POLITICS MEETS FRAUD

I have a mystery story for you, and it begins one October morning in 1954, when the agricultural reporter for the Cuero Record, Ken Roland Towery, was making his morning rounds of the DeWitt County Courthouse (above).  Each day Ken stopped in the offices of county officials, to see if anything newsworthy might be going on.  Poking his head into the district clerk's office, he asked the secretary if anything was up. She replied no, but then she asked him a question. “Ken, what was going on out at the Country Club last night?” When Ken said he hadn't heard anything, she explained, “Oh, they had a big meeting out there, I understand.” And thus began a scandal that would bring down a three term Texas Governor.

Ken Towery had already led an unusual life. After joining the army in 1940 (above), he arrived in the Philippines just in time to be first wounded, and then in March of 1942, made a Japanese prisoner. He spent the rest of the war in a POW camp in Korea, and did not get back to Texas until 1946. Under the G.I. bill he studied chemistry, but he had contracted tuberculous in Korea he had to drop out. He took a job working for his hometown newspaper, the Cuero Record. The sleepy south Texas county seat (pronounced Quair-oh, Spanish for “rawhide”) stood at the junction of three highways, and along the “Gulf, Western Texas and Pacific Railway”. The major business in the rolling countryside was raising cows, chickens and turkeys. And the major business in town was slaughtering them or shipping them elsewhere for slaughter – that and county government. So usually, nothing much happened in Cuero.

But when the secretary described the Country Club meeting to Ken that October morning, she used a few racial epithets, because in Texas in 1954, African Americans and Mexican Americans were usually allowed in the Country Club (above) only as servants. Ken returned to the paper and asked Elvin Wright, an African American press operator, if he could check with his neighbors about the meeting. A week later Wright told him, “All I know is they had a meeting out there and they talked land, they talked about a lot of land.”

That rang a bell with Ken. A few months earlier a local farmer named Webber had approached Ken with a letter on blue paper one his hired hands had received from the Veterans Land Board. The man wanted to know what the letter meant. Webber explained, “It looks like you bought some land somewhere”.  But the man insisted, “I ain't bought no land.” Those two curious events, an illiterate man who had not bought land, and a racially mixed meeting in an area where, in Ken's words, “White people just don't set up big parties for colored field hands”, was enough to send the reporter looking for Shorty Robinson, the black custodian for the brand new Country Club. Shorty explained that two club members, T. J. McLarty and a Notary Republic named Ledbetter, had paid him ten dollars for every black veteran he had rounded up for the meeting with the Veteran's Land board.

The Veteran's Land Board was the brainchild of “General” Bascom Giles (above), eight term elected commissioner of the General Land Office in Austin, Texas. The land board had been approved by the voters in November of 1946. Under Giles' plan, the state issued $75 million in bonds. That money was then used to offer 40 year, 3% interest rate loans of up to $7,500 for each veteran applicant. With just 5% down, they could now purchase up to 20 acres of land. Running the program was Giles, with oversight supposedly provided by three term Governor Alan Shivers and Attorney General John Ben Shepperd.  In 1951, because of rising land prices, an amendment allowed two or more veterans to jointly purchase a tract, which they were allowed to later subdivide and resell.  Ken Towery now headed off to Austin, to speak to Bascom Giles.

At first Ken was told “The General” might not even be in that afternoon. So Ken told the secretary that he was from Cuero, and wanted to talk about the blue letter received by Farmer William's employee. Within 20 minutes Bascom Giles (above) was warmly welcoming the reporter into his office. Giles began by insisting no irregularities had occurred in the program in DeWitt county, and yet blamed any mistakes on an appraiser who had already been fired. But, insisted Giles, he had checked the application in question, it had been signed by the farmhand, and any accusation of fraud was just “politics”.  Ken left after the ten minute meeting,  wondering why Giles was defending himself against accusations which Ken had not made.

Back in Ceuro, Ken confided his concerns to DeWitt County Attorney Wiley Cheatham. Wiley revealed he been investigating the Land Board since the previous August, when “ veterans started trickling in, complaining that they hadn't bought any land, wanting to know what the blue slips were, were there payments to be made. Some of them had pink slips...delinquent notices.” Wiley added he had heard of similar problems in at least six other counties.

Wiley asked Ken to hold the story for a few days, while he drove the 94 miles up highway 183 to Austin. On Friday, 5 November, 1954,  Cheatham informed Ken he had received no cooperation from the Land Board, and to go ahead with the story.  Two weeks later, in the Sunday, 14 November, 1954 edition of the Cuero Record,  Ken Towery broke the story of the Veteran's Land Board fraud.

The scam he laid out worked as follows: speculators like T. J. McLarty first obtained options on tracts of land at standard market prices.  Then, at events like the sales pitch at the Cuero Country Club, they fooled minority veterans into signing authorizations to act as their agents.  The speculators then bribed employees of the Land Board (including Giles) to provide highly inflated appraisals on the properties they held options on. Finally, in the veterans' names, the speculators obtained the 3% loans from the Veterans Land Board to purchase the property at the inflated price. They made only the 5% down payment at the option price, and pocketed the rest of the loan, leaving the veterans with the payments and ruined credit.

Two years later a Texas state Senate report would say, “The plan . . . constituted a highly reprehensible practice, especially in view of the 'spread' between the original purchase price paid by the 'promoters' and the appraised price paid by the Veterans Land Board, resulting in unconscionable and shocking profits . . . without risk and with only token expense to them and the 'rooking' of the veteran-purchaser.”  The scam proved so profitable the speculators could even afford to pay many barely literate veterans up to a hundred dollars for their signatures. One veteran admitted, “They said they'd give me a new set of tires for my car and so I signed up.”

The scandal did not explode instantly. In fact, Bascom Giles had just been elected to his ninth term as Land Office Commissioner.  But thanks to Ken Towerly's (above) work, investigations which had already begun in seven counties began producing headlines of their own. The State Attorney General, John Ben Shepperd, who had rarely attended meetings of the Veterans Land Board, quickly opened his own investigation, as did that other absentee board member, Governor Alan Shivers. Twenty-one people were indicted by grand juries.  Early the following March  Bascom Giles was indicted for conspiracy to steal $83,000 (nearly $600,000 in present day). He was the first Texas state officer convicted for crimes committed while in office. He was sentenced to six years. Fines and civil suits by the state collected all but $3,000 of the money he stole.

When it was all over the State Auditor reported that over $3.5 million ($25 million today) had been stolen, defrauding 591 veterans and 39 land owners. Threatened with jail time, most of those indicted had cut deals, buying back the land from the veterans at the inflated price the crooks had been paid, and re-embursing the land board. So the state of Texas got most of their money back, and only two of the crooks did any substantial time behind bars. But one of those two was T.J.McLarty, of tiny Cuero. 

Governor Shivers (above) was never directly implicated in any involvement in the Veterans' Land Board scandal, but because of his shoddy oversight,  his reputation was so damaged that he did not run for re-election, and left politics. His greatest political claim to fame was that in 1952, as a conservative Democrat, he had delivered Texas to Republican Presidential candidate Dwight Eisenhower.  After politics, he served as a regent for the University of Texas, and died of a heart attack in January of 1985.

In 1955 Ken Towerly (above) won the Pulitzer Prize,  and the Associated Press sent him a check for $4.00, for reprinting his story nationwide.  He later interviewed Bascom Giles in the state penitentiary at Huntsville.  In his own interview 60 years later, Ken recalled, “He had long stories, of course, like all crooks do...everybody out there is doing it, I don’t know why they picked on me....And I told Bascom...“If you know of anything,  well just name them”...And he said, “Oh, no, it wouldn’t do any good.,,They're all doing it”  After his release in 1958, Bascom Giles moved to Venice Florida, where he died in a car accident, in 1993.

And Ken went into politics. He never ran for public office, but he did work on the staff of Texas Republican Senator John Towers. As of May, 2016, he was still enjoying his unusual life

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