The Taut Miles from Pecos

Even by Texas standards. Billie Sol Estes stood out as a spectacular example of a man who got very rich very quick. At 37, he owned or was a partner in some three dozen businesses, including grain-storage facilities, a fertilizer firm, cotton plantations, a newspaper and even a funeral parlor. Estimates of his fortune ran as high as $150 million.

A stocky, bespectacled fellow, Estes lived with his wife and five children in the most lavish house in the town of Pecos. It had palm trees out front, a 52-ft. living room with an artificial waterfall at one end. a 45-ft. swimming pool, and barbecue equipment capable of roasting three steers at once. As signs of his influence beyond the boundaries of Pecos, Estes displayed on the walls of his office autographed photos of President Kennedy, Vice President Johnson, Harry Truman.

Adlai Stevenson and other Democratic notables. The Kennedy picture was inscribed: "For Billie Sol Estes, with appreciation and warm regards." Still friendlier was the inscription on the photo of Texas' liberal Democratic Senator Ralph Yarborough: "To a great friend, a true Texan, a grand American--Billie Sol Estes, of Pecos. with warm appreciation."

In the Hole. Billie Sol, as everybody in Pecos called him, had humble beginnings. A farmer's son. he was born and raised in the dusty hamlet of Clyde, Texas. Despite his worldly success, his huge barbecue parties, his orchid-colored Cadillac, he retained many traits from his Bible belt upbringing. He never drank, never uttered a cuss word, frequently delivered sermons as a Church of Christ lay preacher. He had a rule that, except for married couples, males and females (including children) could not swim in his pool at the same time.

But Billie Sol, as it turned out. had a couple of bad habits, too--and one evening last March, FBI agents came to his house and arrested him. Last week he was free on bail, but his empire had collapsed, and he was under indictment on charges of fraud and theft. West Texas was swarming with investigators trying to untangle a web of deceit, fraud and corruption that stretched the 1,500 taut miles to Washington. One major discovery about Billie Sol was that the guesses about the size of his fortune had been fantastically inaccurate; far from being worth $150 million, or even $1 million, he was something like $12 million in the hole.

A Good Deal. Estes made his entrance into big-time wheeling and dealing during the late 1950s as a distributor of anhydrous ammonia, an efficient nitrogen fertilizer used in large-scale farming. He talked New York's Commercial Solvents Corp., one of the U.S.'s biggest manufacturers of anhydrous ammonia, into selling him huge quantities of the stuff on credit, reportedly with five years to pay. Then he sold the fertilizer to Texas farmers at cut-rate prices, driving rival dealers out of business and quickly making himself one of the biggest anhydrous ammonia distributors in the U.S. His losses ran into millions--but the reckoning with Commercial Solvents was still in the future. Estes used the proceeds from his money-losing fertilizer sales to buy or build grain-storage facilities. He expected to reap hefty profits from U.S. Government fees for storing crops deposited by farmers under federal price-support programs.

In order to raise additional capital for expanding his grain-storage domain, Estes concocted a weird scheme involving nonexistent anhydrous ammonia tanks (the ammonia is normally a gas, has to be stored in pressure tanks to keep it liquid). In partnership with a Texas tankmaking firm, Superior Manufacturing Co., Estes would approach farmers with a proposition that went something like this: I need more tanks for my fertilizer operations, but I'm short of ready capital, so I'm offering you a good deal. You buy some tanks from Superior on credit, sign a mortgage for them, and lease the tanks to me. I'll make the lease payments exactly equal to the mortgage payments, so you won't have to lay out any money. All you'll be doing is letting me use your credit for a while. In return. I'll pay you 10% of the purchase price.

To a lot of West Texas farmers, this sounded like something for nothing. Over the course of three years, 1959-61. farmers signed mortgages on some 33,500 storage tanks, at about $1,000 apiece, for a total obligation of some $33.5 million.

Estes and his partners at Superior used the mortgages as collateral to get about $22 million from commercial finance companies in New York. Chicago. Los Angeles and other cities. With the heavy finance-company discounts, plus the initial 10% payments to the farmers, the scheme was a ruinously expensive way of obtaining capital. At the peak, just before his downfall. Estes was paying out something like $500,000 a month to finance companies.

Invisible Tanks. To keep his inverted pyramid from toppling, Estes had to make fat profits from his grain-storage operations. But they never got to be fat enough. Though he did expensive favors for Agriculture Department officials, his storage facilities were only 43% full at the time of his collapse.

Estes hastened his downfall by starting a newspaper in Pecos in competition with the existing paper, the twice-weekly Independent. Fighting back. Independent Editor Oscar Griffin, 29, assigned a reporter versed in business arithmetic to study mortgage records filed in courthouses in Reeves County (where Pecos is located) and other West Texas counties.

Beginning last February, after four months of investigation, Griffin wrote and published a series of articles on the tank-mortgage mess. "Reeves County." he began, "may well be the anhydrous ammonia tank capital of the world--on paper, that is." He went on to detail the absurd totals of mortgaged tanks in that section of Texas and the strange fact that most of the tanks were invisible to human eyes.

Somebody mailed clippings of Griffin's articles to the Los Angeles headquarters of Pacific Finance Corp.. which had advanced Estes some $3,000,000. A task force of Pacific investigators swooped into West Texas. Within a few days. Estes was besieged by investigators from the finance companies, the Agriculture Department, the FBI, and the state attorney general's office. Among the more fascinating items of testimony so far:

> Three Agriculture Department officials accepted gifts of expensive clothing from Estes. According to employees of Dallas' Neiman-Marcus luxury store, Estes brazenly took them into the store and let them select their gifts--$245 suits, $29.95 shirts, and so forth, adding up to more than $1,000.

> One of the officials whom Estes took into Neiman-Marcus, Administrative Assistant William E. Morris (lately fired), had additional reason to be friendly toward Estes: Morris' wife was on Estes' payroll at about $300 a month as "Washington columnist" for the Estes newspaper in Pecos.

> Morris wrote Estes a letter saying that Minnesota's Congressman H. Carl Andersen, a member of the House subcommittee on agricultural appropriations, would be a "good Republican contact" in Congress.

It might be a "good investment." Morris suggested, to help Andersen out of financial difficulties. Shortly afterwards, Morris escorted Andersen to Pecos. where Estes gave the Congressman $5,000 for stock in a coal mine owned by the Andersen family. Estes did not bother to get a stock certificate in exchange.

> Agriculture Secretary Orville Freeman on Nov. 17. 1961, confirmed Estes' appointment as a member of the Government's National Cotton Advisory Committee--although two months before, the department had fined Estes $42,000 for violating cotton acreage-control regulations. Already under way at the time was an even bigger investigation of questionable cotton-acreage dealings by the Estes empire, for which the penalties could run to $500,000 or more.

> Just before an investigation of Estes' cotton-acreage manipulations got under way. an Agriculture Department agent.

Henry H. Marshall, the man in charge of federal cotton allotments in Texas, was found dead in a Texas pasture with five bullet holes in him. He had been shot with his own bolt-action .22-cal. rifle, which lay near his body. The local sheriff declared the death a suicide, but there were doubts whether a man could fire five bullets into himself, pulling the bolt back after each shot.

Into the Shambles. When the Estes case first broke into public view, both Democrats and Republicans in Washington, unsure who had done what to whom, remained warily noncommittal. But as the disclosures piled up. it became clear that the Estes affair might be a useful campaign issue. NEW MESS IN WASHINGTON, headlined the Republican National Committee publication Battle Line. Illinois' Senator Everett Dirksen and Indiana's Representative Charlie Halleck, the Republican leaders in Congress, called for an "all-out" congressional investigation, accused the Democrats of moving too slowly.

Arkansas' Senator John McClellan promised that his Government Operations Committee would hold hearings if the evidence warranted. Commented the Washington Daily News: "When a Democratic House committee stumbled on the favors bestowed on Sherman Adams of the Eisenhower Administration, there wras a feverish rush to uncover all the dirt.

Mr. Adams and his benefactor were unmercifully exposed--and properly so. Why all the reluctance to investigate now?" The insistence that an all-out congressional investigation was needed got some confirmation from a minor Agriculture Department official, N. Battle Hales, who splashed onto the front pages by telling newsmen that the department had shown "favoritism" toward Estes; Hales said that he had reported his suspicions to the FBI but was switched to another bureau and denied access to the files on Estes.

In West Texas, Billie Sol's downfall brought anguish and fear. Farmers who had signed mortgages--some signed scores. and even hundreds--faced ruin if the bilked finance companies could manage to hold them legally responsible for payment.

At week's end scores of investigators--federal, state and private--were still digging into the vast and malodorous shambles. It seemed likely that some gamy discoveries still lay ahead.

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