The Sharpstown scandal was a stock fraud scandal in the state of Texas in 1971 and 1972 involving the highest levels of the state government. The name came from the involvement of the Sharpstown area of Houston.
The Sharpstown scandal was a stock fraud scandal in the state of Texas in 1971 and 1972 involving the highest levels of the state government. The name came from the involvement of the Sharpstown area of Houston.
The scandal revolved around Houston banker and insurance company manager Frank Sharp and his companies, the Sharpstown State Bank and the National Bankers Life Insurance Corporation (NBL). Sharp granted $600,000 in loans from his bank to state officials who would, in turn, purchase stock in National Bankers Life, to be resold later at a huge profit, after Sharp artificially inflated the company's value. One of the victims of the scandal, Strake Jesuit College Preparatory, lost $6,000,000 and a portion of the school's land following the advice of Sharp. The school bought the resold stock at $20–$26 a share. [1] Using the stock as encouragement, Sharp pushed for legislation that would benefit National Bankers Life, increasing the value of the company to its investors—the very people who would push the legislation through.
The scheme succeeded in generating profits for the investors on the order of a quarter of a million dollars, but the U.S. Securities and Exchange Commission (SEC) stepped in early in 1971, filing criminal and civil charges against former state attorney general Waggoner Carr (D), former state insurance commissioner John Osorio, Frank Sharp, and a number of others. By the middle of 1971, anyone in the state government who might have been connected to Sharp was heavily pressured politically. Allegations of bribery to push the favorable bills through the government spread to House Speaker Gus Mutscher Jr. (D), State Representative Thomas Clifton “Tommy” Shannon (D), state Democratic chairman and state banking board member Elmer Baum, Lieutenant Governor Ben Barnes (D), and even Governor Preston Smith (D).
Gus Mutscher was indicted by the SEC in late 1971, and subsequently tried in Abilene in 1972. He was found guilty of conspiracy for accepting a bribe from Sharp, and sentenced to five years’ probation. As a convicted felon, he was forced to resign his seat. Mutscher appealed the charges, and after the scandal had calmed down, the charges were overturned. He was then elected to county judge of Washington County, and worked as a political consultant and lobbyist until his death in 2023. Sharp was also found guilty of violating federal banking and securities laws, and was sentenced to three years’ probation and a $5,000 fine.
State Representative Tommy Shannon and Rush McGinty (one of Mutscher’s aides) were also convicted of accepting a bribe from Sharp, and sentenced to five years’ probation.
Although none of the other elected officials were found guilty, the damage had already been done to the two Democratic politicians. 1972 was an election year, and everyone who was remotely connected to the scandal was defeated by more moderate Democrats, Republicans, or other reform candidates.
Although not brought to trial, Governor Preston Smith and Lieutenant Governor Ben Barnes saw their political careers effectively ended. Smith, who called the special session to consider the NBL-favorable legislation and then sold his NBL stock for a $62,500 profit before vetoing the legislation, [2] was defeated in the primaries by businessman Dolph Briscoe of Uvalde.
Attorney General Crawford Martin, who in 1967 issued a legal opinion that was said to have allowed a 2,200% increase in the bank’s capitalization, was defeated in the Democratic Primary for renomination by John L. Hill. [3]
The final impact of the stock fraud scandal on Texas politics occurred during the regular session of the legislature in 1973. The lawmakers, led by new House Speaker Price Daniel Jr. of Liberty, a political moderate and son of a former governor, supported by Attorney General Hill, Lieutenant Governor Hobby, and Governor Briscoe, passed a series of far-reaching reform laws. The legislation required state officials to disclose their sources of income, forced candidates to make public more details about their campaign finances, opened up most governmental records to citizen scrutiny, expanded the requirement for open meetings of governmental policy-making agencies, and imposed new disclosure regulations on paid lobbyists. [4]
"Dirty Thirty" was the name given, by Dan Cain, House Committee Clerk, to thirty members of the 1971 Texas House of Representatives who grouped against Texas Speaker of the House Gus Mutscher and other Texas officials charged in the Sharpstown scandal. The coalition of thirty Democrats and Republicans, conservatives and liberals, has been given credit for keeping the Sharpstown stock fraud scandal alive as a political issue. [5]
The Yazoo land scandal, Yazoo fraud, Yazoo land fraud, or Yazoo land controversy was a massive real-estate fraud perpetrated, in the mid-1790s, by Georgia governor George Mathews and the Georgia General Assembly. Georgia politicians sold large tracts of territory in the Yazoo lands, in what are now portions of the present-day states Alabama and Mississippi, to political insiders at very low prices in 1794. Although the law enabling the sales was overturned by reformers the following year, its ability to do so was challenged in the courts, eventually reaching the US Supreme Court. In the landmark decision in Fletcher v. Peck (1810), the Court ruled that the contracts were binding and the state could not retroactively invalidate the earlier land sales. It was one of the first times the Supreme Court had overturned a state law, and it justified many claims for those lands. Some of the land sold by the state in 1794 had been shortly thereafter resold to innocent third parties, greatly complicating the litigation. In 1802, because of the ongoing controversy, Georgia ceded all of its claims to lands west of its modern border to the U.S. government. In exchange the government paid cash and assumed the legal liabilities. Claims involving the land purchases were not fully resolved until legislation was passed in 1814 establishing a claims-resolution fund.
Dolph Briscoe Jr. was an American rancher and businessman from Uvalde, Texas, who was the 41st governor of Texas between 1973 and 1979. He was a member of the Democratic Party.
Preston Earnest Smith was an American entrepreneur and politician who served as the 40th governor of Texas from 1969 to 1973, who previously served as the lieutenant governor from 1963 to 1969.
Benny Frank Barnes is an American real estate magnate, politician, and crisis manager, who formerly served as Speaker of the Texas House of Representatives from 1965 to 1969 and the 36th Lieutenant Governor of Texas from January 21, 1969, to January 16, 1973, for two two-year terms. He was a vice-chair and top fund-raiser of John Kerry's presidential campaign. Barnes was one of only eight persons who raised over $500,000 for Kerry.
Jack Allan Abramoff is an American lobbyist, businessman, film producer, writer, and convicted felon. He was at the center of an extensive corruption investigation led by Earl Devaney that resulted in his conviction and 21 other people either pleading guilty or being found guilty, including White House officials J. Steven Griles and David Safavian, U.S. Representative Bob Ney, and nine other lobbyists and congressional aides.
Frank Wesley Sharp was a land developer in Houston, Texas, United States who was responsible for creating several large post-World War II housing developments.
The Jack Abramoff Indian lobbying scandal was a United States political scandal exposed in 2005; it related to fraud perpetrated by political lobbyists Jack Abramoff, Ralph E. Reed Jr., Grover Norquist and Michael Scanlon on Native American tribes who were seeking to develop casino gambling on their reservations. The lobbyists charged the tribes an estimated $85 million in fees. Abramoff and Scanlon grossly overbilled their clients, secretly splitting the multi-million dollar profits. In one case, they secretly orchestrated lobbying against their own clients in order to force them to pay for lobbying services.
Robert Alton "Bob" Gammage was a Texas politician, having served as a Democrat in the Texas House of Representatives, the Texas State Senate, and the United States House of Representatives.
Tom Moore Jr. was a Democratic member of the Texas House of Representatives from 1967 to 1973 from McLennan County. Moore is most noted for an April Fool's Day prank he played to demonstrate that his fellow legislators often did not read the legislation they were approving and for being a member of the "Dirty Thirty."
Donna Axum was an American beauty pageant winner, author, television executive producer, philanthropist and model. She was crowned Miss America in 1964. One month earlier she had been crowned Miss Arkansas.
Crawford Collins Martin was a Texas State Senator, Texas Secretary of State and Attorney General of Texas from 1967 until his death.
Gus Franklin Mutscher was an American politician who was Speaker of the Texas House of Representatives from 1969 to 1972. He was one of several Texas politicians indicted in the Sharpstown bank stock fraud scandal. He was convicted and sentenced to five years probation for conspiring to accept a bribe. Mutscher’s conviction, however, was later reversed on appeal.
The 62nd Texas Legislature met from January 12, 1971, to May 31, 1971, in regular session, and again in four more special called sessions. All members present during this session were elected in the 1970 general elections.
The 1868-1869 North Carolina railroad bonds scandal took place in North Carolina after Milton S. Littlefield and George W. Swepson defrauded North Carolina of $4 million by issuing fraudulent bonds for a railroad project.
Thomas Hutcheson Bass was a Texas politician, professor, and third-generation Houstonian. In addition to his many years teaching at the high school and university level, he served in the House of Representatives and in Harris County government.
Carlos Flores Truan Sr., was an American businessman from Corpus Christi, Texas, who served for thirty-four years as a Democrat in both houses of the Texas Legislature. He was a state representative from 1969 to 1977 and a senator from 1977 until his retirement in 2003.
Ramiro Muñiz, known as Ramsey Muñiz, was an American political activist. Muñiz was a Mexican American who ran for governor of Texas in 1972 and 1974, each time as the nominee of the Raza Unida Party. He lost both elections to the Democrat Dolph Briscoe, a wealthy banker and landowner from Uvalde, Texas. He is the first Hispanic whose name appeared on a Texas gubernatorial general election ballot.
Frederick Joseph Agnich was a Minnesota-born geophysicist who served from 1971 to 1987 as a Republican member of the Texas House of Representatives. From 1972 to 1976, he was the Texas Republican National Committeeman.
