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1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 I =man am am we INN =mon so as an THE TEXAS OBSERVER 504 West 24th Street Austin, Texas 78705 Enter a 1-year subscription, at $7.30 street city state [ Check enclosed [ To be billed “One of the best publications in the country remains The Texas Observer.” THE NEW YORK POST, Dec. 18, 1969 .. probably as close as any publication in America to the high European standard of informed reportage and commentary.” THE SOUTH AND THE NATION by Pat Watters A journal of “considerable influence in Texas public life.” THE NEW YORK TIMES BOOK REVIEW, Oct. 22, 1967 With “influence felt far beyond the state borders.” TIME, Sept. 27, 1968 “The conscience of the political community in Texas …” THE NEW REPUBLIC, Nov. 20, 1965 “. . . the state’s bell-wether liberal publication.” AUSTIN AMERICANSTATESMAN, Sep. 20, 1969 “A respected journal of dissent.” THE NEW YORK TIMES MAGAZINE, March 2, 1969 44 . . that outpost of reason in the Southwest …” NEW YORK REVIEW OF BOOKS, April 11, 1968 `. . . that state’s only notable liberal publication . . . ” THE WASHINGTON POST, Nov. 25, 1968 “. . . delights in exposing the peccadil loes of the Texas establishment …” THE PROGRESSIVE, November 1968 “No doubt the best political journal in the state.” THE REPORTER, Nov. 30, 1967 “Copies find their way to the desks of the mighty and even into the White House.” ST. LOUIS POSTDISPATCH, July 25, 1965 “Time and again since its first appearance in 1954, the Observer has cracked stories ignored by the state’s big dailies and has had the satisfaction of watching the papers follow its muckraking lead.” NEWSWEEK, March 7, 1966 1.1111O INI =I MN MI MI Q: At that time did Frank Sharp agree to finance the purchase of this stock for Dr. Baum? Osorio: I feel sure that he did. I’m pretty sure that he did. Q: How do you know? Osorio: Well, Preston not Preston, Dr. Baum told me. * * * Q: Tell me, Mr. Novotny, if you issued a check to John Doe and Richard Roe, could John Doe cash it with only his signature on it? Novotny: No. Q: Well, how is it you deposited Elmer Baum’s cashier’s check to the Baum account without having some written authorization from Preston Smith to do so? Novotny: I don’t know. Washington, D.C. Assistant Atty. Gen. Will Wilson says that all he knows of the SEC fraud suit in Texas “is what I read in the papers.” Wilson said he filed a memo of disqualification as soon as he learned of the Texas cases, on the grounds that he had once served as attorney for National Bankers Life. “I can’t say what I did for them,” he said, “because of the privileged lawyer-client relationship. Only the client is at liberty to discuss my role.” Wilson denied playing any role in the SEC decision to prosecute. “Civil action was filed by SEC lawyers,” he said, “not by Justice. I don’t think anything has been referred formally to us by SEC, ‘though they may have sent information copies over here. But in any case, I wouldn’t see them, due to having disqualified myself.” He said that Atty. Gen. John Mitchell has assigned the case to Deputy Atty. Gen. Richard Kleindienst for study. Kleindienst and Mitchell will make the decision as to the filing of any criminal charges. Except for his disqualification, Wilson would normally make that decision. “I’m aware that many people think I had a hand in the SEC action,” Wilson said, “because Texas political figures are involved. It simply isn’t true.” \(Among those people is Gov. Preston Smith, who told the Observer, “My guess is that he’s [Wilson’s] the mastermind behind Wilson refused to comment on, or to speculate on, the possibility of criminal charges or what laws may have been violated. “I have no knowledge,” he said. As a member of the State Banking Commission, Wilson voted to charter the Sharpstown State Bank on Jan. 16, 1960. He says he recalls the Sharpstown application “only in general terms,” adding, “I recall the application seemed meritorious. There was a big shopping center going in there, and the bank was to be located a goodly geographic distance from any other bank. As I recall, the bank prospered for some time. We had some fierce fights over other bank charters in the Houston area, but there was never any real question about Sharpstown.” He asked a reporter whether the bank is still solvent, adding, “you know, you have to close even solvent when there’s a run on them.” Wilson specifically denied a rumor that he had information in his files last summer, but failed to proceed out of consideration for Frank Sharp. “Nothing to it,” he said. “I repeat, that I have been no way involved.” Larry L. King Editor’s note: Until he left Texas in 1969 to take a position in the Nixon administration, Will Wilson was Frank Sharp’s attorney. Will Wilson acted as go between and handled the negotiations for Frank Sharp’s acquisition of NBL in June, 1968. John Osorio testified that he believed himself and others for whom he acted to be absolved from Article 3.67 of the Texas Insurance Code \(“No director or officer of any insurance company shall be pecuniarily interested as principal, co-principal, agent or beneficiary in any purchase, by reason of an opinion delivered by Will Wilson, when Wilson was state attorney general, granting exemptions to that provision. D. * * * Q: Do you recall any discussions with Mr. I Sharp to the effect that you were not going to 10 The Texas Observer Wilson says he’s not involved credit Dr. Baum’s account or the governor’s account with any monies over and above the payment of the loan until the act was signed by the governor? Novotny: No, sir. Q: Are you absolutely certain? Novotny: I am as positive as I can be that I never discussed … Q: Well, can you explain why everybody’s \(Shannon, Mutscher, McGinty except his was credited on Sept. 12 and he wasn’t credited until Oct. 7? Novotny: I just don’t know. Q: Let me point out that the proclamation vetoing this bill was dated Sept. 29 and that your first letter to Dr. Baum was dated Oct. 2 and in that letter you apologized for the delay. Now what delay were you referring to? Novotny: I’m sorry, I just don’t know.