May 16 (Bloomberg) -- Billie Sol Estes, the Texan con man whose exploits rattled the administrations of Presidents John F. Kennedy and Lyndon B. Johnson, died in his sleep May 14. From a penniless background, Estes built up a $40 million West Texas empire of cotton, grain, real estate and fertilizers, and then lost it all when a series of newspaper articles in 1962 revealed that many of his dealings were fraudulent.
Estes once wrote that “Everything I touched made money.” The truth was that everything he touched was tainted. His downfall toppled five federal officials, was linked to seven mysterious deaths and was rumored to have almost cost Johnson his spot on the 1964 presidential ticket (though you won’t read a word about Estes in Robert A. Caro’s four-volume biography, “The Years of Lyndon Johnson”). As it turns out, even the story behind the story that brought down Estes has a shady element.
On Feb. 12, 1962, the Pecos Independent published the first of four unsigned articles that referred to Estes only as a “Pecosite.” They detailed a huge swindle in 11 West Texas counties. The paper’s editor, Oscar Griffin, wrote that farmers had been approached by a businessman who offered to pay a 10 percent commission if they would take out a mortgage to buy anhydrous ammonia tanks, used to store fertilizer for growing cotton on the alkalized Texas soil. The tanks would then be leased back to the businessman for the exact amount of the monthly mortgage payments.
The businessman explained that he was essentially paying farmers to use their credit so he could expand the infrastructure of West Texas agriculture. Between 1959 and 1961, West Texas farmers mortgaged 33,500 tanks at a cost of more than $34 million. A single tank is sufficient for several hundred acres of farmland. In Reeves County, where Pecos is located, there was a tank for every four acres of cotton.
Griffin would later write in the Saturday Evening Post that most farmers refused to talk to him when he phoned and mentioned the phrase “tank deals.” He got a lucky break when he visited a farmer named L.B. Johnson (not that one) and showed him a county record for a $93,000 mortgage that he’d never heard of. Johnson disclosed a series of conversations he’d had with Estes, and remembered that he’d signed some blank papers, before calling Estes’ office and asking to rescind his cooperation. Estes had apparently ignored him and bought him a 131,000-gallon tank.
Not a single one of those tanks was ever found. It was a vast swindle whereby Estes sold the mortgages that the farmers had signed to various financial companies and funneled the profits through one of his holding companies.
Ten days after the last article appeared in March, Estes was arrested on federal fraud charges, covering not just the tank swindle but also a complicated scheme to defraud the federal government’s grain storage program. He was eventually convicted and served six years in prison. He was tried again in 1979 for tax fraud and served another four years.
The effects of the Independent articles were very different for Oscar Griffin. Later that year, on the last day before the deadline, Griffin gathered his four articles on Estes, tied them together with a shoelace, and sent them north to the Pulitzer Prize Board. It paid off. He won the 1963 Pulitzer Prize for investigative reporting.
But as Estes’ daughter Pam pointed out in her 1984 book, the “Eastern and national media that lionized the editor for fearless journalism didn’t really want to know the paper’s real motivation.” And she was right.
As the journalism historian Stephen Bates uncovered in his investigation of Griffin’s work, the Independent had an economic interest in bringing Estes down. He was directly threatening the paper’s livelihood.
Estes first roused the ire of the publishers of the Pecos Independent in 1961 when he made an initial foray into politics. He had his eye on the governor’s mansion, but he started with a run for the Reeves County school board as a liberal Democrat with strong Christian values. His campaign promises included lowering cheerleaders’ skirts, banning school dances and segregating children’s public swimming pools by gender.
He approached the Republican Independent and offered them thousands of dollars in advertising if they would decline to oppose him. The newspaper’s response came the next day in the form of an editorial that said, “We will put our advertising columns up for sale, as will any other newspaper, but we WILL NOT sell our editorial support.”
Estes responded by spending a small fortune to put the Independent out of business (he lost the school board election). He founded the Pecos Daily News, which began publication on Aug. 1, 1961, and Bates estimates that he spent as much as $600,000 to strong-arm advertisers and undercut prices, while the Independent lost $400,000 as it fought back. The Independent was losing the battle and was about to declare bankruptcy when it began its expose of Estes’ swindle. Bates wrote that the Independent probably wouldn’t have run those articles if it weren’t for the Daily News.
The Daily News was forced into receivership after Estes’ arrest and was soon purchased by its rival. The two papers merged to become the Pecos Enterprise.
(Amy Reading is the author of “The Mark Inside: A Perfect Swindle, a Cunning Revenge and a Small History of the Big Con,” recently published in paperback by Vintage. The opinions expressed are her own.)
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