ustxtxb_obs_1971_10_08_50_00003-00000_000.pdf

Indictments indeed Dallas, Austin “The big fish are still swimming around,” House Speaker Gus Mutscher grumbled after he was booked, fingerprinted and released from the Travis County jail on two $10,000 bonds. Mutscher and his speaker pro tern, Rep. Tommy Shannon of Fort Worth, were the first and possibly the last elected officials to be indicted in the stock fraud ,scandal. Mutscher was charged with both bribery and conspiracy to accept a bribe, while Shannon and Mutscher’s top administrative aide, Rush McGinty, were charged only with conspiracy. The Travis County grand jury failed to indict Gov. Preston Smith, Democratic Executive Committee Chairman Elmer Baum and House Appropriations Chairman Bill Heatly, who, along with Mutscher, Shannon and McGinty, received loans from Sharpstown State Bank to purchase National Bankers Life stock. The grand jury, however, did release a report saying “some Texas lawmakers, who have been elected by voters of Texas to these high positions of trust, were too busy granting political favors and being influenced in exchange for turning a fast buck to be concerned about good government for the people.” There seems to be a consensus among the state’s prosecutors that Travis County is the proper venue for bribery charges in this case; so it appears that Heatly, Smith and Baum are off the hook, at least off the hook for bribery. But some of the politicians who made sworn statements to the SEC might be liable for perjury charges. These would come from the city in which the perjury was committed. GRAND JURIES all over the state waited to hand down indictments until after the SEC completed its civil suit. That suit ended successfully for the SEC in September when federal District Judge Sarah T. Hughes enjoined Frank Sharp, John Osorio, former Attorney General Waggoner Carr and a passel of others from’ messing around with unregistered stocks. Now the indictments are starting to roll in. The Austin grand jury charged John Osorio, a former insurance commissioner, with filing false statements with the State Board of Insurance. A Houston federal grand jury was expected to indict some small fish after the Observer’s deadline. Speculation was that the first Houston indictments might concern mail fraud on banking law violations. U. S. Dist. Atty. Anthony J. P. Farris of Houston, of course, is the man who obtained immunity for Frank Sharp. One of Sharp’s lawyers, Morton Sussman, a former federal DA, convinced Farris that in return for immunity from criminal prosecution Sharp would spill the beans on prominent Texas Democrats. Farris, in turn, convinced his boss in Washington, Richard Kleindeinst, that the only way to get convicting evidence on the politicians was to give Sharp immunity. Kleindeinst gave the go ahead. SEC investigators were aghast. “You don’t start with the top man and work down,” one of the SEC lawyers complained. “We’d been dealing with Sharp for six months and knew better than to agree to his terms.” Sharp pled guilty to two minor charges before federal Dist. Judge John Singleton and received a three-year suspended sentence and a $5,000 fine. Then began a tedious series of command performances. before grand juries around the state. It soon became evident that Farris had been sold a bill of goods. Sharp was willing to provide titillating hearsay about politicians, but when asked specific questions his arthritis was liable to start bothering him. Kleindeinst was none to happy with Sharp’s information. He went so far as to send an assistant from Washington, Theo Pinson III, to take over the Houston investigation. Farris’ awkward situation has led many observers to guess that the indictments out of Houston may not be far reaching. A number of other grand juries are looking into the complex stock scheme. The grounds for investigation have scarcely been tilled. The SEC had 5,000 documents marked as exhibits in the civil suit and it has 5,000 more that may be handed on to other authorities. Some of the as yet unreleased information may well pertain to politicains who were not involved in the civil suit. After months of conferences about venue in the stock fraud scandal, state and federal prosecutors seem to have concluded that, generally, Austin has jurisdiction over bribery cases, Dallas over stock manipulation and Houston over banking transgressions. The same week the Austin grand jury indicted Mutscher and friends, a Dallas federal grand jury quizzed the crews of Apollos 12 and 13 about the notorious “astronauts’ stock” \(Obs., is a possibility that some of the defendants in the civil suit not the astronauts .violated the Welfare and Pension Plans Disclosure Act of 1962 by selling the stock to the National Bankers Life Employees Retirement Plan. \(The astronauts were dragged into this mess when Quincy Adams of Ling & Co., the man who was making a market in NBL stock, exceeded his $600,000 inventory ceiling in NBL stock. He had to get rid of it, and Frank Sharp tried to help him out by selling 22,500 shares of NBL to five astronauts. But the astronauts didn’t want the stock. They got it anyway, presumably without their authorization. The stock was later sold to the NBL Plan via loans from Dallas Bank & Trust and City Bank & Trust. This is one of the transactions that implicated Waggoner Carr in the scandal. In handing down her ruling against Carr, Judge Hughes pointed out that, as a control person. in DB&T, the former Texas attorney general “aided and abetted” a scheme to manipulate the stock A Dallas County grand jury may get into the act when it is empanelled this month. Dallas DA Henry Wade said it is doubtful that his office would seek indictments against persons who have strong charges against them in other counties. THE S T ATE ATTORNEY general’s office is also conducting an investigation that probably will center on the activities of state agencies involved in the stock scandal. And then, of course, there’s Gus Mutscher’s House General Investigating Committee which is right out front, looking into the fact that somebody leaked the story of Mutscher’s bribery indictment to the Associated Press a month before the charge was officially made. After winning their request for indictments the SEC lawyers, who had been working seven days a week for months preparing their case, said they would be taking a short vacation. Gerald Boltz, the SEC’s regional administration, said he is not at liberty to discuss what will be investigated next, but there is speculation in Dallas that the SEC team will be looking into possible manipulation of National Data Communication stock. \(The securities people were investigating NDC before they turned their attention to Frank Sharp’s machnations. SEC examiners asked many defendants in the stock fraud suit about their dealings with National Meanwhile, the SEC, the FBI and the Internal Revenue Service are trying to figure out where the money went. John Osorio and Waggoner Can appear to be broke ‘. Frank Sharp, however, has managed to employ two very good, very expensive lawyers and he continues to live in the old homestead on stately River Oaks Boulevard in Houston. K.N. October 8, 1971 3