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and condominiums. At the time FCP stock found its way to Cleburne, 8,695,130 common shares were in issue. But 70 percent of the stock was in the hands of the Belzberg brothers of Canada. So any large purchase of FCP, insiders knew, was almost certain to drive the stock up. But to novice investors, turned on to a stock that seemed to go nowhere but up, FCP was as secure as AT&T and it offered the promise of short-term gains that the Blue Chips somehow never seem to provide. In 1983-84, as. the stock moved upward, Rogers’s FCP fortune became the talk of the town. The son of a local junkyard dealer, and the town’s most successful defense attorney, Rogers was said to have turned $2 million into $12 million by dealing in FCP in 1983 and 1984. And even before the FCP trading, word had circulated in Johnson County of Rogers’s successful dealings with Gulf Oil stock. Though Rogers. in a recent interview, said that some dollar amounts were exaggerated, and that he had various business interests, wouldbe investors were drawn to him and to Reid, who was said to hold 400,000 shares of FCP stock. And in a small rural community where most of the wealthy share some common roots, FCP trading spread like oakwilt; the list of creditors from Mike Rogers’s personal bankruptcy today reads like the Cleburne Social Register. “You have to understand that nothing like this ever happened to a small town like us,” Jackson said. He, like many others in Cleburne, had wanted to meet Reid. And when Reid set up shop in Rogers’s office, spending days doing deals by telephone, many in the community did meet him. Among those who did and who joined in his investment scheme were some the most successful businessmen in Cleburne. “These men,” said Michael Patman, president of Cleburne-based Frontier Oil and Gas, “were men I admired as I grew up.” They were bankers and other business community leaders whose stature and success, 31-yearold Patman said, he hopes to someday achieve himself. Patman, who works in the oil exploration business, didn’t realize any success with First City Properties. He lost, he said, almost a million dollars. He did, however, learn something about the stock market. “I earned a Ph. D. in business dealing with him [Rogers],” Patman said. Patman contends that the success of the investment scheme was based on a continuous demand for the stock. “You take a thinly-traded stock,” Patman said, “and the more you buy the higher it goes. So he’s [Rogers] doing it, not the stock or the market.” THE ELABORATE scheme that involved Reid, Rogers, and Rind involved more than the recruitment of local investors in an effort to manipulate a stock. Court documents allege a concerted effort to continually bid up the price of the First Cities stock an effort that between December of 1983 and January of 1985 involved hundreds of transactions in brokerage , houses in places like New York City; Dallas; Encino, Cal.; Short Hills, New Jersey; and Cleburne. An SEC complaint filed in the Southern District of New York suggests that there was no. place for the two-dollar bettor in the “Cleburne Group.” In one of several rounds of trading, in December of 1984 and January, of 1985, through three separate brokerage houses, Reid, Rogers, . and Rind placed orders for FCP stocks totalling $5,565,950. Though none of the stock was ever paid for, the magnitude of the orders had the effect of temporarily driving up the price of the stock thus increasing, at least for a time, the value of FCP stocks already held in investors’ private portfolios. FCP was as secure as AT&T and offered the promise of short-term gains that the Blue Chips never seem to provide. Similar orders were placed in other stock brokerages around the country until shortly before an SEC action brought the trading to an end. When stock actually was purchased, in blocks so large that demand worked on the pricing mechanisms built into the market, the fuel that drove the First Cities manipulation was easy credit. According to a source close to the investigation, about 20 Fort Worth/Dallas Metroplex banks were involved in the dealings. Some, like the Energy Bank and Overton Park Bank in Dallas, Northwest Bank in Fort Worth, Waxahachie Bank & Trust, in Waxahachie are today only entries in FDIC ledger books. Other healthier institutions have written off FCP loans and continued to operate. The eighteen banks listed as creditors in Rogers’s personal bankruptcy filing suggest the extent of bank involvement. And the ease with which one investor borrowed money for a big stock buy suggests that several small rural banks were eager participants in the First Cities trading. The story that Billy Roten tells reads like a cautionary tale for the federal office of the comptroller and other agencies that oversee the nation’s banks particularly small or rural banks that do their work far from the madding crowd of bureaucrats who ride herd on bank dealing. Roten said he had never owned a single stock on the New York Stock exchange until one day in August of 1984 when he was approached by his attorney, Mike Rogers. Rogers proposed that Roten buy 37,500 shares of FCP at a total cost of $712,000. What Roten didn’t know was that a scheme, which had advanced FCP stock from four to five dollars in 1982 to its all time high of $20, was about to be revealed. Nor did he suspect how easy it would be to raise money using FCP stock as collateral. But the borrowing routine by that time apparently had evolved into a series of pro forma presentations to bank officers accustomed to dealing with FCP traders. Roten describes visits to four banks, in which Rogers did most of the talking. Three hours and four banks after Rogers and Roten started scrambling to beat a stock delivery deadline. they had in hand $712,000 in certified checks to pay for stocks to be delivered on mid-afternoon of that same day. And $610,000 of that amount was raised in two Cleburne banks within two hours: $400,000 at Interfirst Bank \(now An additional $100,000 was raised at Midlothian National_ Bank where Roten had served on the board of directors. The race to Midlothian became inevitable when an extended lunch hour by a loan officer at a bank in Keene, where Rogers and Roten intended to get the final $100,000, posed a threat to their meeting their mid-afternoon stock delivery deadline. And though federal regulations prohibit banks from lending money on stocks until six months after purchase, in this case $712,000 was raised on stock certificates still in the hands of a courier a practice that was repeated in other banks lending on FCP stock certificates, according to several sources involved in the trading. Of that total amount, $612,000 was secured by the green FCP stocks. Eddie Saylors, president of NCNB Cleburne, then Interfirst Bank, said that it was not the policy of his bank to lend money on stocks. Asked about the aforementioned loan, made by one of the bank’s officers, Saylors said that the information was confidential and that he could not discuss it. He added that if such loans were indeed made, he was not aware of it. Jimmy Campbell, former president of First State Bank and now president of First National Bank in Cleburne, refused to discuss the First Cities stock trading. \(After one visit and repeated telephone requests to First National Bank in Cleburne, bank officers have failed to provide information about current ownership and about major First National shareholders at the time of FCP stock trading. This, though a federal law the “Bert Lance Law” requires banks to make such information public. At least one Cleburne businessman, believed to be a major First National shareholder. was, according to court records, a major THE TEXAS OBSERVER 15 W..00504111AWNVINVenOwrz , :rO.