Silverado 6 – E. Trine Starnes Jr – With God And Ronald Reagan On His Side
Peter Brewton describes E. Trine Starnes Jr as perhaps `the biggest con man that Texas ever produced’ , a dubious honor. (1) Brewton adds:
In terms of dollar amounts [stolen] he easily distanced Billie Sol Estes, friend of LBJ and Morris Jaffee and on a national scale he is right up there with the fugitive financier Robert Vesco
Sol Estes and Vesco, were minor leaguers compared to more modern day financial crooks like Bernie Madoff, Bernie Eggers, Ken Lay and Jeffrey Skilling, but in their day Sol Estes and Vesco were `the Magellan’s’ of their age, probing as yet untapped possibilities of massive fraud, financial shyster pioneers of sorts, paving the way for even higher levels of greed and corruption in the post millenial world. And smooth talking E. Trine Starnes Jr – who never spent a night in jail (from what I can tell) – is right up there with the best of them, and with God and Ronald Reagan on his side to boot.
Certainly an initial scan of the Savings and Loan literature suggests this an accurate portrait.
Twenty odd years after the scandal has died down, Starnes’ name has almost disappeared from public attention. Two references suggest the man is still with us. The first is a 2002 reference to Mr and Mrs. E. Trines Jr as being charter members of the President’s Circle of Texas Christian University in Abilene. The second is a 2008 real estate notice in a New Orleans newspaper stating that an E. Trine Starnes Jr sold a condominium there for $ 150,000 odd dollars to the Road Home Corporation. $150,000 is small potatoes considering the sums that were passing through the man’s hands decades earlier.
Only one bit of information to add to this portrait…an email, from a man claiming to know him. It claims that after the Silverado venture, Starnes lives – or lived – somewhere near San Diego, that he has always been careful to avoid publicity as it could backfire and that he was involved in a real estate kickback scheme in which he’d rent office space for high prices…and then refund some of the money to the renters. The higher rent on the books, inflated the property’s value, making it more profitable to o sell as it gave the appearance the building was more in demand than it was in actuality. The he’d sell the building and the sucker who bought it would wonder why he couldn’t get the rents and profits out of deal that Starnes did.
How accurate a picture? It rings true, the shyster at work trying to remain incognito, avoiding the limelight, still up to his old tricks, traveling quietly in the same right wing Republican circles, but quietly…
If today Starnes Jr. does not have the name recognition of a Neil Bush, still, in his own way he is one of the more curious figures whose fate and that of Silverado Bank converged.
Son of a Texas Church of Christ Evangelist
The son of a Texas Church of Christ Evangelist, Ellison Trines Starnes Sr, `Junior’ s’ is nothing short of a non-stop story of a man out of control.
- His first documented brush with economic troubles was as early as 1973 when at the tender age of 28 he was determined legally responsible for driving a Dallas Texas company called CIC Cosmetics International into bankruptcy. An investor sued and won a judgement against Starnes of nearly $250,000.
- By 1976 he had lost two more fraud judgments in Houston and filed for bankruptcy, listing his debts at $2.4 million, his assets at $6000.
But this was just the beginning.
Able somehow (but how?) to be discharged from bankruptcy in 1977 he entered the real estate field and began a spectacular decade rise – mostly with other peoples’ money – to wealth and power, at least temporarily. At his zenith in 1984, a mere 11 years after driving CIC Cosmetics International into ruin and 7 years after emerging from bankruptcy himself, Starnes was in a much more comfortable financial position. He had somehow gained control of 175 companies and real estate partnerships, 50 properties, oversaw the lives of 500 employees and had an alleged net worth of $222 million.
Not bad for the son of a depression era preacher man.
Like Ken Good, Starnes was living in the fast lane.
- He owned a $1 million home in Houston, a $2 million home in Dallas, a $1 million condo in Vail – watering ground for alot of these Silverado-related scoundrels – and a luxury skybox at Texas Stadium where the Dallas Cowboys played
- He and his wife Kathryn ran up bills of more than $400,000 at Neiman Marcus, probably just as a matter of principle to keep up with the Jones’s.. or the Bushes
- He flies around in a private plane
And then, for no apparent reason, while seemingly riding so high off the hog, in 1988, Starnes suddenly declared bankruptcy once again. As Brewton puts it:
Starnes second bankruptcy was indeed a thing of great beauty and a joy forever sure to warm the cockles of the coldest cynic’s heart (2)
The list of creditors in this Starnes’ second bankruptcy takes up 70 pages with a total of more than 800
- There were at least 21 banks and savings and loans from New Jersey to Florida to Minnesota to Texas, New Mexico and Colorado
- Starnes and his wife had 34 checking accounts in 22 financial institutions and Starnes listed 48 pending law suits against him
- The FDIC had sued Starnes in his bankruptcy filing, claiming he defrauded seven failed banks
- Although Starnes cites debts of approximately $103 million, the figure is misleading. He doesn’t list the debt figure for most of his creditors and omitted the figure of the largest single debt: $77.5 million owed to Silverado Savings in Denver.
- An Associated Press story estimated his total debt to banks and savings and loans at `as much as $500 million’.
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An Associated Press story estimated his total debt to banks and savings and loans at `as much as $500 million’.
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This level of gold medal Olympic level fraud raises a number of questions. How was Starnes able to continually get loans. Some say it was his smooth talking charm. No doubt he excelled at sweet-talking, a useful skill in politics and other forms of high level fraud. A more reflective view suggests this is not, by itself, a credible explanation.
Besides there is another, more tantalizing question that comes to mind: what happened to all the money Starnes borrowed? Did he squirrel it away in his myriad of corporate shells and bank accounts, or was he in the end, merely a conduit for others who used him to get the money giving him his cut, and then funneled it off elsewhere? Much of the money has never been publicly accounted for. Starnes’ high roller life style only accounts for a small portion of a half trillion dollars in bank loans. Nor do his varied business interests begin to explain these large sums. It is impossible to tell without a subpoena to get hold of bank records, and even then it would take a finely tuned forensic accountant to make sense of it all.
While the details are more than a bit foggy and the money trail does run cold, still it is interesting that among Starnes’ many bank accounts included some on the Isle of Jersey (in the English Channel) and in the Bahamas – both centers of tax evasion, big money transfers and money laundering.
Starnes and Silverado
Starnes relationship with Silverado Bank also raises questions. He was easily able to secure $77.5 million in loans from the bank – this at a time when the bank was already in trouble and he was already in financial difficulty. At the very least it suggests how easy it was for people to borrow from banks like Silverado `without even the same checks that a credit card application would receive’ (3). Starnes got these loans from Silverado “despite the fact that Silverado had no previous experience with Starnes, and that Starnes had a previous history of financial instability,” the FDIC said in its lawsuit against him.
The fundamental question is why would Silverado deal with Starnes in the first place? How did he get tied up with Silverado. Brewton suggests that both Starnes and Silverado had close connections with what is referred to as Riddle/Corson/Aubin/Woods Group – a Texas circle of developer-banker types who cannot shake their ties to the Mafia, CIA and other low-life types, in particular Herman Beebe (discussed below). While admittedly the connection is speculative, from what I can tell it is based on existing business connections. Besides, if this is not the case, if Starnes’ introduction to Silverado came through another channel, it has never been substantiated. Admittedly gray areas here, and as will be seen below, complex and somewhat painful to even follow to, less confirm. My current take is that Brewton comes as close as anyone to getting to the bottom of all this and that no one else has even come close.
The $77.8 million in loans Starnes and partner Clinton E. Owens took out from Silverado were described as `substandard’ by regulators who wondered about the lack of financial checks on Silverado’s borrowers. The regulators also noted that the very size of the loan violated Silverado’s own rules.
- The loans came in three tranches, the largest one was for nearly $31 million for the purchase of an orange juice plant near Ft. Pierce Florida that was sold by one Starnes partner to another one. Once sold, the plant was then leased to a company called `TreeSweet Products’ , which incidentally happened also to be owned by Starnes and partner Clinton E. Owens. In classic Starnes style, he happened to be the buyer, seller and real estate agent for the deal and got a cool $1.9 million commission to the sale to himself, payable out of Silverado proceeds.
- In another of the deals in which the loans were used, a Starnes group used $10 million in proceeds from TreeSweet loan to buy the Breckenridge, Colorado Hilton, which Silverado was trying to sell. As with the `TreeSweet Products’ deal, using money borrowed from Silverado, he (or his company) bought a hotel from Silverado in which he also acted as the real estate broker. In this deal, Starnes paid himself $3.8 million in real estate commissions- or double the commission he had gotten from TreeSweet, all with money borrowed from Silverado.
- The third Silverado loan to Starnes was for $16.5 million with the mortgages of two office buildings in Colorado Springs and a second mortgage on an office building in Denver used as collateral. According to the federal investigators, the deal was pretty shady as the loan was used to refinance existing debt on the Colorado Springs building and to purchase a bad loan Silverado held on the Denver building. Again, in exchange for offering Starnes a loan for his business concerns, Silverado, already overloaded with toxic assets hoped to dump some of it off on Starnes, making their books look a little better as a part of the bargain. Predictably, Starnes’ group defaulted on the Colorado Springs properties, which were in any case, worth far less than the amount of the loan.
Looking into the TreeSweet deal, FDIC investigators noted more irregularities, of the type that were typical of both Silverado loans and Starnes’ modus vivendi.
- The regulators observed that the value of the land and property securing the loan was worth much less than the loan amount. The value of the lease was equally suspect. TreeSweet, the lesse, had suffered 18 months of operating losses and was likely to have serious difficulties making its lease payments.
- The FDIC report went on to state that Silverado had no experience in making this type of loan; even its lending officer for this loan conceded that that he did not understand the operation of the TreeSweet plant. This inexperience resulted in Silverado’s failure to obtain reasonable collateral on the plant’s equipment and spray fields.
- Silverado closed the loan – again to someone they hardly knew – without even getting a written appraisal on the property
- A federal examination report on Silverado later stated that although the written appraisal on the property came in at $31.5 million – the approximate value of the Silverado loan to Starnes – that this was $14 million higher than the price the Starnes group paid to acquire the plant in May 1985. Given the fact that TreeSweet was losing money during this period there is no way that it could have appreciated that much in just 3 years. Again, phoney appraisals were common during the S&L scandal. Inflating property values became the basis for getting larger loans.
- TreeSweet ceased operations and declared bankruptcy in January 1988. Starnes had made a financial killing on the commissions. Silverado was left holding the bag on a $30 million loan.
The FDIC suit against Starnes also went to point out that Silverado’s directors “were willing to make large sums available to Starnes even for speculative and poorly underwritten projects in exchange for assistance in temporarily removing bad loans from Silverado’s books.” “Federal regulators sued Starnes in his Houston bankruptcy case, trying to block him from walkingaway from his debts a second time. The government accuses Starnes of defrauding seven failed banks,and sought $2 million from Starnes – a pittance of what he had been able to get his hands on in the first place.
- In Texas he had business dealings with the Allied Bank of Texas, controlled by Walter Mischer, one of the state’s and the nation’s most powerful political brokers. Starnes also had ties to what was called the Riddle/Corson/Aubin/Woods Group
- He also loaned money from Continental Savings in which New Orleans’ Herman K. Beebe, convicted felon and Mafia associate had controlling interests opening up a whole new realm of possibilities and connections. Beebe was a busy man. Altogether, he controlled, directly or indirectly, at least 55 banks and 29 S & L’s in eight states. What is particularly interesting about Beebe’s participation in these banks and savings and loans is his unique background. Herman Beebe had served nine months in federal prison for bank fraud and had impeccable credentials as a financier for New Orleans-based organized crime figures, including Vincent and Carlos Marcello.
- From Continental Savings, Starnes was able to borrow $25 million, an amount that would not have been possible without Beebe’s support. Some of that money was used to purchase and develop the ten story Marina City office building in Chicago.
- As the indomitable researcher Brewton adds `Starnes also had a close relationship with West Belt National Bank where Sandsend Financial Consultants of the Isle of Jersey, an offshore company involved in secreting ill-gotten S&L and drug proceeds, had its Houston bank account. (4)
1. Pete Brewton. The Mafia, CIA & George Bush: Corruption, Greed and Abuse of Power in the Nation’s Highest Office: The Untold Story of America’s Greatest Financial Debacle. SPI Books. 1992. p. 252.
2. ibid p. 253
3. Seattle Times. `Smooth Talking S&L Borrower Goes Broke Twice’. September 23, 1990
4. Brewton, op. cit. p.256
5. http://stuartbuck.blogspot.com/2004_04_01_archive.html
6. ibid
7. http://www.acorn.net/jfkplace/09/fp.back_issues/17th_Issue/rambler4.html
Beneficial Blog! I had been simply just debating that there are plenty of screwy results at this issue you now purely replaced my personal belief. Thank you an excellent write-up.
You only touch the tip of the ice berg. A real slick deal. His office bldgs. tenants would agree to pay inflated rents and then get a rebate after the proprty was all filled up he would refinance and the “sell” the building with little money down and transphere it to some sucker.
If you want to contact me put Trine in the subject line. Just one of his ploys.
it seems to be a good news for the online Bhamas Real estates industry.
His father baptized me in 1958. In 1971 I picked up his tab at a restaurant I managed in downtown Dallas and he cussed me out for that. Total jerk.