1: &121E-E-77-Talg I Air 1E13E1 ,1401., Jacobsen in the world of Sharp Austin If you study the 10,000-odd pages of depositions in the SEC stock fraud scandal, you find that certain names keep popping up here in affadavit, there in an exhibit, here in a memo, there in a ldan record like a tribe of berserk prairie dogs. If you keep track of the holes the prairie dogs pop out of and collate them, you begin to get some idea of the connecting tunnels beneath the surface. Two of those prairie dog-like names are Jake Jacobsen and Ray E. Cowan. Jake Jacobsen is an Austin attorney and an LBJ crony. 1 From 1949 to 1953, Jacobsen worked as executive assistant to then state attorney general Price Daniel, from ’53 to ’56 he worked as administrative assistant to then U.S. Sen. Price Daniel, from ’56 to ’59 he worked as executive assistant to then Gov. Price Daniel. From ’59-’65 he was in private practice. From 1965 to 1967, Jacobsen was White House legislative counsel to LBJ. While at the White House and after his return here, Jacobsen was spoken of as “Lyndon’s bank man” and it was widely assumed that he sometimes acted for the Johnson interests. Ray Cowan is Jacobsen’s investment partner and has independent banking interests as well. Jacobsen’s public debut in the Sharp case came on Jan. 29, 1971, when he and his law partner Joseph R. Long bought control of City Bank & Trust Co. of Dallas, a Sharp-linked entity, for an undisclosed price. At the time, Jacobsen said that neither he nor Long had any “connection with Frank Sharp, the Sharpstown State Bank or any others named in the litigation.” In the banking community in Dallas at the time, there was a sense of relief that Jacobsen and Long had appeared to pull CB&T’s chestnut out of the fire. The bank was by no means in bad shape, but public confidence in all Sharp-connected enterprises was at a particularly low ebb, since the Sharpstown State Bank had been ordered closed on Jan. 25. Although CB&T was fiscally healthy, no one was sure it could stand a strong, panic-inspired run. MEANWHILE, those researching the SEC depositions were frequently running across Jacobsen’s name. Dallas Johnson, the ex-FBI agent and former chief executive of SSB, told the SEC that Jake Jacobsen got him the job with Sharp. In 1969 banking examiners were becoming highly critical of the way SSB was run and they, in effect, ordered Sharp to get himself a new executive for the bank who 1For some reason, there is a journalistic convention that LBJ has cronies not friends, chums, pals or business associates just cronies. On the other hand, Richard Nixon hasn’t even got cronies. would shape up the place. Jacobsen then introduced Dallas Johnson to Sharp and Sharp hired him. Alas, according to Johnson, instead of shaping up the bank, he found himself frequently forced by Sharp to make loans against his own better judgment. Also in Johnson’s testimony to the SEC is the following fragment: Q: What is JEB, Inc.? Johnson: JEB was a corporation formed the initials stand for Joe, Eleanor and Betty. Joe is Joe Novotny. Eleanor is I forget Eleanor’s last name. She is secretary to Joe Ridings. Betty was Betty Jordan, secretary to Joe Novotny. The purpose of the company, the formation of the company, was to enable that company to borrow $500,000 each from the Community Savings & Loan Association of Fredericksburg [controlled by Ray Cowan and Jake Jacobsen] , First Savings & Loan at San Angelo [controlled by Cowan] and the Lubbock Savings & Loan Association at Lubbock [controlled by Cowan] , making a total of $1.5 million. Then the money was used to lend to Sharpstown Realty Co., a million and a half dollars. The Sharpstown Realty Co. then pledged some acreage on the north side of the Sharpstown Country Club golf course to secure the loan. The million and a half was then used to pay off a loan with Associated Mortgage Investors that it had made on 10 acres plus the Sharpstown Music Theater. The Sharpstown Music Theater and the 10 acres was then pledged as collateral behind the Oak Forest Investment Co. loan to Sharpstown State of some $2.3 million. The Observer has checked the Harris County land records relative to the Sharpstown Mall, which is owned by Sharpstown Realty Co., and has found therein some interesting deeds of trust. On Nov. 7, 1969, four mortgages against the Sharpstown Mall were filed with Harris County. They include $1.2 million mortgages each to the Community Savings and Loan Association of Fredricksburg, First Savings and Loan at San Angelo and the Lubbock Savings and Loan Association. Also filed on the same date was a $2.9 million mortgage to the Eleven-O-Four Corporation of Houston along with an assignment of lien of that mortgage to Associated Mortgage Investors. The Eleven-O-Four Corp. in Houston is not listed with the phone company nor in any business directory: Associated Mortgage Investors is a substantial, publicly-held Florida firm. October 22, 1971 9 Personal Service Quality Insurance ALICE ANDERSON AGENCY INSURANCE & REAL ESTATE 808A E. 46th, Austin, Texas 465-6577 #riple Since 1866 The Place in Austin GOOD FOOD GOOD BEER 1607 San Jacinto 477-4171
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