Saudi Owners of American Bank Stock

Barnes family stock in Bank of the Commonwealth, Detroit, Michigan:

United Press International, April 3, 1972

DETROIT (UPI) - James T. Barnes & Co., a Detroit-based mortgage investment firm, announced today it had options to purchase controlling interest in the financially-troubled Bank of the Commonwealth from the Chase Manhattan Bank of New York. James T. Barnes Jr., president of the mortgage firm, said the Barnes family had agreed to purchase 1,780,435 shares of the common stock of Commonwealth from Chase Manhattan. The New York bank acquired the stock more than a year ago in public auction after it had foreclosed on two notes totaling $20 million owed the bank by the prior controlling group interest, Donald H. Parsons [former chairman of the Bank of the Commonwealth of Detroit and owner of a Pittsburgh hockey team, the Penguins, and the Ford and Dime Buildings in Detroit] and his associates. [Parsons and his group, mostly University of Michigan alumni in their mid-thirties, took over Bank of the Commonwealth in a proxy fight in 1964.] The Barnes family also said it had arranged to purchase the 65,000 shares of preferred stock held by Chase Manhattan, as well as an additional 100,000 shares of preferred stock held by two California real estate men, Donald Kaufman and Eli Broad.

The combined total gives the Barnes family 53 per cent of the preferred stock and 39 per cent of the common stock, effective control of Commonwealth, Detroit's fourth largest bank. However, ultimate control remains with the Federal Deposit Insurance Corp. (FDIC) which was given broad powers in agreeing to loan Commonwealth $60 million to strengthen the bank's capital. The FDIC loans, the largest of its type ever extended, was approved by the stockholders last month.

The purchase price was not disclosed, but Commonwealth stock, traded over-the-counter, closed at 7% on the last trading day, Thursday. The acquisition of the Commonwealth stock by the Barnes family, which last fall bought 85 per cent of the Peoples Bank of Port Huron, another ill-fated Parson's venture, was praised by Robert P. Briggs, commission of the Michigan Financial Institutions Bureau. He called it "good news to all who have worked to bring about the reorganization of the bank."

John E. Thompson, president of Commonwealth, praised Chase Manhattan for its role in strengthening the bank but said it was "in the best interest of everyone" that a local family now has control. Barnes told a news conference that John A. Hopper, a Chase Manhattan vice president sent in as chairman of the Commonwealth, would remain as chairman "for as long a period as possible consistent with his intention at a later date" to return to New York.

United Press International, April 3, 1972

DETROIT (UPI) - James T. Barnes & Co., a Detroit-based mortgage investment firm, announced today it had options to purchase controlling interest in the financially-troubled Bank of the Commonwealth from the Chase Manhattan Bank of New York. James T. Barnes Jr., president of the mortgage firm, said the Barnes family had agreed to purchase 1,780,435 shares of the common stock of Commonwealth from Chase Manhattan. The New York bank acquired the stock more than a year ago in public auction after it had foreclosed on two notes totaling $20 million owed the bank by the prior controlling group interest, Donald H. Parsons [former chairman of the Bank of the Commonwealth of Detroit and owner of a Pittsburgh hockey team, the Penguins, and the Ford and Dime Buildings in Detroit] and his associates. [Parsons and his group, mostly University of Michigan alumni in their mid-thirties, took over Bank of the Commonwealth in a proxy fight in 1964.] The Barnes family also said it had arranged to purchase the 65,000 shares of preferred stock held by Chase Manhattan, as well as an additional 100,000 shares of preferred stock held by two California real estate men, Donald Kaufman and Eli Broad.

The combined total gives the Barnes family 53 per cent of the preferred stock and 39 per cent of the common stock, effective control of Commonwealth, Detroit's fourth largest bank. However, ultimate control remains with the Federal Deposit Insurance Corp. (FDIC) which was given broad powers in agreeing to loan Commonwealth $60 million to strengthen the bank's capital. The FDIC loans, the largest of its type ever extended, was approved by the stockholders last month.

The purchase price was not disclosed, but Commonwealth stock, traded over-the-counter, closed at 7% on the last trading day, Thursday. The acquisition of the Commonwealth stock by the Barnes family, which last fall bought 85 per cent of the Peoples Bank of Port Huron, another ill-fated Parson's venture, was praised by Robert P. Briggs, commission of the Michigan Financial Institutions Bureau. He called it "good news to all who have worked to bring about the reorganization of the bank."

John E. Thompson, president of Commonwealth, praised Chase Manhattan for its role in strengthening the bank but said it was "in the best interest of everyone" that a local family now has control. Barnes told a news conference that John A. Hopper, a Chase Manhattan vice president sent in as chairman of the Commonwealth, would remain as chairman "for as long a period as possible consistent with his intention at a later date" to return to New York.

WISCONSIN STATE JOURNAL, 
SATURDAY, FEBRUARY 1, 1975

DETROIT (AP) - A Saudi Arabian financier has reached agreement with the Bank of the Commonwealth, Michigan's sixth largest bank, to buy 40 per cent of its stock. The agreement, announced Friday, must be endorsed by the Federal Deposit Insurance Corp., which holds a $35-million note on the bank.

Ghaith Pharaon said he agreed to purchase most of the Commonwealth stock now held by the James T. Barnes family. Arab sources said Pharaon, 34, has close ties, to the Saudi Arabian ruling family. He attended the Harvard Business School and is a director of the Jezirah Bank of Jedda.

One segment of the Barnes family stock in Michigan's Commonwealth Bank had previously been owned by Chase Manhattan Bank, a member of the New York Federal Reserve, whose interest had been derived through foreclosure of loans made to Donald H. Parsons.

The other segment was purchased by the Barnes family from Detroit real estate men, Kaufman and Broad, creators of the first publicly traded (NYSE) home-building corporation. Thus, we can surmise the Federal Reserve was well aware in 1975 that a Saudi citizen was approved to controlling shares of the Commonwealth Bank in Detroit.

He was also happy, along with Khaled bin Mahfouz and John Connally, in 1976 to invest in the Main Bank of Houston, conveniently located in the historic Humble Oil Building on Main Street, which had become vacant after Humble Oil revealed its ownership by Exxon and moved into its new building a few blocks away. 

It was not until a year later the Saudis' investments in American banks became an appalling crime when they began to consider buying bank stock from Jimmy Carter official Bert Lance.

Associated Press - December 1977

Part 7 of Land and Loot

Lehman Brothers' Role in General Homes

General Homes - Connections with Canada

One way to research General Homes is to begin in 1983, when it really began to sell homes at a fast pace. It was that year that certain investment banks, primarily Lehman Brothers, began issuing mortgage-backed securities. The General Homes initial public offering (IPO) was completed that year, bringing in money for new stock issues that was pumped into real estate purchases in Harris County. Possibly this new-found cash was a means of paying off some of the other companies which had already bought land in that area, or perhaps it was to continue the growth in that area with an updated legal vehicle the attorneys and legislators had pushed through.

But as we will clearly see, the moving force behind the move into residential development and construction in Harris County was a group of Canadians who had formed a partnership to build the new commercial retail and office center in downtown Houston on land owned and acquired by an arm of the Texas Eastern Transmission Co. The Canadian group was called Cadillac Fairview, and the Bronfman family members who owned its stock were also heavily invested in banking and other industries as well. Leo Kolber explained that fact in his book, Leo: A Life. 

 

In 1978 Cadillac Fairview first acquired an interest in General Homes, a Texas corporation, which formed General Homes Consolidated Companies, Inc. Almost two years following the IPO, the stock was owned as follows: 

• General Homes Management Co. owned 97%; 
• General Homes Investment Co. (partnership of the Texans from whom the company was purchased in 1978) owned 1.5%; and 
• ASLA of Florida owned 1.5%.  

 

The address of General Homes Management Co. was 17801 N.W. 2nd Avenue in Miami, which was the address of Morris N. Broad and ASLA (formerly American Savings & Loan Association). However, Broad and his father in December 1982 had signed a voting trust agreement relative to control of ASLA with Marvin Leon Warner, a Cincinnati businessman, to allow Warner to purchase $13 million of ASLA stock.

In 1963 the Bronfmans had acquired Texas Pacific Oil and Coal, which they held until 1981, using their $2 billion profit to take over Conoco (formerly the Continental Oil Co) by purchasing a block of stock from DuPont. According to Kolber's book, the Bronfmans would sell off Cadillac Fairview in 1987 to buy into the Music Corporation of America (MCA), which is not part of our story. Our focus is on the time they were in control--and while Edgar Bronfman, Jr., who controlled the corporate interests, was married to Ann Loeb, daughter of John L. Loeb and granddaughter of Carl M. Loeb.

In December 1983 General Homes acquired 86 acres in Old Town Spring, an unincorporated city north of Houston. The seller was a joint venture called North Spring Joint Venture--a partnership composed of Walter Mischer’s TMC Funding and United Financial Corp., in which Charles Hurwitz (a customer of Michael Milken) began buying a year before.[1]  

Development around Spring, located in northernmost Harris County, had taken off five years earlier by Canadian-connected corporations, such as Genstar Homes of Canada, which in 1977 had acquired all of Lexington Woods Section 5, purchased from Spring Village Development Co., an entity set up by H. Arthur Littell and Don McGregor, Jr. [Harris Co. File No. F404069].[2] The local executive vice-president for Genstar was an engineer named Bernard Johnson of Houston, who would become one of County judge Jon Lindsay’s biggest contributors. His engineering office on Westheimer was situated between the Galleria shopping center mall and  Post Oak Bank--next door to the original office building of an oilman named Michel T. Halbouty.

Genstar was established in Canada in 1951 as Sogemines Ltd. by Societe Generale de Belgique de Brussels. It was closely linked to the Royal Bank of Canada, and its chairman in 1955 was Angus MacNaughton.  When Genstar opened an office in the U.S., its headquarters was in San Francisco in a Rockefeller building called Embarcadero Center. In 1986, however, the Genstar corporation was bought by Imasco, based in Montreal, a company set up to handle investments for Imperial Tobacco, Canada Trust and Shoppers Drug Mart. In 2000 those corporations were sold off to British-American Tobacco and Toronto-Dominion Bank.  

Genstar bought property in Houston primarily from companies controlled by McGregor, Littell and Marvin Leggett, who were involved with Canadians in Lexington Development and in Markborough Properties, a subsidiary of Hudson’s Bay Co., Canada’s largest retailer, which acquired Markborough in 1973 and spun it off in 1990 “to shareholders in the form of a dividend. HB offered one Marborough share for every HB share held. Kenneth Thomson, chairman of Thomson Corp, and his family, holders of” the majority of shares:

Hudson's Bay Company acquired Markborough Properties, a real estate company, in 1973; Zellers, a chain of discount department stores, in 1978; and Simpsons, a group of Toronto-area department stores, the following year. Kenneth R. Thomson, representing the family of the late Lord Thomson of Fleet, acquired a 75 percent controlling interest in the company in 1979…. In a strong attempt to survive, Thomson shook up top management, eventually appointing George Kosich, a career merchandiser, president. Thomson revamped retail operations. The combined market share of the three department store chains rose to 33 percent from 29 percent in two years…. Hudson's Bay Company reversed a formidable debt picture in 1987 by shedding nonstrategic assets such as its wholesale division and getting out of the oil and gas business. In 1990 it spun off its real estate subsidiary, Markborough Properties, as a separate public company. Shareholders received one share of Markborough for each share they held of Hudson's Bay, with the Thomson family retaining a majority interest in Markborough. Also in 1990, the company bought 51 Towers Department Stores and merged them with Zellers. 

By 1981 Hudson's Bay--the merchandizer corporation, which was successor to the Canadian fur trading company chartered by the Crown--whose stock eventually came into the hands of London investment banks in 1886--would be owned by Conoco (which was taken over by the Bronfmans). But it was through a series of intricate and confusing maneuvers and manipulations which led to that outcome. To understand the relationships, we have to begin with the individuals named in Genstar documents. Genstar was busy buying land from Don McGregor, H. Arthur Littell and Marvin E. Leggett.

Who were these men?

 

Leggett and Littell, who owned Texas Bank and Trust,  were both directors also of Colonial Savings, an institution chartered in 1961, in which Littell was chairman and William H. Doyle, Jr, was president in 1977. S.N.Goldman (the Oklahoma grocery tycoon, owner of Standard Food Markets and Humply Dumpty, who in 1937 invented grocery shopping carts ), with whom the two were involved with investments in Oklahoma mineral interests, was also a director. The headquarters was 6161 Savoy in Sharpstown. Other directors were Jack D. Mulvihill,  J. Curtiss Brown, a long-time official of the Texas State Bar before his appointment as chief justice of the Texas Court of Civil Appeals for the 14th District; Edward R. Godwin, senior vice president of Mortgage Trust Inc. of Houston; and Houston City Councilman Johnny Goyen.

They worked on the development of Regency Square in Sharpstown, an area in which Frank Sharp had spearheaded a huge Texas scandal referred to as the Rent-a-Bank Scandal. Sharp had begun his 25,000-home development in the heart of Houston with great fanfare during the Cold War days of 1955 by announcing he was considering including bomb shelters as part of the construction. Seven years later, shortly after Houston had been selected as the location of NASA headquarters, Sharp began announcing that astronauts would be given free homes in Sharpstown. The acreage for Sharpstown had been acquired at a cost of $6 million in the mid-50's. Sharp had to be quite confident of success to spend that kind of money, or he must have been acquainted with some very convincing salesmen. .

In 1930 Sharp, young and single, was living in the Savoy Apartments at 1600 Main Street in downtown Houston. He transitioned from oil sales to home building in a few short years. He arrived in Houston from Crockett, Texas, where his father was a carpenter and farmer, rearing a great many children there. Within a few short years Sharp had become secretary to the Houston Lions Club and was friends with the newly elected Congressman in Houston, Albert Langston Thomas, accompanying him and his wife on out of town trips; Sharp, too, had married by 1937.

In the 1970's Littell had become associated with South Coast Investment Co., which would be located in Houston at 806 Main, a building once referred to as "Carter's Folly," home of S.J. Carter’s Second National Bank building. It later sold to a subsidiary of American National Insurance before Howard Pulver, a strange New Yorker who spent some time in Corpus Christi before relocating to Houston, began using it for apartment syndications. He and his associates were described in detail by Pete Brewton in his book, The Mafia, CIA and George Bush. An important player in that insurance company was Dee S. Osborne, who applied for a state bank charter in Sharpstown early in 1971, naming proposed directors of the Community Bank of Houston as Corbin J. Robertson Jr., Meredith J. Long, William N. Finnegan III, R. E. "Bob" Smith, Vivan Smith, Marvin K. Collie (famed attorney at Vinson and Elkins law firm in Houston), Morgan J. Davis (petroleum geologist who spent his career at Humble Oil and Refining Company (now Exxon Company, U.S.A.); and Gaston E. Heffington, all of Houston. Some of those same men were drawn into a scandal in 1983 involving the Hermann Estate, which set up the Medical Center with a gift from George Hermann:

 

 

The South Coast Investment Company was a vehicle of South Coast Life Insurance, whose directors included independent oilmen Grover Joseph Geiselman (with an office at Suite 849 of the Houston Club Building, where both W.S. Farish III and George Bush were located during the late 1950's), Floyd Louis Karsten of Fort Worth, Jack S. Blanton of Eddy Refining Company, and E.C. Scurlock (among several other oil men), attorney Newton Gresham, a partner in Leon Jaworski's firm, Charles G. Heyne, and Vernon F. Neuhaus of Mission, Texas. Most of these individuals have in some way been connected with the Neuhaus Education Center in some manner since its founding by W. Oscar Neuhaus in 1978.

Geiselman's son was married to a daughter of Everette deGolyer, and Neuhaus, who was related to the family of W.S. Farish through marriage, also served on the board of Texas College of Arts and Industries (Texas A&I in the Valley) with numerous illustrious Texans, including John F. Lynch of Corpus Christi and later Houston (senior vice president of the Texas Eastern Transmission Company) and Mrs. Richard M. Kleberg Jr. of Kingsville, whose husband was the Congressman for whom Lyndon Johnson first worked in Congress. Charles Heyne was the uncle of Marcia Heyne Modesett, granddaughter of Fred J. Heyne, Jesse Jones’ right-hand man for many years, who remained in control of the Jones family companies and foundation until his own death in 1966. More will be said about this group later.

In 1973 Neuhaus was one of the honorees who received awards from emcee John Connally from the Ex-Students Association of the University of Texas, along with George R. Brown of Brown & Root and Texas Eastern Transmission Co., and Tom Landry, coach of the Dallas Cowboys.

The long and short of it is that, even though not well-known, Littell was "close to wealth and power" in Texas at the time. It is a type of power that has never been adequately explored or understood. Exploration of the network that gave it life and power is the goal of this project.

Littell was also in partnership with S.N. Goldman of Oklahoma City in a number of syndications that, by all appearances, could have involved the laundering of money through overseas banks, and he was connected with some of the biggest banks in the U.S. who provided financing for his buyers.
Leggett and Littell also developed lands surrounding the Sam Houston Racetrack, that had been held by Lexington for many years before a horse-racing license was finally approved in Texas. The land surrounding the racetrack was developed by Leggett--for commercial purposes--and by General Homes--for residential. The State Highway Commission, chaired by Bob Lanier, agreed to complete Beltway 8 through the property, and Harris County Flood Control District paid for the drainage outfall. But that's another story. 

NOTES:

[1] The history of United Savings began with Houston First Savings, founded by Humble Oil executive and attorney, Rex G. Baker, Jr., which was changed to Southwestern Savings before again changing its name to United.
[2] McGregor's father had owned an office next door to Lomas & Nettleton at 201 Main in Houston and had bought land in Nassau Bay with financing from Carl M. Loeb, Rhoades & Co. In 1966 Don McGregor, Jr. had an office on the 12th floor of the First City National Bank Bldg. and was involved in a number of general partnerships with Solomon Goldman of Oklahoma City [Harris Co. File No. C414892].

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.   

 ~~~~~~~~~~~

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.

~~~~~~~~~~~

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:

---

[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)

Land and Loot: A How-To on Money Laundering - Part 3

Copyright 2011 by Linda Minor, all rights reserved

General Homes* was a large publicly traded land development company operating in Houston, which had an option to buy the Texas land mentioned in the previous segments. The feasibility of the project from General Homes’ perspective depended totally upon the cost of constructing a road and necessary drainage through the property, as required under the option. In addition to getting control of VisionBanc, Corson also had to be responsible for having a road and drainage work constructed through the General Homes property, and since he did not have the money for that, he spent a great deal of time entertaining a certain judge in Houston, who had the authority to make recommendations to the governing body in charge of roads and bridges in Harris County.

County Attorney Mike Driscoll’s civil lawsuit filed in 1993 against County Judge Jon Lindsay, alleged that the judge, who was chief administrator for the county, had accepted numerous favors from Robert Corson in exchange for Lindsay’s agreement to “cause the county to build a road through the Park 45 land and thereby improve the value of the land.”

The first evidence of the complicity of the judge in the developer’s scheme was not made public until seven years later by Corson’s former employee, Billy Wayne Chester, who brought the information to Mike Driscoll in the hope of protecting himself from future federal prosecutorial misconduct in a guilty plea to bank fraud. Chester was influenced in this decision by his friend, John Ballis, a dentist (who got into land development at the behest of his father-in-law) who was then appealing a U.S. District Court conviction on charges brought after Ballis had completed his probation under his own guilty plea. The feds’ position was that Ballis had failed to reveal all crimes in which he had participated, thereby releasing them from the terms of the plea agreement prohibiting further prosecution. Ballis argued that, though he repeatedly attempted to provide evidence of his having paid a million-dollar bribe to Commissioner Bob Eckels, the prosecutors refused to investigate the allegations.

Billy Chester had been a high school teacher and coach when he was approached in the late 1970’s by Carl Stockholm, an old friend working in one of Walter Mischer’s banks. Stockholm hired Chester and trained him in the real estate field, where he soon came in contact with Corson. During the Houston land boom that occurred, Chester left banking to work in the land development company Corson had formed with his mother, B.J. Garman. Prior to Chester’s employment, Corson had worked with a man named Andy Howard, a vice-president at General Homes, buying unrestricted reserves in General Homes subdivisions and developing them for commercial use—either selling or leasing to convenience stores and other enterprises. According to Chester, it was Howard who first introduced Corson to Jon Lindsay, during a luncheon meeting at a restaurant Lindsay frequented in the American General Insurance Co. building. Andy Howard was also intricately involved in the contract negotiations between Corson and General Homes on the Park 45 property.

Andy Howard was obviously acquainted with Jon Lindsay because in April 1985 Lindsay appointed him to the boards of the Harris County Housing Authority and the Housing Finance Corporation (HFC).[1] If we assume that Andy Howard’s appointment was consistent with the other appointments Lindsay made and with the proponents of those who favored creation of the Housing Finance Corporation, from whom was Jon Lindsay getting his instructions?

How are all the Lindsay appointees related? For clues, here’s a quote from a lawsuit Howard filed against Robert Corson on August 2, 1986:

Previously in 1985, Plaintiff, Andy Howard was employed by General Homes Corporation* in the position of Vice-President. His duties primarily revolved around analysis of, purchase and sale of real property and the development of same. In connection with this employment, Andy Howard enjoined [sic] a substantial salary, numerous financial benefits and the various advantageous attributes incident to this employment.

In connection with this employment, Andy Howard met Robert Corson. Robert Corson, B.J. Garman, Individually and d/b/a Corson & Garman, Defendants herein, were also actively engaged in Real Estate Development and sale. In connection with the business dealings that brought them together, Robert Corson became familiar with the capabilities of Andy Howard. Impressed by these capabilities, Robert Corson requested Andy Howard to leave General Homes and to take an employment position with Robert Corson and his organization. After a series of discussions, during which Andy Howard made known to Robert Corson a reluctance to give up the significant benefits and advantages that were inurring [sic] to Andy Howard as a result of his employment with General Homes, Robert Corson induced Andy Howard to sever his relationship with General Homes and to become employed by Robert Corson’s organization by virtue of a promise that Andy Howard would receive fifteen percent (15%) of the benefits arising out of and incident to the various business dealings and transactions that Andy Howard was to engage in (and that Andy Howard was to work on). * * *[fn]

Additionally, in a prior business transaction, individuals by the name of Clyde M. Speed and Robert M. Ley desired to convey to Andy Howard certain property. It was desired that this property be taken and held in the name of Robert Corson, Trustee. At all times Andy Howard was the beneficiary of this Trust and Robert Corson was the Trustor [?] owing feduciary [sic] duties to Andy Howard in connection with this transaction. Further to this, Clyde M. Speed and Robert M. Ley conveyed this property into the name of Robert Corson, Trustee. . . . At all times, however, Andy Howard was the beneficial and equitable owner of the property and the interest of Robert Corson was solely holding Title in the capacity as a Trustee.

The problem arose, according to the petition, when “[s]uddenly, in the spring of 1986, and without any explanation or prior warning, Robert Corson advised Andy Howard that Robert Corson no longer desired that Andy Howard be affiliated with Robert Corson, B.J. Garman or Corson & Garman.”

From this information, it can be seen that at the time Andy Howard was appointed to the board of the HFC he worked for General Homes, and thereafter for Robert Corson, whose primary source of business was from General Homes. If we assume for purposes of argument that Andy Howard and Robert Corson were working on behalf of the controlling shareholders of General Homes in their attempt to have the road and drainage work through Park 45 constructed at county expense, then Corson’s actions of using sham corporations to purchase land from himself makes more sense, BECAUSE it was General Homes which ultimately benefited from the looting of the savings and loan companies which made the loans to the straw borrowers who never made a single payment. General Homes kept a first lien on the property in the sale to Corson and also received cash from the proceeds of loans secured by second liens. When General Homes foreclosed on the first lien, the savings and loans (taxpayers) were wiped out, but General Homes got to keep the proceeds of those loans and also got the land back free and clear, with a new road in place. It was left to receivers for the creditors to sue to get back any fraudulently induced loan funds.

birth of general homes

General Homes was formed as a subsidiary of First General Realty, which was itself a subsidiary of First Mortgage Co.[1] According to a 1984 Houston Post story, First General began as a residential developer in Harris County with the Meyerland Additions and with Meyerland Plaza Shopping Center. The Post article stated:

The George Meyer family owned the land and was a partner in the development, but later sold out of the project, as did First General, and the Meyerland Co. was purchased early this year [1984] by the Houston-based Development Group, Inc.[2]

That one paragraph thus connects General Homes, the Meyer family and Mike Adkinson. The article continues:

Other Houston communities developed by First General include Nottingham, Ponderosa Forest, Ashford Forest, the Villages of Lakeside and four early subdivisions developed in the Clear Lake area in partnership with the firm then called the Humble Co. and now known as the Exxon Corp.* * *

Tom Robinson, originally with First Mortgage, is the actual founder of First General, which started as a sideline to the mortgage business in the 1950s. First General employees bought the company from Robinson in the 1970s. He is now retired.

Richard H. Skinner, First General chairman, and H. Fred Schoenberg, president, along with John L. Mattern, vice president and treasurer, were hired away from Arthur Andersen & Co. as accountants and management consultants in the late 1970s and are now among the owners of First General.

Richard G. Carlson, vice president for marketing, who is now buying in as an owner, notes that the sellers kept a piece of the action when First General was acquired three years ago by the Milwaukee-based Northwestern Mutual Life Insurance Co.

We will return to Northwestern Mutual’s name repeatedly as this study continues.

---

[fn] General Homes Corporation was affiliated with the American Savings & Loan Association of Miami, which was dragged down in 1985 by the ESM Government Securities fraud.

 

[1] The HFC was organized as a non-profit county-sponsored corporation which was authorized by Texas law to issue tax-exempt bonds to fund construction and purchases of low and moderate income housing--both single and multi-family. Jon Lindsay is the official who recommended its creation by Harris County in 1980, after ordering a study conducted by municipal bond brokers Underwood Neuhaus & Company and First Southwest Company. The first of these brokerage firms had connections to W.S. Farish III and his relatives; the second was at that time being operated in Houston by Howard Pulver and his Manhattan associates with ties to Mainland Savings--ably documented in chapter 4 of Pete Brewton's book. According to Houston Chronicle reporter Bill Mintz, Lindsay's friend Tom Masterson "ran the bond and public finance operations at Underwood, Neuhaus & Co. for 29 years before leaving in 1985 to start his own investment and brokerage firm. In 1991, the firm [Masterson Moreland Sauer Whisman] bought the public finance operations of the Houston investment firm Lovett Underwood Neuhaus & Webb." According to the January 12, 1996 article by Mintz, Masterson's firm was considering merging with First Southwest of Dallas, headed by Hill Feinberg, who was managing director in the Dallas office of Bear Stearns & Co. for 14 years before buying First Southwest in 1991 with Bob Utley. Utley "is a developer who participated in financier Ronald Perelman's 1988 acquisition of First Gibraltar."

                    Interestingly enough, the Underwood, Neuhaus study was ordered to be done by commissioners court on June 9, 1980, although legal documents prepared by Vinson & Elkins drafting the articles of incorporation and bylaws, were forwarded to the brokerage firm five days earlier by V&E attorney Bob Randolph.  The creation of the corporation was approved on June 24, 1980.  Rather than have only the same five board members who were then sitting on the Housing Authority Board, Lindsay proposed increasing the board to nine, and the names of Billy Burge, Richard S. Slocomb, Jack Fields and Paul W. Davis were added.  Davis, Lindsay's appointee and president of Mortgage and Trust, Inc. of 3100 Travis, resigned from the board in July 1981.  In his place Lindsay appointed W.E. Daniels, president of First Continental Mortgage, a Mischer-controlled investment trust.  Andy Howard replaced O.J. Streigler, a prior appointee, but Howard served only until August 12, 1986, two months after the Park 45/Florida closing.  He was replaced by Steve Krueger, a banker employed by Joe Russo's Ameriway Savings.

                    W.E. Daniels resigned in January 1988, citing his commitment to "Rice Center" for allowing him insufficient time to serve.  His resignation was on letterhead of D&L Investments of 1360 Post Oak Blvd., Suite 2100.  Daniels' replacement was Robert M. Dawson, who was at that time president of Liberty Savings Association, and who had previously been a consultant for First Texas Savings of Dallas and president of SGF Investment Service Corporation, a subsidiary of United Savings.  His earliest work history was with Holland Mortgage from 1955 to 1972.

                    Harris County HFC made numerous loans for apartment construction which benefited Continental Savings, a company about which Pete Brewton had much to say in his book.  Continental loaned money to a company called Landmark Developers, Inc., with loans guaranteed by the HFC, which had to be restricted for low income tenants.  In at least one instance Landmark conveyed the property to a limited partnership, of which E. Trine Starnes, Jr. (whom Brewton classed in the same category as Robert Vesco) was general partner [J054366].  Starnes conveyed the apartments a year and a half later to an individual, and the next month there was a foreclosure.  By the end of 1986 the HFC had issued more than $278 million in multi-family bonds and more than $254 million in single-family bonds.  It is unknown how many of the loans went into default, but it appears that the apartments ended up being owned by investors in California.

[2] General Homes' mortgage lending company, FGMC, stands for First General Mortgage Corporation.  In 1981, FGMC's address was 5353 W. Alabama #401 [G924489].  In deeds of trust dating back to the 1950's Charles Foley was named as trustee for First Mortgage Co. and for a company called Fidelity Mutual Life Insurance.  In that same year, Charles Foley was appointed as substitute trustee by New York Life Insurance Co., Crown Life, Connecticut General and First General Realty.  In the late 1950's First Mortgage assigned a great many mortgage loans to Sun Life Insurance Co. of Canada, which had offices in Massachusetts.

[3] Houston Post, August 20, 1984.  DGI was the company Mike Adkinson allegedly controlled which was used to loot several savings and loans.