Ocean Reef Club’s landing strip and Opa-Locka Airport (used as the CIA’s center of operations during the 1954 Guatemalan coup). The Ocean Reef Club is a subsidiary of Carl Lindner’s American Financial Corp., which also owns the banana company formerly called United Fruit, which served as a cover for the coup.  DeVoe is the pilot who was laundering his money through Lawrence Freeman’s bank in the Isle of Jersey being used by the Mike Adkinson group.

DeVoe had two attorneys during his legal battles—both with IRS and for drug smuggling.  One was Theodore Klein,[10] who had also represented arms dealer Ron Martin, an alleged casino partner of Robert Corson.  Another was Harvey Silets of Chicago, who represented Burton Kanter, a former associate of Paul Helliwell.  Another lawyer to whom DeVoe was introduced was Lawrence Freeman, a member of Helliwell’s law firm in 1970, which he left to become in-house counsel for Castle Bank & Trust, the Bahamian bank set up by Helliwell and Kanter.

Even though Freeman left Castle Bank and then Helliwell’s firm, he kept in close touch with Kanter.  They and their associates were involved in at least 21 companies incorporated in Florida.  Almost all of them were registered in the late 1970s or early 1980s, and some are still active.  Kanter also had a law office next to Freeman’s in Miami for about a year, and when Florida state prosecutors and investigators raided Freeman’s office in November 1985, they found Kanter’s name on several documents.

One was a disbursement of $27,500 to Kanter from a $50,000 receipt from the Bank of New England.  Freeman got $10,000 of this, while his law firm received $6,000.  In a letter to me [Brewton] at the Houston Post, Kanter said the $27,500 was a “reportable fee and was, in fact, reported on my personal income tax return.”[11]

The Texas counsel for the Bank of New England was Trevor William Rees-Jones at Locke, Purnell in Dallas, who served as trustee for MONY in Mel Powers’ loans [E426559].  This firm included Eugene Locke, who ran for governor of Texas after he had managed John Connally’s gubernatorial campaigns.  Rees-Jones has served as trustee on deeds of trust for Mutual of New York (MONY), New England Mutual Life in Massachusetts and the Bank of New England.  The Bank of New England, incidentally, refinanced Enron Cogeneration’s loan with Morgan Guaranty in 1988.[12]  Further research needs to be done on the history of these institutions.  

NOTES:

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[1]  According to Brewton (p. 137) Capital Bank merged with Paravicini Bank in 1969 to start a new Swiss bank, Bank for Investment and Credit Berne, which included among its investors, Seagrams [both Seagrams and Cadillac Fairview are owned by the Bronfmans].  William Stamps Farish III of Underwood Neuhaus and J. Hugh Liedtke of Zapata were directors.  Not long after the merger, the bank was involved in fraudulent stock transfers with Billy Mellon Hitchcock, heir to Gulf Oil [Liedtke's father had been general counsel to Gulf for many years] and was caught laundering $67 million of Hitchcock's money, which, according to a 1985 book by Martin A. Lee and Bruce Shlain, included proceeds from the manufacture and sale of LSD [Acid Dreams:  The CIA, LSD and the Sixties Rebellion (New York:  Grove Press, 1985)].  Hitchcock and his friend and attorney, Seymour Lazar, both owned shares in Resorts International, the successor to Mary Carter Paint, and had accounts in the Castle Bank & Trust in the Bahamas.   

Because Castle Bank was created by attorneys, like Paul Helliwell, who laundered money for the CIA, it is highly likely that Lazar's LSD activities were related to the CIA's MK-Ultra operations in California.  Lazar also knew Bernie Cornfeld, owner of IOS mutual funds.  Robert Vesco, who took over IOS from Cornfeld, is said to have created Global Holdings and Global Natural Resources in order to acquire Resorts International stock.  See Arthur Herzog, Vesco, p. 151.  Lazar's name also came up in 1977 as the bankroller of Harold Rhoden, "the shrewd Los Angeles lawyer" who attempted to probate the "Mormon will" which would have given Rice Institute 1/4 of 1/8 of the estate, 1/32 to "Ella Rice of Houston," 1/16 to William R. Lummis and which appointed Noah Dietrich as executor.

[2]  Both Canadian banks executed the documents in Atlanta, where they were operating in the First National Bank Tower (2 Peachtree Northwest) [G926576], although their Houston address was Two Houston Center.  Trotter, Bondurant, etc., the attorneys representing Citizens & Southern Realty Investors (later Southmark), was located in Peachtree Northwest [F660925].   Another address for the Toronto Dominion Bank in Atlanta is 225 Peachtree Street, N.W., #1600 Peachtree Center South.  This is shown on a Financing Statement Assignment of a lien from Albert Lum filed October 1990 by his attorneys, Schlanger, Cook, Cohn, Mills & Grossberg located in the same building with Charles Hurwitz, 5847 San Felipe.  This lien was assigned to Guaranty Properties (U.S.), Inc. in Toronto [M886850].  Another assignment was made from Toronto Dominion to Guaranty Properties of a lien from Raintree Village, Ltd. [M886849].  Raintree Village, Ltd. was located c/o Jim M. Reinders, Ronto Development Corp. at 277 N. Collier Blvd. in Marco Island, Florida.  Raintree was assigning the net proceeds it would receive under a contract with A. Jack Solomon and Harry L. Solomon [M886846].  The new address for Toronto-Dominion Bank on that assignment is Two Houston Center #1700.  Shell Oil, in 1968, had an address of 230 Peachtree, N.W. [C791165], and the law firm that represented Cadillac Fairview in the suit filed by Odom--Chamberlain, Hrdlicka, White, Williams & Martin--now has an Atlanta office at 233 Peachtree, N.W. (according to their letterhead).  [Peachtree Center Tower was owned 100% by Trizec in 1980, according to Susan Goldenberg, Men of Property:  The Canadian Developers Who Are Buying America (Personal Library Publishers:  Toronto, 1981, in Appendix B).]  Michael H. Trotter was also a named trustee of the C&S investment trust, the Houston attorneys of which were Baker & Botts.

[3] The release was signed by  Gerald Sheff in New York, who was one of Cadillac Fairview U.S., Inc.'s executive vice-presidents.

[4] General Homes 10-K filed with SEC 1980.

[5] according to a class-action lawsuit filed against General Homes in the Dallas Division of U.S. District Court in CA 3-88-2509-H.

[6] Brewton, p. 283.

[7] Brewton, p. 280.

[8] Brewton, p. 281.

[9] Strange how similar this is to the International Financial Society set up by the consortium of London investment bankers in 1886 set up to buy the bonds of the Canadian Pacific Railroad.

[10] Could this be a descendant of Julius Klein, who had been instrumental in the Zionist movement for the Rothschilds and for British Intelligence in the decades between the two world wars?

[11] Brewton, p. 296.

[12] According to Brewton, Robert Corson's mother, B.J. Garman, took two trips with Mel Powers in 1987 to Belize "to discuss a business deal with some New York insurance people.  At least one eyewitness, and officials who have seen Customs' records, state that Walter Mischer accompanied them." (p. 115)