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Novotny It seems to me that he told me he had gotten a call from Dr. Baum and that Dr. Baum was nervous about the records.” Q. Did you destroy them? NovotnyNo. [He added under further questioning that the only thing on file on the governor was a listing on the loan liability ledger. There was not the usual application for a loan with sustaining information.] Other efforts apparently were made to conceal Smith’s loan. An account opened at the Sharpstown Bank for deposit of Smith’s $62,500 profit was not carried in Smith’s name, according to Baum. Austin According to Gus Mutscher, he first heard of NBL in the summer of 1968, when Shivers sold the company to Sharp. He placed his order for stock through Ling & Co. with Quincy Adams. Mutscher said in his deposition that his decision to order through Adams was one “we reached on our own.” He said he was introduced to Adams by Osorio. “Did Mr. Sharp suggest to you that you make the purchase at Ling & Co?” “No,” replied Mutscher. Mutscher also said in his testimony that he had “visited with Frank [Sharp] on a number of occasions.” Dallas Johnson said Mutscher was always in and out of SSB. Mutscher’s new account card at Ling & Co. states that Mutscher was referred to Adams by Sharp. Mutscher said he did not discuss selling the stock with McGinty, Schulte or Shannon. According to Father Kennelly’s testimony, all of them came to the bank together on Sept. 11 and Father Kennelly was introduced to them at that time and signed the checks drawn on the Jesuit Fathers’ account to purchase their shares at that time. Mutscher said in his affidavit that Shannon was not with him that day. Shannon said they drove there together from Austin. Mutscher said in his deposition that he had first assumed his stock would be sold to a broker. He said he learned it was sold to the Jesuits before he saw the deposit slip to his account. He said he learned it from Frank Sharp. Mutscher said he had never discussed the stock purchase with Smith, Baum or Heatley. He said neither Can nor Osorio ever talked to him about the bill. Osorio said that he did talk to Mutscher about it. Mutscher said he understood at the time that the bill was to provide insurance in addition to, not in lieu of, FDIC protection. He said he had never heard the 6 The Texas Observer Smith and Baum said they did not know who sold their stock shares or on what date they were sold. They said they had never talked with J. Quincy Adams, vice president of Ling and Co., who placed the order. They insisted they had never had any dealings with the company. SEC examinder Robert Watson said Smith’s name does not appear on the transfer records at National Bankers Life, even though Smith received Master Control “spin off” stock. Adams said in testimony that the only way Smith could have received Master Control stock, if he was not listed on the NBL transfer records, was by claiming it through Ling & Co. K.N. question of whether the proposed state insurance corporation would be in addition to or in lieu of FDIC discussed. Mutscher further testified that he owns stock in NDC, purchased through an unnamed bank. He further testified that on Feb. 20, 1970, he bought 2,000 shares of Olympic Life stock at 2 14 through Ling & Co. Mutscher also testified that he had sent McGinty to talk to Robert Stewart of the State Banking Commission about the problems of SSB and that he had talked to Clay Cotten, insurance commissioner, about NBL. Also in Mutscher’s affidavit are records of the following purchases of NBL stock made through Merrill Lynch: Aug. 11, 1969, 550, 220 and 280 shares; Aug. 20, 1969, 100 shares; Sept. 24, 1969, 100 shares; Sept. 25, 1969, 200 and 200 shares: the total is 1,600 shares through Merrill, Lynch. . Mutscher also had 4,000 shares of Master Control stock through Ling & Co. “Did you have any discussions with Frank Sharp about this legislation prior to its passage?” “No, sir,” replied Mutscher. “Did you have any discussion with Frank Sharp about this legislation after its passage?” “Well, I have I visited with Frank on a number of occasions and I know he regretted to see the bill be vetoed. He thought it was good legislation.” “To your knowledge did you or any member of your staff ever make any suggestions to Mr. Stewart or any member of his staff that a receiver should or should not be obtained for Sharpstown State Bank?” “No.” During a dinner held to honor him in Fort Worth on Jan. 29 \($25 a head, 500 people, during a year when Mutscher has SEC investigator told him, “If you had any inside information, you certainly didn’t take advantage of it.” There is no such remark on the record of Mutscher’s hearing before the SEC. Mutscher borrowed $105,000 from Sharpstown State on July 28, 1969, and paid it back on Sept. 11, 1969, with the proceeds of his stock sale to the Jesuits Fathers \(who paid $5 a share above market 1969 backed by $102,000 in stocks. The state banking auditors reviewing SSB’s books last November considered the loan a write-off. Mutscher borrowed another $65,000 on Nov. 27, 1969, and another $70,000 the next day. In view of the fact that NBL and MCI stock is practically worthless, Mutscher’s final profit-loss reckoning on the transaction leaves him about $200,000 in the hole. Q: “When did you become aware of John Osorio: “When Mr. Adams told me who bought the stock.” Q: “Mr. Adams told you who bought the stock?” Osorio: “No.” Q: “Did you arrange for them to buy stock from Ling & Co. from Mr. Adams?” Osorio: “Not the governor. I never did talk to the governor about it. Let’s see. I told Bill Heatley, I think.” Bill Heatley made about $43,000 on the sale of his NBL stock. He still owns several thousand shares of MCI. Rep. Dick McKissick sold 15,000 shares of Coaches of America Life to John Osorio in the summer of 1969. Osorio wanted to merge Coaches with NBL but it never came off. McKissick said he was a founder of the firm had served as an officer and board member until 1967. Rep. Ben Atwell of Dallas said he bought 100 shares of NBL several years ago. He bought at $25 and sold at $8. According to Tommy Shannon, he first got a tip on the stock from Rush McGinty. He said he dealt through the mail \(in he never met any of them, “Mr. Sharp or any of them in the SSB”; that he did not meet them until he sold his stock. Shannon said Eugene Palmer, an Austin attorney, wrote the bills and asked Shannon to introduce them. Palmer is a law partner of Can and Osorio. M.I. Endurance Aeons for an urn; old manu Scripts protected; Rembrandts behind Steel bars. Art endures. Patrons, endure a morning of Mourning for artists, all dead or Dying to be the mortician’s Happy medium. SI DUNN Houston Gus and friends