TRUST OR HUSTLE: The Bush RecordNEIL BUSH. In 1990, federal regulators filed a $200-million lawsuit against Neil Bush and other officers of the Silverado Banking, accusing them of “gross negligence” contributing to its $1 billion collapse.1 “Our conclusion is that Silverado was the victim of sophisticated schemes and abuses by insiders and of gross negligence by its directors and outside professionals,” FDIC Senior Deputy General Counsel Douglas H. Jones said in a statement.2
Bush was reprimanded by the Office of Thrift Supervision for “multiple conflicts of interest” as a paid director of the S&L, including his approval of $132 million in loans from Silverado to two business partners, Bill Walters and Kenneth Good.3 Bush, in turn, had received $550,000 in salaries from a company funded by Walters and Good plus a $100,000 loan from Good that was subsequently forgiven.4 Walters and Good looted an estimated $330 million from Silverado; one Silverado director had shared instructions on how to establish family trusts to protect such secreted funds from repossession by the government.5
A top federal regulator testified to Congress that Washington officials postponed Silverado’s shutdown from October to December 1988, after George Bush’s presidential campaign was successfully culminated.6 The director of the Office of Thrift Supervision asked the Treasury Department to investigate whether political considerations caused the delay, but no such probe was conducted.7 Neil got off paying only $50,000 in a settlement of the $200 million federal suit against him other Silverado directors.8 He didn’t have to worry about his $250,000 legal bill, as Thomas Ashley, a friend of George Bush senior and the head of a banking association that was lobbying the federal government for bank deregulation, formed a legal defense fund to pay the bills.
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JEB BUSH. In 1987, Miguel Recarey, a longstanding business associate of Tampa Mafia boss Santos Trafficante, fled the U.S. under three indictments for labor racketeering, illegal wiretapping, and Medicare fraud.1 His firm, International Medical Centers (IMC), which was America’s largest health maintenance organization for the elderly and which had received $1 billion in Medicare funds, collapsed.2 Recarey’s HMO left $222 million in unpaid bills,3 and was suspected of up to $100 million in Medicare fraud.4 “IMC is the classic case of embezzlement of government funds,” said William Teich, who headed the U.S. Office of Labor Racketeering in Miami. Teich called it a “bust-out operation” where money was “drained out the back door” and disappeared down “a black hole.”5
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Jeb’s defaulted loan from Broward Federal Savings and Loan in Sunrise, Florida transpired as follows.16 On February 1, 1985, Broward Federal loaned $4,565,000 to real estate developer J. Edward Houston, secured only by Houston’s personal guarantee. The same day, a company headed by Houston turned around and loaned the same amount to a partnership of Jeb Bush and Miami real estate developer Armondo Codina for them to buy a five-story building in Miami’s financial district.
Curiously, the Bush-Codina partnership was required to repay the loan from Houston “only as, if and to the extent that the cash flow from the building was sufficient to support those payments.” In fact, Bush and Codina made no payments at all on the loan prior to the final default settlement. In 1987 Houston defaulted on the $4.5 million Broward Federal loan, and the S&L sued both him and the Bush-Codina partnership. In an unusual settlement with the FDIC, Bush and Codina were obligated to repay just $500,000 of the loan and got to keep the building in the Miami financial district that collateralized the loan.
(edited to clean up a messy post)