ustxtxb_obs_1956_01_11_50_00003-00000_000.pdf

Senator William T. Moore AUSTIN Bryan, considered a liberal in the Senate, has worked for twd, and possibly three;. of the Texas insurance companies involved in major’receiverships in the last lour years. ,. The Texas ObServer asked Moore member of the Senate Banking Committee Who was one oft five senators who cast votes there which killed H.B. 240 to regulate U.S. Trust & Guaranty Co. as a bankif A. B. Shoemake of U.S. Trust had .ever tried to retain him. “Well . a lot of people have tried to retain me, and I’d rather not talk about it over the telephone,” he replied. He said in a second conversation that the newspapers are “distorting” the matter of senatorial involvement in bankrupt insurance companies. In the Texas Mutual case, the court record shows, Texas Mutual officials paid Moore $13,600 between December,. 1949, and February, 1953. Moore refused to ,say what services he performed fol-‘ Texas Mutual except getting an appraisal approved by the InSurance Commission and work done in January and February. He said he performed’ “numerous services” as at.toniev and Made “numerous trips to the Department for them” and “a trip to Chicago for them” to try to secure some reinsurance contracts. He was on the Senate . Insurance Committee at that time. Justice Hughes of the Court of Civil Appeals in Austin, in May, 1954, wrote that the record in the case of Texas Mutual’s collapse “is replete with evidence of fraudulent and corrupt abuse-of ‘our insurance laws and gi-oss if not criminal laxity in their enforcement.” Moore confirmed by telephone that he had also been paid for legal services by General American Casualty Company, thrown into receivership in June, 1954. He stated that attorneys for the state’s liquidatorwho filed a $6.6 million recovery suit against the receiver last week”never took my deposition because they knew they had nothiif.” He said he “settled a lot _of claims” for General American. He received his fees from that company in 1953. An action’ not related to the state’s liquidator in federal court in Brownsville names Moore a defendant and says he “Was employed .. to repretheir relationship with the Board of Insurance Commissioners of Texas.” Moore defended senators Who take retainers from corporations. He said any law Prohibitingsuch acts should apply to all corporations and should be accompanied by a law making membership in the Legislature full-time, with pay of $15,000 a year. Hensaid if he had to live On $3,000 a year he would quit the Senate. “I quit ,representing all insurance companies in 1954 and have not represented any since and don’t intend to in the future;” he said. He said:: the newspapers, in giving publicity to the insurance matters, are hurting the Texas industry. “New York companies are reaping the bene-, fits of this publicity,” he said. “The money those coiiipanies get goes to Wall Street and never gets back to Texas.” The appraisal Moore had approved in the Texas Mutual case was a $436,000 valuation on property held to be worth far less than that. Judges Hughes stated that when examiner V. C. Thompson swore that “the property was originally purchased at a cost of $436,000” in his audit report, he made a “false statement.” L. W. Blanchard, chief examiner, said he had “personally examined” the deed of the land, but Judge -Hughes said there was no such deed. This brings up the matter of V. C. Thompson, who is no longer with the board. Here is some of the testimony of record, by Stanley W. Izard of Texas Mutual in connection with Thompson: “Q. Mr. Izard, after Mr. Thompson, V. C. Thompson, came down there examining this company, do you know of your own knowledge whether he *was paid any money during the course of that examination? A. Yes, I do. He was . . . There were three occasions when I delivered it to him personally. It was in currency in an envelope . . . . I got it from Paul each of these three cases it was $100.00. ,`Q…. What caused you to do it. A. I was told to by Mr. Paul Lowry $7 million dollar firm retained a num ber of senators and representatives. The Observer, the Houston Chronicle, and the Houston Post have now established that at least five senators and one representaive had finanical connections of some type with U. S. Trust, and this week the Observer reports elsewherea reply on the point from Senator William T. Moore of Bryan, one of the five senators who killed the bill which would have put U. S. Trust under the banking cornmission. State Auditor C. H. Cavness confirmed last week a Post :story that Senator Kilmer Corbin of Lubbock another of the fiveand Sen. Rogers Kelley of Edinburg had received funds from Shoemake’s matrix. It is also now public record that Senator Carlos ‘Ashley of Llano, leader of the pro-Shoemake Senate group and another of the five, was retained by Shoemake; that Senator Jep Fuller of Beaumont received legal fees from him; that a law partner of Sen. Gus Strauss of Halletsvilleyet another of the fivedid work for Shoemake at an undetermined time; and, of course, that State Rep. Bert McDaniel of Waco has been retained by Shoemake’ for some time. Senator Ottis Lock of Lufkin, who joined Senators Moore, Ashley, Strauss, and Neville Colson of Navasota in voting against reporting to the Senate H. B. 240 to regulate U. S. Trust as a bank, told the Observer he had not been approached by Shoemake and, he said lightly, he felt “slighted.” The Senate investigating committeewhose chairman, Senator Searcy Bracewell of Houston, was offered cash by Shoemake but refused instructed Cavness to dig up the facts of such payments to legislators, and he reported on them to the committee this week. Strauss and Ashley are members of the Senate Banking Committee. Corbin, Fuller and Kelley are members of the Senate Insurance Committee. Aloore is also a member of the banking group. McDaniel is a member of the banking and insurance committee in the House. A series of “cash” checks labeled “for legal services” also turned up in the inquiry. There are no endorsements on them. Although Ashley, Fuller, and McDaniel have been paid by U.S. Trust, no checks were found with their names on them. DEMANDS FOR legislative action evoked Governor Shivers’s refusal to call a special session. He said he had full confidence in the three insurance commissioners and sees no need for a special session \(see BraCewell suggested a special ses Thompson was hard tip and needed money,and that he felt it was good politics on the part of him, Paul and that, in other words, he would probably do his job a little more cheer-, fully and agreeably.” Judge Hughes also said Thompson, while in Beaumont for the examination, borrowed money from Atlantic Finance Company, Of which Lowry was president, and that the money had not been . repaid ; and that Texas Mutual paid a $43.09 Dallas hotel bill for Thompson around New Year, 1951. sion to provide extra examiners for the commission \(before it adopted the plan for an audit of all Texas insur . ance companies by C. P. A.’s at com crest of Temple also suggested such a session, and Reps. Charles Hughes of Sherman and D. B. Hardeman of Denison called for such a session. \(Hughes said impeachment could be Rep. Zelce Zbranek of Hull-Daisetta wrote a letter to Bracewell asking that the Senate committee consider recommending impeachment of any or all of the insurance commissioners on grounds of incompetency. He quoted a part of the state insurance law that. provides that incompetency is a legal grounds for impeachment of “the Commissioner of Insurance.” He also quoted a statutory duty of the board that if it finds a company’s capital impaired one-fifth it “shall” give the company two months to Make it good andif the company fails to do sothen.”shall’ require the company to stop doing business and in stitute legal proceedings. “In the Board Order \(of the com24, 1955,….the Board found U. S. Trust & Guaranty had a total impairment of its capital,” Zbranek said. “If Article 1.10 had been complied with at this point, many people would have been spared their losses.” Rep. Joe Pool of Dallas called for enactment next session of a law requiring lobbyists to register and legislators to state publicly the retainer fees they receive from people “having legislation before the Legislature.” In Corpus Christi, Reps. Curtis Ford and DeWitt Hale suggested a special session, and Ford said if it is Letter to Corbin Mr. Kilmer Corbin’ 3313 25th St. Lubbock, .Texas Dear Mr. Corbin: I wish to apologize for waiting so long to write you, however, I have been out of the city for the past several days. I sincerely trust that this has not inconvenienced you in any .way. I enjoyed very much the last meeting with you. I wish to extend to you an invitation to visit our Lubbock operation located at 1701 Texas Ave. Our manager, Mr. Graham, will be more than happy to show you around and explain our operation in detail to -you. Thanking you and with kindest regards, I am your very truly Yours very truly, B. Shoemake, President U. S. Trust & Guaranty AB S/gh Blind copy to john Graham, Lubbock. D.R. 24523$500 enclosed. ’91 Plorelana d al. v .Knox, Court of Civil Appeals of Texas, May 12, 1954, The Observer was told this week in . a letter from the former secretary treasurer of Texas Mutual that the company provided Moore a room at a Dallas hotel during an insurance meeting in the summer of 1952; that Moore made telephone calls at the company’s expense ; that Moore wanted the company agent to buy “some hard liquor,” but the agent wouldn’t; and that Moore wired Les night “to find out why he did not use his services” on a new company the executive had formed. necessary to impeach someone, “then I’m all for it.” “I don’t know offhand who we can impeach, but of all that bunch in Austin, Fin sure we can find someone,” Ford said. Hale, calling for a special session, said Shivers had stated that some legislators had suggested a special session for selfish publicity reasons. “If a whitewash of this situation is attempted, some of us ,are going to seek more publicity,” Hale said. Rep. J. W. Cooper told the depositors’ meeting Hale and Ford were also addressing that the the state liquidator is proceeding with the U. S. Trust liquidation as speedily as possible and expects a report in 30 days. Sen. -William Shireman of Corpus and Rep. Ben Glusing of Kingsville also attended. C ORBIN, too, called for special session and impeachment proceedings. Corbin got $500 check from Southern Medical and Hospital Service, a U. S. Trust now under Insurance Commission “supervision” and threat-‘ ened with conservatorship on December 16, 1954. The Legislature was not in session then. Kelley’s law firm of Kelley, McLean and Littleton received from U.. S. Trust a $2,400 check Jan 14 and another $2,400 check in March while the Legislature was in session. Cot -bin said his $500 was for “policy approval work.” Kelley said his firm represented U .S. Trust in “general legal business in connection with the property near Edinburg and.. _other loan business.” Corbin said he knows Shoemake personally, but not very well. He said he never did represent U. S. Trust & Guaranty and did not know Southern Medical was a subsidiary of U. S. Trust at the time of the payment. He struck at the insurance commission as “guilty of utter incompetency, if not official Misconduct” and called for a special session “for purpose of impeachment as well as to investigate the connection of members of both houses of the Legislature in their relations with any questionable corporation, be it insurance,or otherwise.” Kelley said he does not know Shoe make and that he had “no personal connection” with U. S. Trust. Shoe-. make negotiated by mail with J. C. Looney, one of Kelley’s partners, it is reported. Attached to this correspondence is a green inter-office memorandum sheet which lists Kelley’s home address and telephone number. Kelley said : “I’ve never represented these people. I’ve never accepted a retainer from them, and I’ve hag, absolutely no knowledge of this firm. We handle hundreds of matters thal I know nothing about.” Corbin said he voted to put U. S. Trust & Guaranty under “strict regulation of both the Banking Commission and the Insurance Commission, but my position was defeated in the Senate.” Corbin said records would show he voted against an Ashley-offered substitute to H. B. 39, the insurance securities regulation act. His substitute would have exempted U. S. Trust from regulation. The Texas Observer Page 3 Jan. 11, 1956 AUSTIN Members of the Legislature have been stirred by the U.S. Trust & Guaranty failure with its 140:000 policyholders. and 5,600 depositors, and some of them are issuing statements calling for a special session, consideration of impeachment of the insurance commissioners, and other drastic steps. Rep Wade Spilman announced a meeting of the House investigating committee Jan. 19-21. As the Observer reported last May and again Dec. 21, A. B. Shoemake’s . . AUSTIN This letter from A. B. Shoemake of Waco to Senator Kilmer Corbin of Lubbock, mentioning the $500 fee Corbin agrees he received from Southern Medcial and Hospital Services, a subsidiary of Shoemake’s U.S. Trust & Guaranty, has been turned up in the companies’ files in Waco : Dec. 16, 1954 Legislators Involved; Others Explode