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ir “:’*: / / 1 Legislature? Sharp: No, sir, it was not.* Q: Were you concerned over this lack of legislation being introduced? Sharp: Well, I will say that I wasn’t too happy, and I think that one time I expressed that to Mr. Mutscher I believe the expression that he used was, “Father Time had not been working in our favor.” * * * Q: Do you recall in early July, 1969, a meeting with Mr. Mutscher at the Rice Hotel? Sharp: Yes, I remember. I think the meeting you are referring to is … Mr. Mutscher was in Houston this day and called my office. I wasn’t in at the time. He left word with my secretary that he was going to be there during the day and that he was having several conferences with other people, and that if I had the time, he would appreciate my letting him know if I could come by and letting him know when I could come by so we could chat for awhile, I believe was the expression, and I called back and made the appointment. Q: Sir, what was the substance of that discussion? Sharp: Well, I first took it more or less as the speaker needed someone to cry on his shoulder. The speaker, meaning Mr. Mutscher, he told me that he had considerable loss in some stock that he had bought from Siboney. Siboney is a company that Sharpstown Realty Company had signed a letter of intent, and he had bought considerable stock in Siboney. And when it was evident that Sharpstown Realty Company and Siboney were not going to close their trade, the stock went down considerably. And he was … Q: Did he say how much money he had lost? Sharp: No. He did not tell me how much he lost and I did not ask him. I remember saying to him I think you and Cecil Haden both should be kicked because both of you bought a lot of their stock and you didn’t say a word in the world to me about it, and I really think you should have. Q: Do you know if it was Mr. Haden who had talked Mr. Mutscher into making that stock purchase? Sharp: Well, of course, I have no way of knowing. It was my opinion that Mr. Mutscher bought this on his own. Q: Well, what else about this meeting? Sharp: Well, Mr. Mutscher, I remember, had a *Actually the banking bills were introduced during the regular session by Tommy Shannon. House Clerk Dorothy Hallman testified that HB 52-53 died in the House Banking Committee. suite, that was several rooms that were connected, and I had the thought that he was there on dental business rather than legislative business, because he was going from one room to another trying to talk to all the people, and he and I were in the dinette next to the kitchen there. Q: You were by yourselves? Sharp: We were by ourselves, yes. And as I was getting ready to leave, he said I might be interested in buying some of your National Banker’s Life Insurance stock to make up for my loss that I have on Siboney. And I remember that I remarked to him that I would be very complimented if he did buy stock, but he did say, let me say this, if I buy any of the stock, I want you to know that I am free, white and 21, and I’ll do it on my own. I smiled and he smiled and that was about … Q: You just sat there and smiled at each other. Sharp: Yes. Q: Did you mean anything by your smile, other than just acknowledging Mr. Mutscher’s smile? Sharp: You’ll have to interpret that for yourself. * * * Q: Mr. Sharp, at this meeting, did you indicate to Mr. Mutscher that Quincy Adams was a partner in your stock. [Witness must have indicated with his head] Did you indicate to Mr. Mutscher that because of this move of making a market of the stock that you would probably make him money by purchasing NBL stock? Sharp: Mr. McShane, I can’t ever remember of making a direct remark. I think that would be really degrading his intelligence on making such a remark. I explained to him what everyone was trying to do and certainly this would be a sufficient explanation. I will say this, that Mr. Mutscher, in all fairness and truthfulness, in every way, it was certainly my feeling that if Mr. Mutscher bought any stock at that time, if he didn’t make a profit, it would be very disappointing. Q: Was there any relationship between Mr. Mutscher’s purchase of NBL stock and the introduction and passage of the package of House Bill 72 and 73, incorporated your concept of state deposits or of state insurance bank deposits? Sharp: Mr. McShane, by this time of the year I had become very well acquainted and become very good friends, I felt, with Mr. Mutscher, and to say that there was never any language used in this extent, but I would also confess to you that in some degree, if not 100% degree, there was certainly a tacit understanding.. Q: Mr. Sharp, is it a fair statement that there was a tacit understanding between you and Mr. Mutscher, to the effect that you would assist Mr. Mutscher in purchasing NBL stock, and he would assist you in your legislative program? Is that a fair statement? Sharp: Well, it doesn’t work that way. I helped him get the stock, because, Mr. McShane, I never at any time sold any of mine, of my stock, I would say that I put him in touch with Quincy Adams, who was instrumental in handling the account of NBL. Q: And was it your understanding that you would, through your bank, assist Mr. Mutscher in financing these stock purchases? Sharp: Well, that didn’t come at this meeting, when we finally walked off from each other, I walked off from this door, where he had other people in there. He had not definitely made up his mind whether or not he was going to buy any of the stock, but soon thereafter he called me and said that he would like to buy some of the stock and that some of his associates, I think was the expression that he used, would like to buy some. He named Mr. Schulte, Mr. Shannon, Mr. McGinty, and then he paused a little bit and then he said, I would like for my father to have some of the stock. And I said, Gus, if you want to buy the stock, that’s your business, not mine. Q: Mr. Sharp, may I interrupt you here a minute, did he indicate at this time that he would need financing, that he or any of these other parties would need financing for the purchase of the stock? Sharp: Yes, that’s what I was fixin’ to say. He said all of this, of course, would depend on whether or not he could get it financed, and I said to him, Gus, the first step, in my opinion is, . that you should talk to Quincy Adams, and let him see if there is enough stock in his portfolio, to sell you the stock that you want, and then, if he has the stock on hand … Then he said, I will have to have someone help me to finance it. Then I said that I don’t think that’s going to be a big problem. It all depends on what their financial statements are… . * * * Q: Do you have knowledge of the circumstances surrounding Mr. Heatly’s purchase of NBL stock? Sharp: Well, as I remember, John Osorio called me, I believe it was one Monday morning, and said that he would like for Mr. Heatly to be allowed to buy some NBL stock and he told me how long he had known Mr. Heatly. They had September 10, 1971 3