Dad Would Make a Deal with the Devil

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Of all the fast-buck artists who contributed to the savings and loan crisis, Herman Beebe Sr. is among the most notorious. Rising from an impoverished boyhood in Louisiana's woods, Beebe had built, by the early 1980s, a $150 million financial empire that stretched across the Sunbelt. But the brash, stocky financier was actually a ringleader in a network of good ole boys who helped ruin more than a dozen savings institutions by handing out as much as $10 billion in reckless loans -- some of which ended up in Beebe's own pocket. Recalls Beebe's son Ken, who worked for him: "Dad would make a deal with the devil if it looked good."

The centerpiece of Beebe's empire was AMI, his company based in Shreveport, La., which invested in banks and thrifts, insurance companies, motels and nursing homes. Beebe and his colleagues at one time or another held control of nearly 40 banks and S & Ls, through which they allegedly made insider "back- scratching" loans to finance one another's high-risk moneymaking schemes. Their tower of debt collapsed in 1986, brought down by the energy bust and tenacious federal investigators. Having pleaded guilty to two counts of fraud in 1988, Beebe, 61, now washes laundry in a federal prison in Texarkana, Texas, where he is serving a sentence of one year and a day.

Beebe used his financial institutions to bankroll everything from polo fields to time-share condos and mini-warehouses. Though a 1987 federal case against Beebe ended in a mistrial, the Government has contended that he was one of his own biggest customers, using the network of banks and thrifts to finance ventures in which he held hidden interests. "He saw the thrifts as one big gold mine, an endless pit of money," says Joseph Cage, a U.S. Attorney in Louisiana who prosecuted Beebe. Rather than exert his ownership outright, Beebe often held control behind the scenes. One of his tactics was to stake friends like the high-flying financier Don Dixon, who relied on Beebe's backing to acquire Texas-based Vernon Savings & Loan in 1982 and rode the institution to a spectacular collapse in 1987.

As Beebe's enterprises grew, he reveled in the trappings. He acquired a nine-passenger Hawker Siddeley jet to carry business associates on golfing trips. He took clients duck hunting in the Louisiana marshes on a lavish two- story barge. In Shreveport, he built a $1 million home for his family, as well as a gleaming seven-story office building.

But under the glare of investigations, Beebe's roof began to cave in. He was convicted in 1985 of defrauding the Small Business Administration on a loan it made to finance a nursing home from which Beebe allegedly profited. Beebe was sentenced to perform community service, while some of his associates were acquitted. Two years later, the Government accused him of fraud for making loans to a quarter-horse breeder with whom Beebe allegedly held an interest in a tax-shelter scheme. After the 1987 mistrial, Beebe pleaded guilty last year to the two fraud counts.

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