TIME: Almanac 1990/1990 Time Magazine Compact Almanac, The (1991)(Time).iso/time/022089/02208900.025

Text File | 1990-09-17 | 3.6 KB | 65 lines

BUSINESS, Page 71

"Dad Would Make a Deal with the Devil"


    Of all the fast-buck artists who contributed to the savings
and loan crisis, Herman Beebe Sr. is among the most notorious.
Rising from an impoverished boyhood in Louisiana's woods, Beebe had
built, by the early 1980s, a $150 million financial empire that
stretched across the Sunbelt. But the brash, stocky financier was
actually a ringleader in a network of good ole boys who helped ruin
more than a dozen savings institutions by handing out as much as
$10 billion in reckless loans -- some of which ended up in Beebe's
own pocket. Recalls Beebe's son Ken, who worked for him: "Dad would
make a deal with the devil if it looked good."

    The centerpiece of Beebe's empire was AMI, his company based
in Shreveport, La., which invested in banks and thrifts, insurance
companies, motels and nursing homes. Beebe and his colleagues at
one time or another held control of nearly 40 banks and S & Ls,
through which they allegedly made insider "back-scratching" loans
to finance one another's high-risk moneymaking schemes. Their tower
of debt collapsed in 1986, brought down by the energy bust and
tenacious federal investigators. Having pleaded guilty to two
counts of fraud in 1988, Beebe, 61, now washes laundry in a federal
prison in Texarkana, Texas, where he is serving a sentence of one
year and a day.

    Beebe used his financial institutions to bankroll everything
from polo fields to time-share condos and mini-warehouses. Though
a 1987 federal case against Beebe ended in a mistrial, the
Government has contended that he was one of his own biggest
customers, using the network of banks and thrifts to finance
ventures in which he held hidden interests. "He saw the thrifts as
one big gold mine, an endless pit of money," says Joseph Cage, a
U.S. Attorney in Louisiana who prosecuted Beebe. Rather than exert
his ownership outright, Beebe often held control behind the scenes.
One of his tactics was to stake friends like the high-flying
financier Don Dixon, who relied on Beebe's backing to acquire
Texas-based Vernon Savings & Loan in 1982 and rode the institution
to a spectacular collapse in 1987.

    As Beebe's enterprises grew, he reveled in the trappings. He
acquired a nine-passenger Hawker Siddeley jet to carry business
associates on golfing trips. He took clients duck hunting in the
Louisiana marshes on a lavish two-story barge. In Shreveport, he
built a $1 million home for his family, as well as a gleaming
seven-story office building.

    But under the glare of investigations, Beebe's roof began to
cave in. He was convicted in 1985 of defrauding the Small Business
Administration on a loan it made to finance a nursing home from
which Beebe allegedly profited. Beebe was sentenced to perform
community service, while some of his associates were acquitted. Two
years later, the Government accused him of fraud for making loans
to a quarter-horse breeder with whom Beebe allegedly held an
interest in a tax-shelter scheme. After the 1987 mistrial, Beebe
pleaded guilty last year to the two fraud counts.

    Stripped of his wealth, Beebe is hounded by collectors from
the Internal Revenue Service, the Federal Savings and Loan
Insurance Corporation and the Federal Deposit Insurance
Corporation, which last month sued him and 20 other bank executives
for $20 million. But Beebe remains unrepentant. "The FSLIC was
encouraging the thrifts" to be aggressive, said Beebe's lawyer,
James Adams. "Herman felt he could make money, so he got in. He
doesn't feel he did anything wrong."