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Salinas’ predecessors The San Antonio group Austin, San Antonio When state banking authorities closed its doors, Citizens State Bank of Carrizo Springs belonged to Enrique Salinas, but the bank had been getting unfavorable reviews even before a group of San Antonio investors sold the Citizens stock to Salinas. In fact, Banking Commissioner Robert Stewart and his examiners severely criticized the San Antonio control group for “self-dealing” and “abusing their position” at the bank. Ron Bramble, who owns a San Antonio consulting firm, provided the financial brains for the San Antonio investment group which bought control of Citizens in the summer of 1974. The other members included: Dr. James E. Bauerle, a University of Texas regent appointed in January, 1973, by outgoing Gov. Preston Smith and an oral surgeon who has invested his earningsnot always wiselyin real estate, banks, and a trade school; Urban Farrow of Carrizo Springs, the county attorney for Dimmit County and once chairman of the Carrizo Springs bank board; Willard Mertz, a former economics professor at St. Mary’s University in San Antonio and an associate of Bramble’s; Richard George, a Carrizo Springs rancher; Jack S. Brown, a San Antonio engineer; Norman Bevan, former governor of the now-defunct San Antonio Wings football team and head of an investment firm called Moneymasters, Inc. W. T. Harris, a major investor in the Wings. Bauerle and Bramble have both been involved in profit-making educational schemes. That may be how they originally got together. Bramble earned BA and MA degrees from Trinity University in San Antonio. In 1959, he received The Wall Street Journal Award as the “outstanding business graduate” of his Trinity class. By 1973 he was chairman of the management department at San Antonio College, but he left SAC that year to engage in more questionable educational endeavors. In 1972, Bramble had become a trustee of Indiana Northern University, a degree mill located on a small, recycled dairy farm near Gas City, Ind. INU was the invention of The Most Reverend Dr. Gordon A. DaCosta, presiding bishop of the Anglican Church of the Americas. DaCosta, whose specialty is “psychotherapy,” was the subject of an investigative article in The National Observer in 1973 entitled “A Shell Game in Shrinkdom.” The newspaper article said that INU awarded “tainted PhDs.” Bramble received a PhD in business administration from INU in 1973. Dr. Mertz, then chairman of the economics department at St:NMary’s, was also connected to INU; its 1973 catalogue listed him as an associate professor of finance. Mertz was additionally a senior member of the staff of Bramble’s consulting firm, Bramble Associates. Bramble left San Antonio College to go into business with DaCosta. They set up the Southwest Institute of Management in San Antonio, but SWIM never got certified by the proprietary schools section of the Texas Education Agency. The San Antonio Express wrote a series of articles about DaCosta and INU, and SWIM shut down in July of 1973 because of the “bad publicity,” according to Bramble. Bramble and Bauerle got together in 1975 when Bauerle and a group of ten other San Antonio investors, mostly dentists, bought a foundering business school from Carl D. Wehling. Wehling and his schools were in debt to Citizens State Bank, then owned by Bauerle, Bramble, and friends. Wehling had gotten into trouble with the Department of Health, Education, and Welfare, the Texas Education Agency, and the state ,attorney general for failing to comply with the state regulations concerning proprietary schools.*He is now being sued by the Texas attorney general for failure to make $927,000 in refunds due former students. Many of Wehling’s federally insured *Profit-making trade and business schools became big business when the federal government started subsidizing them through the federally inveterans education benefits \(see “The knowledge hucksters,” Obs., started requiring students to sign up for federal loans so that the schools could get their money up front. Salesmen recruited anyone who’could sign his or her name to a loan application. But the courses were often next to worthless and the withdrawal rate at trade schools nationally wasand isextraordinarily high. Students often didn’t get refunds on the uncompleted portions of their courses, but they were held responsible for the full sum of their federal loans and the default rate was high. Such abuses prompted the State of Texas to start regulating trade schools in 1971. The FISL program still has major problems because of defaults. student loans were processed through Citizens Bank of Carrizo Springs. Dr. Bauerle said that he bought one of Wehling’s schools, Parish-Draughon of San Antonio, as a favor to a friend and as a business investment. \(In addition to the bank link, Bauerle had been leasing a building he owned in McAllen to another of Wehling’s schools. When it folded, a bank in McAllen took possession of Bauerle’s viser on the sale of the San Antonio school to Bauerle and his dentist friends. State and federal regulators watched the Parish-Draughon sale with a jaundiced eye: One of the stipulations they put on the deal was that Bauerle, who was buying 20 percent of the school, could not process federally insured student loans through any lending institution in which he owned more than a 10 percent interest. That, presumably, precluded Parish-Draughon from routing student loans through the Carrizo Springs bank so long as Bauerle was in its control group. Parish-Draughon didn’t get many federal loans after the dentists took over because HEW and the TEA soon withdrew their certification of the school. The regulators doubted whether the new owners ever put in some $125,000 in new capital which they listed on the school’s pro forma balance sheet dated July 31, 1975. The dentists later admitted to the TEA that the $125,000 was more like “accounts receivable” than paidin capital. When the Observer called Bauerle on this point, he transferred the call to Gene Riley, who had worked at Parish-Draughon. Riley said the funds in question went to sustain both the San Antonio school and another of Wehling’s schools, Southwestern Business College in Houston, which the dentists that $100,000 of the funds had been loaned to Dr. Bauerle personally by Savings Life Insurance Co.: which is owned in part by Herman A. Bennett, former Lt. Gov. Ben Barnes’ Brownwood partner. Both Bennett and Barnes got loans at Citizens bank while the San Antonio investors controlled it. Riley said that the school is now “dormant” and that the dentists are preparing to file bankruptcy papers. On the last examination done before the banking department closed Citizens State Bank, ParishDraughon Business Corp. is down for a $75,000 unsecured loan in the loss category. September 3, 1976 3 Mr..144,