The Bush Clan's Family Business
by Stephen Pizzo
Mother Jones magazine, September
In 1991, President Bush bristled at a
flurry of news accounts that questioned the business ethics of
three of his sons. "The media ought to be ashamed of itself
for what they're doing," Bush complained. "They [the
boys] have a right to make a living, and their relationships are
appropriate," added a White House spokeswoman in June 1992.
Since George Bush has raised "family
values" as a campaign issue repeatedly, though, it seems
only fair to take a look at his own family. A computer search
showed that over the past five years stories have periodically
surfaced chronicling the individual business antics of the president's
sons -- each riding comfortably through life in the slipstream
of his father's growing power and influence.
Although a handful of good reporters for
the New York Times, LA Times, Village Voice, and Wall Street Journal
have diligently been digging through business records for months,
something has been missing: an overview that "connects the
dots" in the myriad deals that have been examined, making
it clear that cashing in on influence has become a pattern of
behavior extending through the first family.
Instead of criticizing reporters, the
president might more wisely begin listening to those in government
who have watched his sons with mounting worry. A year ago, I sat
across a desk from a Secret Service agent who had been assigned
to Bush-family security. I rattled off the names of a half-dozen
questionable characters who had found their way into business
deals with the Bush boys. How had these characters been allowed
to get even close to the president's sons?
The agent slumped back in his chair and
sighed. "We warn them," he said in a whisper. "But
that's all we can do. We can't stop these kids from associating
with someone they want to be with. All we can do after warning
them is to sweep these guys with metal detectors when they come
What follows is a sourcebook of concerns
about the president's three sons.
George W. Bush, Jr.
None of George Bush's offspring is more
his father's son than George W. Bush. George Jr., or "Shrub"
as Molly Ivins refers to him, began his own Texas oil career in
the mid-1970s when he formed Bush Exploration. Like the business
dealings of his brothers, George's company was not a success,
and it was rescued in 1983 by another oil company, Spectrum 7,
run by several staunch and well-heeled Reagan-Bush supporters.
But by mid-1986, a soft oil market found Spectrum also near bankruptcy.
Many oil companies went belly-up during
that time. But Spectrum had one asset the others lacked -- the
son of the vice-president. Rescue came in 1986 in the form of
Harken Energy, just in the nick of time. Harken absorbed Spectrum,
and, in the process, Junior got $600,000 worth of Harken stock
in return for his Spectrum shares. He also won a lucrative consulting
contract and stock options. In all, the deal would put well over
$1 million in his pocket over the next few years -- even though
Harken itself lost millions.
Harken Energy was formed in l973 by two
oilmen who would benefit from a successful covert effort to destabilize
Australia's Labor Party government (which had attempted to shut
out foreign oil exploration). A decade later, Harken was sold
to a new investment group headed by New York attorney Alan G.
Quasha, a partner in the firm of Quasha, Wessely & Schneider.
Quasha's father, a powerful attorney in the Philippines, had been
a staunch supporter of then-president Ferdinand Marcos. William
Quasha had also given legal advice to two top officials of the
notorious Nugan Hand Bank in Australia, a CIA operation.
After the sale of Harken Energy in 1983,
Alan Quasha became a director and chairman of the board. Under
Quasha, Harken suddenly absorbed Junior's struggling Spectrum
7 in 1986. The merger immediately opened a financial horn of plenty
and reversed Junior's fortunes. But like his brother Jeb, Junior
seemed unconcerned about the characters who were becoming his
benefactors. Harken's $25 million stock offering in 1987, for
example, was underwritten by a Little Rock, Arkansas, brokerage
house, Stephens, Inc., which placed the Harken stock offering
with the London subsidiary of Union Bank -- a bank that had surfaced
in the scandal that resulted in the downfall of the Australian
Labor government in 1976 and, later, in the Nugan Hand Bank scandal.
(It was also Union Bank, according to congressional hearings on
international money laundering, that helped the now-notorious
Bank of Credit and Commerce International skirt Panamanian money-laundering
laws by flying cash out of the country in private jets, and that
was used by Ferdinand Marcos to stash 325 tons of Philippine gold
around the world.)
Stephens, Inc., also helped introduce
the BCCI virus into US banking in 1978 when it arranged the sale
of Bert Lance's National Bank of Georgia to BCCI front man Ghaith
Pharoan. (The head of Stephens, Inc., Jackson Stephens, is a member
of President Bush's exclusive "Team 100," a group of
249 wealthy individuals who have contributed at least $100,000
each to the GOP's presidential-campaign committee.)
If any of these associations raised questions
in the mind of George Bush, Jr., he had little incentive to voice
them. Besides getting Harken stock through the deal, Junior was
paid $80,000 a year as a consultant (until 1989, when his wages
were increased to $120,000; recently they were reduced to $45,000).
He was also allowed to borrow $180,375 from the company at very
low interest rates. In 1989 and 1990, according to the company's
Securities and Exchange Commission filing, Harken's board "forgave"
$341,000 in loans to its executives. In addition, Junior took
advantage of the company's ultraliberal executive stock purchase
plan, which allowed him to buy Harken stock at 40 percent below
Such lavish executive compensation would
suggest a company doing quite well indeed. But in reality, Harken
had little going for itself. One Wall Street analyst called Harken's
web of insider stock deals and mounting debt "a lot of jiggery-pokery."
Harken was not making money and could not have continued into
1990 without at least some means of convincing lenders and investors
that the company would soon find a lot of oil.
Suddenly, in January 1990, Harken Energy
became the talk of the Texas oil industry. The company with no
offshore-oil-drilling experience beat out a more-established international
conglomerate, Amoco, in bagging the exclusive contract to drill
in a promising new offshore oil field for the Persian Gulf nation
of Bahrain. The deal had been arranged for Harken by two former
Stephens, Inc., brokers. A company insider claims the president's
son did not initiate the deal -- but feels that his presence in
the firm helped with the Bahrainis. "Hell, that's why he's
on the damn board," the insider says. "...You say, 'By
the way, the president's son sits on our board.' You use that.
There's nothing wrong with that."
Junior has told acquaintances conflicting
stories about his own involvement in the deal. He first claimed
that he had "recused" himself from the deal; "George
said he left the room when Bahrain was being discussed 'because
we can't even have the appearance of having anything to do with
the government.' He was into a big rant about how unfair it was
to be the president's son. He said, 'I was so scrupulous I was
never in the room when it was discussed.'"
Junior alternately claimed, to reporters
for the Wall Street Journal and D Magazine, that he had opposed
the arrangement. But the company insider says, to the contrary,
that Junior was excited about the Bahrain deal. "Like any
member of the board, he was thrilled," the associate says.
"His attitude was, 'Holy shit, what a great deal!'"
Through the Bahrain deal, the ties between
BCCI and Harken Energy grew tighter. Sheikh Khalifah, the prime
minister of Bahrain and brother of the emir, was also a shareholder
in BCCI -- and it was Khalifah who played the key role in selecting
Harken for the job. Sheikh Abdullah Bakhsh, in turn, was a business
associate of BCCI front man Ghaith Pharoan; he bought a chunk
of Harken's stock and placed his representative, Talat Othman,
on Harken Energy's board of directors.
Did Junior or any of the other Harken
Energy executives trade on the Bush name in these speculative
business deals? None of the principals will answer questions.
But this much is known: after the Harken-Bahrain deal was settled,
Othman was added to the list of fifteen Arabs who met with President
George Bush and National Security Adviser Brent Scowcroft three
times in 1990 -- once just two days after Iraq invaded Kuwait
-- while serving on Harken's board of directors.
The promise of hitting it big in the oil-rich
gulf was certainly critical for Harken. News of the Bahrain deal
kept investors buying stock and lenders making loans. Still, Harken
had nowhere near the capital required for such a large offshore
operation halfway around the world. This required real money.
But not to worry: The billionaire Bass brothers stepped up to
the plate and said they'd be happy to underwrite the cost of the
drilling in return for a piece of the action. (Robert Bass is
a member of President Bush's Team 100; he and other Bass family
members have contributed $226,000 to George, Sr.'s, cause since
But even well-heeled friends like the
Bass brothers could not protect Harken from the troubles of the
world. Just four months after the Bahrain deal was sealed, storm
clouds developed over the gulf region, threatening the oil-exploration
deal. In May 1990, the U.S. State Department sent a chilling but
still classified report to Scowcroft. The report warned that Iraqi
president Saddam Hussein was out of control and was threatening
May 16, 1990
Attached is a paper containing a list of options for responding
to recent actions and statements by the Government of Iraq. ...We
ask that you pass this paper to Robert Gates [CIA] for his review.
Under "options" the memo suggested:
Ban Oil Purchases: The largest benefit Iraq receives from the
US is through our oil purchases...
PRO -- A total ban on oil purchases would have some short-term
CON -- Such action might also have an impact on US Oil prices.
Oil companies had learned, during the
years of the long Iran-Iraq war, that trouble in the gulf hurts
companies with oil interests because, for one thing, at the first
sound of a rifle shot in the gulf region, Lloyds of London jacks
up insurance rates on oil tankers and company installations. The
"wartime" rates are very high and cut deeply into company
profits and investor confidence. If things really get out of hand,
pipelines are destroyed and waterways are mined.
The secret memo augured ill for Harken's
fledgling venture. To compound matters, that same month, Harken's
own financial advisers at Smith Barney produced a hand-wringing
report voicing alarm at the company's rapidly deteriorating financial
condition. (A former company official told Mother Jones that Harken
owed more than $150 million to banks and other creditors at the
time.) Since Harken wasn't producing anything, it was hard to
find a revenue stream, unless you count the river of fees, stock
options, and salaries running into the pockets of Junior and other
top Harken executives. Junior, as a member of Harken's restructuring
committee, could not have been ignorant of the report, since the
board had met in May and worked directly with the Smith Barney
In June 1990, Junior suddenly unloaded
the bulk of his Harken stock -- 212,140 shares -- for a tidy $848,560.
A former business associate says that Junior's motivation was
his desire to buy an expensive new house in Dallas, for which
he wanted to pay cash. The June 1990 transaction was an insider
stock sale, and security laws required that it be reported no
later than July 10, 1990. But Junior filed no such report, at
least not then.
Then, in August, Iraqi troops marched
into Kuwait, and Harken shares plummeted 25 percent. Junior would
have lost $212,140 if he'd waited to sell his shares until then.
Still, he didn't file his SEC disclosure until seven months later,
in March 1991 -- well after U.S. troops had finished fighting
and the gulf war had moved off the front pages. Harken stock rebounded
briefly, but quickly collapsed again.
Were government secrets discussed, directly
or indirectly, that would have given Harken Energy a leg up in
exploiting the Bahrain deal? The White House won't say. If Junior
traded on exclusive, nonpublic, insider information, he committed
a gross violation of SEC rules. Taken together, the company's
critical need for success in its Bahraini deal and a possible
oil embargo to be imposed by his father provided Junior with strong
motivation to bail out of Harken stock before the public discovered
either piece of news. (SEC spokesman John Heine says he is unaware
of any enforcement action pending.)
The folks at Harken Energy weren't the
only ones in Texas taking care of Junior during the 1980s. He
was appointed the managing partner of the Texas Rangers baseball
team, even though his partnership contribution was only a fraction
of the team's purchase price. Among those coughing up the money
to buy the Rangers were William DeWitt and Mercer Reynolds, major
contributors to the president's campaign who had also been in
on the rescue of Junior's oil company.
Junior doesn't deny that being a Bush
has helped him become a millionaire. "I recognize what my
talents are and what my weaknesses are," he told Texas reporters
last year. "I don't get hung up on it. Being George Bush's
son has its pluses and minuses in some people's minds. In my thinking,
it's a plus."
Junior might have been thinking that among
the minuses were questions about his role at Harken. As this article
was being prepared -- and in the midst of extensive interviewing
of former and current Harken business associates -- Junior announced
a six-month leave of absence as a consultant and member of the
Harken board. His role in the presidential campaign, the statement
said, precluded Junior's active involvement at Harken through
the remainder of 1992.
In any case, Junior is stepping away from
a company in deep trouble. Harken stock is trading near its all-time
low. Recently, test wells in Bahrain turned up dry and the company
has not produced anything else. "Harken is not hard to understand
-- it's easy," says Charles Strain, an energy-company analyst
in Houston. "The company has only one real asset -- its Bahrain
contract. If that field turns out to be dry, Harken's stock is
worth, at the most, 25 cents a share. If they hit it big over
there, the stock could be worth $30 to $40 dollars a share. It's
a pure crapshoot."
John Ellis ("Jeb") Bush
After graduating from Texas University,
Jeb Bush served a short apprenticeship at the Venezuelan branch
of Texas Commerce Bank in Caracas before settling in Miami, in
1980, to work on his father's unsuccessful primary bid against
Ronald Reagan. Campaigning for Dad was hardly a paying job. But
Jeb was about to learn that being one of George Bush's sons means
never having to circulate a résumé.
In the next few years, financial support
flowed to Jeb through Miami's right-wing Cuban community. Republican
party politics and a series of business scandals -- including
Medicaid fraud and shady S&L deals -- were inextricably intertwined.
A former federal prosecutor told MJ that, when he looked into
Jeb's lucrative business dealings with a now-fugitive Cuban, he
considered two possibilities -- Jeb was either crooked or stupid.
At the time, he concluded Jeb was merely stupid.
Jeb and Armando Codina
Shortly after arriving in Miami, Jeb was hired by Cuban-American
developer Armando Codina to work at his Miami development company
as an agent leasing office space. A couple of years later, Jeb
and Codina became business partners, and in 1985 they purchased
an office building in a deal partly financed by a savings and
loan that later failed.
The $4.56 million loan, from Broward Federal
Savings in Sunrise, Florida, was granted in such a way that neither
Codina's nor Bush's name appeared on the loan papers as the borrowers.
A third man, J. Edward Houston, borrowed the $4.56 million from
Broward and then re-lent it to the Bush partnership. When federal
regulators closed Broward Savings in 1988, they found the loan,
which had been secured by the Bush partnership, in default.
As Jeb's father was finishing his second
term as vice-president and running for the presidency, federal
regulators had two options: to get Jeb Bush and his partner to
repay the loan, or to foreclose on their office building. But
regulators came up with a third solution. After reappraising the
building, regulators decided it wasn't worth as much as was owed
for it. The regulators reduced the amount owed by Bush and his
partner from $4.56 million to just $500,000. The pair paid that
amount and were allowed to keep their office building. Taxpayers
picked up the tab for the unpaid $4 million.
After the Broward Savings deal was revealed,
Jeb described himself and his partner as "victims of circumstances."
Jeb and Camilo Padrera
By 1984, Jeb had been made chairman of the Dade County Republican
party, and it was as Republican party chief that he nuzzled up
to con man Camilo Padreda. Padreda was serving as Dade County
GOP finance chairman and had raised money for the party from Miami's
Cuban community. (He had also been a counterintelligence officer
for deposed Cuban dictator Fulgencio Batista.) Padreda made his
living as a developer who specialized in deals with the corrupt
Department of Housing and Urban Development. In 1986, he hired
Jeb as the leasing agent for a vacant commercial-office building,
which Padreda had built with $1.4 million in federal loans --
loans approved by HUD officials, oddly enough, even though they
knew there was already a glut of vacant office space in Miami.
Like so many of those who would attach
themselves to the Bush sons over the years, Padreda brought some
hefty luggage with him. In 1982, four years before teaming up
with Jeb, Padreda, along with another right-wing Cuban exile,
Hernandez Cartaya, was indicted and accused of looting Jefferson
Savings and Loan Association in McAllen, Texas. The federal indictment
charged that the pair had embezzled over $500,000 from the thrift.
(Cartaya was also charged with drug smuggling, money laundering,
and gun running.) But the Jefferson Savings case would never go
Soon after the indictment, FBI officials
got a call from someone at the CIA warning the agents that Cartaya
was one of their own -- a veteran of the failed Bay of Pigs invasion
-- according to a prosecutor who worked on the case. In short
order, the charges against Padreda were dropped and the charges
against Cartaya were reduced to a single count of tax evasion.
(Assistant U.S. Attorney Jerome Sanford was furious and filed
a demand with the CIA, under the Freedom of Information Act, for
all documents relating to the agency's interference in his case.
The CIA, citing national-security reasons, denied Sanford's request.)
In 1989, Houston Post reporter Pete Brewton
wrote about Jefferson Savings and Cartaya in a series of stories
alleging that CIA operatives and contractors had systematically
misused at least twenty-six savings and loans during the 1980s
as part of a secret program to fund illegal "off-the-shelf"
covert operations, particularly those aiding the Nicaraguan contras.
(CIA officials denied the charge, but admitted to the House intelligence
Committee in 1990 that former CIA operatives had been working
at four of the S&Ls named in Brewton's article. A CIA spokesman
claimed that agency operatives had done nothing illegal.)
The Jefferson Savings affair occurred
four years before Jeb Bush met Padreda, and it is possible he
missed earlier reports. But he could hardly have passed over the
next batch of stories involving Padreda's questionable practices,
because they were spread across the front pages of Miami's papers
in 1985, just months before the two teamed up. These stories,
in Jeb's hometown paper, alleged that Padreda had improperly influenced
a local politician -- the Dade County manager, to be precise,
who'd been made a secret partner when Padreda ran into trouble
getting a parcel of land rezoned. The property was promptly rezoned,
and the county official made a quick $127,000 profit when Padreda,
in turn, "sold" it to an offshore Padreda partnership.
That partnership was controlled from Panama by a fugitive Miami
attorney, who had already been indicted for laundering drug money.
(The official resigned, but Padreda was not charged in the case.)
Yet the 1985 scandal did not seem to lessen
Jeb's enthusiasm for Camilo Padreda. Jeb enthusiastically accepted
the task of finding tenants for Padreda's empty HUD-financed office
building. Padreda, the government officials involved, and Jeb
all refused to answer questions about the scandal. But of allegations
that Padreda engaged in illegal behavior, there remains no doubt.
In 1989, he pleaded guilty to charges that he defrauded HUD of
millions of dollars during the 1980s.
Jeb and Miguel Recarey
With Miami awash in empty office space in 1986, it was no small
event when bagged International Medical Centers as a key tenant
for Padreda's HUD-financed building. IMC, which leased nearly
all the space in Padreda's vacant building, was at the time one
of the nation's fastest-growing health-maintenance organizations
(HMO) and had become the largest recipient of federal Medicare
IMC was run by Cuban-American Miguel Recarey,
a character with a host of idiosyncrasies. He carried a 9-mm Heckler
& Koch semiautomatic pistol under his suit coat and kept a
small arsenal of AR-15 and Uzi assault rifles at his Miami estate,
where his bedroom was protected by bullet-proof windows and a
steel door. It apparently wasn't his enemies Recarey feared so
much as his friends. He had a long-standing relationship with
Miami Mafia godfather Santo Trafficante, Jr., and had participated
in the illfated, CIA-inspired mob assassination plot against Fidel
Castro in the early 1960s. (Associates of Recarey add that Trafficante
was the money behind Recarey's business ventures.)
Recarey's brother, Jorge, also had ties
to the CIA. So it was no surprise that IMC crawled with former
spooks. Employee résumés were studded with references
to the CIA, the Defense Intelligence Agency, and the Cuban Intelligence
agency; there was even a fellow who claimed to have been a KGB
agent, An agent with the U.S. Office of Labor Racketeering in
Miami would later describe IMC as a company in which "a criminal
enterprise interfaced with intelligence operations."
Recarey also surrounded himself with those
who could influence the political system. He hired Jeb Bush as
IMC's "real-estate consultant." Though Jeb would never
close a single real-estate deal, his contract called for him to
earn up to $250,000 (he actually received $75,000). Jeb's real
value to Recarey was not in real estate but in his help in facilitating
the largest HMO Medicare fraud in U.S. history.
Jeb phoned top Health and Human Services
officials in Washington in 1985 to lobby for a special exemption
from HHS rules for IMC. This highly unusual waiver was critical
to Recarey's scam. Without it, the company would have been limited
to a Medicare patient load of 50 percent. The balance of IMC's
patients would have had to be private -- that is, paying -- customers.
Recarey preferred the steady flow of federal Medicare money to
the thought of actually running a real HMO. Former HHS chief of
staff McClain Haddow (who later became a paid consultant to IMC)
testified in 1987 Jeb that directly phoned then-HHS secretary
Margaret Heckler and that it was that call that swung the decision
to approve IMCs waiver.
Jeb admits lobbying HHS for the waiver,
but denies talking to Secretary Heckler -- and denies as well
the charge that his call won the HHS exemption. "I just asked
that IMC get a fair hearing," said later. After the IMC scandal
broke in 1987, Heckler left the country, having been appointed
U.S. ambassador to Ireland, a post she held until 1989. (Heckler
is now a private citizen living in Virginia. We left a detailed
message with her secretary, outlining our questions, but she declined
In any case, the highly unusual waiver
by federal officials allowed IMCs Medicare patient load to swell
-- to 80 percent -- and the money poured in. At its height in
1986, IMC was collecting over $30 million a month in Medicare
payments; in all, the company would collect $1 billion from Medicare.
(Jeb would not discuss the IMC affair with Mother Jones. But in
an opinion piece he wrote for the Miami Herald last May, he insisted
that he had worked hard for IMC, looking for real-estate deals,
and had earned his $75,000 in commissions. While acknowledging
making a telephone call to one of Heckler's assistants on IMC
Is behalf, he claimed the waiver was not granted on his account.
The allegation of a connection, Jeb wrote, "is unfair and
Despite Jeb's involvement, trouble began
brewing for IMC when a low-level HHS special agent in Miami, Leon
Weinstein, discovered that Recarey was defrauding Medicare through
overcharges, false invoicing, and outright embezzlement. Weinstein
had been following Recarey's activities since 1977, and as early
as 1983 he believed he had enough information to put together
a case. However, he found his HHS superiors less than receptive;
they took no action on Weinstein's information.
But Weinstein kept digging and in 1986
renewed his investigation of Recarey and IMC -- and again his
HHS superiors blocked the probe. "Washington just refused
to pursue my evidence," Weinstein, now retired, told Mother
Jones last spring. "And they made it perfectly clear that
I was not to pursue IMC. When I did, they threatened me and threatened
Weinstein dug in his heels. "I had
them this time. I told my superiors I would fight this time because
I had nothing to fear. I had just reached retirement age. They
immediately backtracked," he says. Weinstein was allowed
to continue his investigation -- though HHS still took no formal
action against Recarey. Eventually Weinstein turned to Congressmen
Barney Frank (D-NY) and Pete Stark (D-CA) with his information,
sparking congressional hearings into the scandal.
Had it been up to HHS, Recarey would still
be running his Medicare racket. But by chance, the now-disbanded
U.S. Miami Organized Crime Strike Force was also investigating
Recarey. (Recarey was bribing union officials in order to get
them to sign workers up as patients at IMC, apparently so that
IMC could meet its reduced non-Medicare patient requirements of
20 percent.) "We didn't know anything about the HHS investigation,"
former Organized Crime Strike Force special attorney Joe DeMaria
says. "Recarey was bribing union officials.... But HHS never
contacted us or told us anything."
Before Recarey's trial on bribery charges
began, DeMaria's investigators also caught Recarey using his former
spooks to wiretap IMC employees in an effort to discover who was
talking to federal agents. DeMaria had Recarey indicted a second
time, for the illegal listening devices. During Recarey's trial
on the bribery charge, a lawyer who handled the bribe money testified
that the money IMC gave him was not bribe money but "commissions"
he had earned while doing work for the company. "See, that
commission thing was Recarey's MO. They didn't call them bribes,
they called them commissions," DeMaria explains.
After he was convicted, Recarey resigned
from IMC and was immediately replaced by John Ward. (Ward had
been law partner to Reagan-Bush campaign manager John Sears. And
Sears had also been a lobbyist for IMC.) But Recarey's Medicare
scam would never get to a public courtroom airing. Before his
trial on the wiretap charge, Recarey skipped the country. His
getaway was remarkable: just in time for his flight, the normally
tight-fisted IRS expedited a $2.2 million income-tax refund, which
Recarey claimed he had coming.
The tax refund was a windfall for Recarey.
"Yeah, that was his getaway money," says a former IRS
investigator who worked in the Miami office at the time but asked
not to be named. "Though there is a special IRS procedure
to expedite tax refunds for companies in financial distress, I
don't think you can overlook the possibility that there was influence
from the administration."
Recarey's last act before becoming a fugitive
was an attempt to wire $30,000 into the bank account of Washington
consultant and lobbyist Nick Panuzio -- whose partner was then
managing George Bush's 1988 presidential campaign. (The wire transfer
failed only because, in his haste, Recarey had gotten Panuzio's
account number wrong.) It was only after Recarey was safely out
of the country that the U.S. attorney in Miami -- a political
appointee -- filed formal charges of Medicare fraud against him.
Whistle-blower Leon Weinstein retired
in disgust from HHS and tried to get the IMC case before a judge
by filing a Qui Tam suit. Such suits allow a private citizen to
sue to recover money for the government in return for a share
of any settlement. In his case, Weinstein named IMC and Recarey
as defendants. But HHS continued to fight Weinstein, first challenging
his right to bring such a suit and later accusing him of stealing
HHS documents before leaving his job. When the courts supported
Weinstein, HHS then stepped in, took over his lawsuit, and shouldered
him out. The case remains in the courts and is still unresolved.
HHS officials now pursuing the litigation
claim that Recarey defrauded the Medicare system of at least $12
million. Leon Weinstein says the government is lowballing the
loss and that Recarey's take from his IMC scam could easily be
many times that figure.
Since skipping Miami in 1987, Recarey
has been living comfortably in Caracas, Venezuela. Thomas Holladay,
the consul general of the U.S. Embassy in Caracas, told Mother
Jones that officials there were aware of Recarey's presence and
had formally requested his extradition. "We made a formal
request for his extradition," Consul General Holladay says.
"But we can't do anything until the Venezuelans turn him
over to us, and they have not done that." The conversation
then ended abruptly. "You know, I'm really not supposed to
be talking to you about this," Holladay says.
In May, following inquiries from Mother
Jones, Congressman Pete Stark, who sits on the powerful House
Ways and Means Committee, wrote to both the Department of Justice
and the Venezuelan ambassador in Washington, demanding an explanation
for six years of inaction on the Recarey case.
Jeb and the Contras
The fact that Recarey is living free in Caracas rather than in
shackles at Fort Leavenworth could well be a result of the role
IMC may have played in Oliver North's secret contra-supply network.
Though members of the House Intelligence Committee claimed they
found no reason to believe that Recarey was using IMC's Medicare
facilities and funds to aid the contras, the evidence that IMC
was involved remains compelling. In 1985, the same year that Jeb
Bush was dialing for dollars to HHS officials for IMC, Jeb also
hand-carried a letter from Guatemalan physician Dr. Mario Castejon
to the White House -- directly to his father's office in the Executive
Office Building. Dr. Castejon's letter to Vice President Bush
requested U.S. medical aid for the contras. George Bush penned
a note back to the doctor, referring him to Lt. Col. Oliver North
-- whose pro-contra activities the president now claims he knew
An entry in North's diary reads:
Medical Support System for wounded FDN in Miami -- HMO in Miami
has oked to help all WIA [wounded in action] ... Felix Rodriguez.
(Rodriguez was a former CIA official who
advised Vice-President Bush's national-security adviser, Donald
Gregg, currently U.S. ambassador to South Korea.)
Veteran CIA operative Jose Basulto told
the Wall Street Journal in 1987 that he had personally attended
meetings at IMC headquarters in Miami along with contra leader
Adolfo Calero and Felix Rodriguez. Basulto also said that he had
personally brought sick and wounded contras to IMC hospitals in
Miami, where they received free medical treatment. Former HHS
agent Leon Weinstein is not surprised that Recarey has not been
returned to the United States. "My investigation," Weinstein
says, "led me to conclude that there may have been a deliberate
attempt to obstruct justice...because Recarey, his hospital, and
his clinics were treating wounded contras from Nicaragua...and
part of the $30 million a month he was given by the government
to treat Medicare patients was used to set up field hospitals
for the contras."
Jeb and "Manny" Diaz
Manuel C. Diaz, another Jeb Bush business associate, runs a commercial
nursery with headquarters in Homestead, Florida. Manny Diaz's
previous business sidekick, Charles Keating, Jr., is now sitting
in a California prison. But during Keating's days at the helm
of the $6 billion Lincoln Savings, Diaz became a Keating insider,
confidant, and beneficiary. For example, in 1987, as federal regulators
closed in on his crumbling empire, Keating instructed his attorneys
to transfer a large chunk of prime Phoenix real estate to Diaz,
for just $1. And right before filing for personal bankruptcy,
Keating transferred his $2 million mansion on the island of Cat
Cay in the Bahamas to Diaz.
At the same time Diaz was palling around
with Keating, Jeb, then serving as Florida's secretary of commerce,
arranged a private meeting for Diaz with Florida's Republican
governor Bob Martinez. Promptly afterward, Diaz Farms landed a
lucrative, $1.72 million, state-highway-landscaping contract --
despite the fact that Diaz had little prior highway-landscaping
experience. This raised howls of protest and charges of political
influence-peddling from other contractors. But state officials
explained that the extraordinary speed in issuing the contract
had occurred because the state was anxious to spruce up 113 miles
of freeway for the coming visit of the pope.
Did Jeb know about Diaz's business association
with Charles Keating? Did he have reason to believe Diaz was qualified
for the Florida highway contract that he helped Diaz land? These
are the kinds of detailed questions that the Florida chairman
of the Bush re-election campaign refuses to answer.
In the March/April issue of Mother Jones,
I detailed Neil Bush's activities and therefore only sketch his
involvement here. Neil served as a director of Silverado Banking,
Savings and Loan in Denver, Colorado, from 1985 until 1988. During
that time, the now-dead thrift made over $200 million in loans
to Neil's two partners in JNB Exploration, Neil's abysmally unsuccessful
oil company. Silverado's failure was due at least in part to the
fact that Neil's two partners welshed on $132 million in loans.
Federal regulators determined that, while
Silverado was pumping loans to Neil's two associates, Neil was
completely dependent on the two men for his income. The failure
of Silverado -- its closure delayed until after the 1988 election
-- cost taxpayers about $1 billion. After almost two years of
hand-wringing had passed, an expert hired by regulators declared
that Neil suffered from an "ethical disability," and
he was required to pay a $50,000 fine for his ethical lapses at
Silverado. Neil's estimated $250,000 in legal bills generated
by the scandal are reportedly being paid for him by a banking-industry
lobbyist who is fighting to get banks deregulated.
After Silverado failed, Neil started a
new oil company, Apex Energy. This time, his money came from a
$2.35 million loan through a Small Business Administration program,
a loan arranged by an old family friend. When news of this reached
the press in March 1991, the SBA discovered that the companies
through which the loan was approved were technically insolvent,
and it gave them up to thirty months to "self-liquidate."
This meant that Apex would have to repay its SBA-guaranteed loans.
Neil took this as his cue to move on, and he left Apex -- and
its debts -- for others to worry about. If Apex Energy can't be
sold for more than it owes, the SBA, and ultimately the taxpayers,
will be stuck with the difference. The last time we checked, Apex's
only known asset was an oil lease, which the company had purchased
from Neil for $150,000 before he bailed out. That means taxpayers
could get stiffed for another $2.2 million as a result of Neil
Bush's wheeling and dealing. The public won't learn the precise
outcome until later this year, though. The SBA allowed thirty
months for liquidation of the SBA investment in Apex, putting
the resolution date just past the 1992 general election.
President George Bush claims that only
a return to traditional family values can cure the "poverty
of spirit" that plagues places like our decaying inner cities.
But after a closer look, particularly at his adult children, one
cannot help but wonder about the values that matter to his own
Bush says he is proud of his sons. One
of them rented himself out to a crooked developer who scammed
HUD and helped pry millions out of Medicare to fuel a giant health-care
scam. A second may have profited from an insider stock transaction
in a gulf oil deal at the very time that U.S. soldiers were dying
to make that region safe for oil. And the third son ran a savings
and loan into the ground while shoveling millions of its taxpayer-backed
dollars into the pockets of two deadbeat partners.
When President Bush speaks of the lack
of family values he, of course, is referring to broken marriages,
single mothers, and inner-city kids who join gangs and sell dope.
But are these the only villains -- or the most important ones
-- responsible for the shredded social fabric? What about well-to-do
white boys who trade on family connections, welsh on loans, run
with con men, and leave financial ruin in their wake as they line
their own pockets? What about grown men, with access to the most
powerful public office in the land, who participate in scandal
but show no remorse for any of it -- and who take no responsibility
for the consequences of their own actions?
It's certainly reasonable for candidate
Bush to engage the public in a discussion of family values, to
use his office as a bully pulpit on modern morals. But what of
George Bush's inability or unwillingness to grasp the crisis of
values festering within his own family? The pattern of behavior
by the president's three sons raises questions -- about them and
their father. These issues have yet to get the prime-time exposure
of fictional Murphy Brown's fictional fatherless child.
Stephen Pizzo is author of Inside Job:
The Looting of America's Savings and Loans.
The Bush page