The Bush Family: A Continuing Criminal Enterprise?
Gary W. Potter, PhD.
Professor, Criminal Justice
Eastern Kentucky University
EXCERPT...
Jeb Bush: Influence Peddling for a “Bust-Out” Scam
But, Neil Bush was not the only Bush brother involved in the Savings and Loan collapses. Jeb Bush’s, the current Governor of Florida, curious relationship with Miguel Recarey is another illustration. Recarey was a long-time business associate of Tampa organized crime figure Santos Trafficante. Recarey also fled the U.S. facing three separate indictments for labor racketeering, illegal wiretapping and Medicare fraud (Freedburg, 1988: A1). Recarey’s business, International Medical Centers, was the largest health maintenance organization for the elderly in the U.S. and had been supported from $1 billion in payments from the Medicare program. International Medical Centers went bankrupt in 1988 (Freedburg, 1988: A1; Royce and Shaw, 1988: 4). When International Medical Centers went under it left $222 million in unpaid bills and was under investigation for $100 million in Medicare fraud (Freedbrug, 1988: A1; Frisby, 1992: G1). The U.S. Office of Labor Racketeering in Miami referred to Recarey and his company as “the classic case of embezzlement of government funds ... “a bust-out operation” (Freedburg, 1988: A1)
Jeb Bush’s role in this saga being in 1985 when Recarey’s attempt to create his “bust-out scam” corporation ran into a federal regulation that said no HMO could get more that 50% of its revenue from Medicare (Freedburg, 1988: A1; Royce and Shaw, 1988: 4). Jeb Bush intervened on Recarey’s behalf with Helath Human Services Secretary Margaret Heckler and one of her top aides. Convincing them to waive the regulation in the case of Recarey’s company (Freedburg, 1988: A1; Royce and Shaw, 1988: 4). In addition to Jeb Bush’s intervention, Recarey had paid $1 million to senior Republican lobbyists in Washington, who were also working the staff of Health and Human Services in pursuance of a waiver (Freedburg, 1988: A1; Royce and Shaw, 1988: 4). In addition, Jeb Bush had contacted Secretary Heckler earlier about complaints from doctors over the quality of International Medical Centers’ care and allegations that Recarey had embezzled funds form another hospital (Royce and Shaw, 1988: 4). Jeb Bush told an aide to Secretary Heckler that “contrary to any rumors that were floating around concerning Mr. Recarey, that he was a solid citizen from Mr. Bush’s perspective down there [in Miami], that he was a good community citizen and a good supporter of the Republican Party” (Royce and Shaw, 1988: 4).
Not surprisingly, in 1988 Recarey’s company gave Jeb Bush’s real estate company $75,000 to help it find a site for a new corporate headquarters (Freedburg, 1988: A1; Royce and Shaw, 1988: 4). It was a bad investment because International Medical Centers had already selected a corporate headquarters location when it hired Jeb Bush (Royce and Shaw, 1988: 4).
Jeb Bush had a role in yet another Savings and Loan fiasco when he defaulted on a loan from Broward Federal Savings and Loan (LaFraniere , 1990: A24). Broward Federal loaned $4,565.000 to J Edward Houston, a real developer in February, 1985. The loan was secured only by Houston’s personal guarantee. On the same day, one of Houston’s company lent the same amount to a partnership made up of Jeb Bush and Armondo Codina for the purpose of purchasing a building in Miami. The Bush-Condina partnership was required to repay the loan only if revenues from the building were sufficient to cover the repayment. Bush and Condina made no payments on the loan at all and in 1987 Houston defaulted on the Broward Federal loan and the Bank sued both Houston and the Bush-Condina real estate partnership. In a sweetheart settlement with the Federal Deposit Insurance Corporation, Bush and Codina only had to repay $500,000 of the $4.5 million loan and got to retain ownership of the building which had been the collateral on the loan. In 1991, the FDIC sued the officers and directors of Broward Federal charging that the loan ultimately used by Bush and Codina was an example of the bank’s negleient lending practices (Frisby, 1992: G1). The Bush-Codina loan played a key part in the failure of Broward Federal which cost taxpayers $285 million (LaFraniere , 1990: A24).
George Bush, Jr.: Insider Information, Oil, and Baseball
The present President Bush has also reaped significant benefits from some highly questionable business practices:
Bush sold $828,560 worth of Harken stock [on June 20, 1990] just one week before the company stock posted unusually poor quarterly earnings and Harken stock plunged sharply. Shares lost more than 60% of their value over 6 months. When Bush sold his shares, he was a member of a company committee studying the effect of Harken’s restructuring, a move to appease anxious creditors. According to documents on file with the Securities and Exchange Commission, his position on the Harken committee gave Bush detailed knowledge of the company’s deteriorating financial condition. The SEC received word of Bush’s trade eight months late. Bush has said he filed the notice but that is was lost (Hedges, 1992: 57-59).
At the time of the stock sale President Bush was fully aware that Harken Energy was in a serious cash flow crisis and was about to lose millions of dollars (Yost, 2000). Bush was investigated for insider trading, but on October 18, 1993, Bruce A. Hiler, the SEC’s associate director for enforcement, wrote a letter to Bush’s lawyer stating that “the investigation has been terminated as to the conduct of Mr. Bush, and that, at this time, no enforcement action is contemplated with respect to him” (Lardner and Romano, 1999: A1). Hiler’s official letter went on to say that it “must in no way be construed as indicating that the party has been exonerated or that no action may ultimately result from the staff’s investigation” (Lardner and Romano, 1999) It is instructive to note that head of the SEC at the time of investigation was a supporter of then-President Bush, as was the SEC’s general counsel (who later acted as George W. Bush’s private attorney) (Yost 2000). In addition, Harken, despite its poor performance and large losses, paid unusually high salaries and benefits to President Bush (Hedges, 1992: 57-59). Bush was allowed to purchase stock options at a 40% discount, paid for by company loans that were frequently forgiven (Hedges, 1992: 57-59).
Harken Energy was awarded a contract to drill offshore oil wells for the government of Bahrain in 1990. It was a curious contract because Harken had never drilled an oil well in water. While Bahrain government officials denied that the fact that the President’s son was on Harken’s board had any impact on the contract, the Wall Street Journal quoted an official of Harken Energy as saying there was “never any question” about George W. Bush’s involvement (Morrison, 1999: A26).
CONTINUED...
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