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                             Bush Family Value$
                      The Bush clan's family business

                              by Stephen Pizzo

                        Mother Jones, Sept/Oct 1992



                                  Contents
                               --------------
                         * George W. Bush, Jr.
                         * John Ellis ("Jeb") Bush
                              o Jeb and Armando Codina
                              o Jeb and Camilo Padrera
                              o Jeb and Miguel Recarey
                              o Jeb and the Contras
                              o Jeb and "Manny" Diaz
                         * Neil Bush



     In 1991, President Bush bristled at a flurry of news accounts that
     questioned the business ethics of three of his sons. "The media
     ought to be ashamed of itself for what they're doing," Bush
     complained. "They [the boys] have a right to make a living, and
     their relationships are appropriate," added a White House
     spokeswoman in June 1992.

     Since George Bush has raised "family values" as a campaign issue
     repeatedly, though, it seems only fair to take a look at his own
     family. A computer search showed that over the past five years
     stories have periodically surfaced chronicling the individual
     business antics of the president's sons -- each riding comfortably
     through life in the slipstream of his father's growing power and
     influence.

     Although a handful of good reporters for the New York Times, LA
     Times, Village Voice, and Wall Street Journal have diligently been
     digging through business records for months, something has been
     missing: an overview that "connects the dots" in the myriad deals
     that have been examined, making it clear that cashing in on
     influence has become a pattern of behavior extending through the
     first family.

     Instead of criticizing reporters, the president might more wisely
     begin listening to those in government who have watched his sons
     with mounting worry. A year ago, I sat across a desk from a Secret
     Service agent who had been assigned to Bush-family security. I
     rattled off the names of a half-dozen questionable characters who
     had found their way into business deals with the Bush boys. How
     had these characters been allowed to get even close to the
     president's sons?

     The agent slumped back in his chair and sighed. "We warn them," he
     said in a whisper. "But that's all we can do. We can't stop these
     kids from associating with someone they want to be with. All we
     can do after warning them is to sweep these guys with metal
     detectors when they come around."

     What follows is a sourcebook of concerns about the president's
     three sons.



     George W. Bush, Jr.

     None of George Bush's offspring is more his father's son than
     George W. Bush. George Jr., or "Shrub" as Molly Ivins refers to
     him, began his own Texas oil career in the mid-1970s when he
     formed Bush Exploration. Like the business dealings of his
     brothers, George's company was not a success, and it was rescued
     in 1983 by another oil company, Spectrum 7, run by several staunch
     and well-heeled Reagan-Bush supporters. But by mid-1986, a soft
     oil market found Spectrum also near bankruptcy.

     Many oil companies went belly-up during that time. But Spectrum
     had one asset the others lacked -- the son of the vice-president.
     Rescue came in 1986 in the form of Harken Energy, just in the nick
     of time. Harken absorbed Spectrum, and, in the process, Junior got
     $600,000 worth of Harken stock in return for his Spectrum shares.
     He also won a lucrative consulting contract and stock options. In
     all, the deal would put well over $1 million in his pocket over
     the next few years -- even though Harken itself lost millions.

     Harken Energy was formed in l973 by two oilmen who would benefit
     from a successful covert effort to destabilize Australia's Labor
     Party government (which had attempted to shut out foreign oil
     exploration). A decade later, Harken was sold to a new investment
     group headed by New York attorney Alan G. Quasha, a partner in the
     firm of Quasha, Wessely & Schneider. Quasha's father, a powerful
     attorney in the Philippines, had been a staunch supporter of
     then-president Ferdinand Marcos. William Quasha had also given
     legal advice to two top officials of the notorious Nugan Hand Bank
     in Australia, a CIA operation.

     After the sale of Harken Energy in 1983, Alan Quasha became a
     director and chairman of the board. Under Quasha, Harken suddenly
     absorbed Junior's struggling Spectrum 7 in 1986. The merger
     immediately opened a financial horn of plenty and reversed
     Junior's fortunes. But like his brother Jeb, Junior seemed
     unconcerned about the characters who were becoming his
     benefactors. Harken's $25 million stock offering in 1987, for
     example, was underwritten by a Little Rock, Arkansas, brokerage
     house, Stephens, Inc., which placed the Harken stock offering with
     the London subsidiary of Union Bank -- a bank that had surfaced in
     the scandal that resulted in the downfall of the Australian Labor
     government in 1976 and, later, in the Nugan Hand Bank scandal. (It
     was also Union Bank, according to congressional hearings on
     international money laundering, that helped the now-notorious Bank
     of Credit and Commerce International skirt Panamanian
     money-laundering laws by flying cash out of the country in private
     jets, and that was used by Ferdinand Marcos to stash 325 tons of
     Philippine gold around the world.)

     Stephens, Inc., also helped introduce the BCCI virus into US
     banking in 1978 when it arranged the sale of Bert Lance's National
     Bank of Georgia to BCCI front man Ghaith Pharoan. (The head of
     Stephens, Inc., Jackson Stephens, is a member of President Bush's
     exclusive "Team 100," a group of 249 wealthy individuals who have
     contributed at least $100,000 each to the GOP's
     presidential-campaign committee.)

     If any of these associations raised questions in the mind of
     George Bush, Jr., he had little incentive to voice them. Besides
     getting Harken stock through the deal, Junior was paid $80,000 a
     year as a consultant (until 1989, when his wages were increased to
     $120,000; recently they were reduced to $45,000). He was also
     allowed to borrow $180,375 from the company at very low interest
     rates. In 1989 and 1990, according to the company's Securities and
     Exchange Commission filing, Harken's board "forgave" $341,000 in
     loans to its executives. In addition, Junior took advantage of the
     company's ultraliberal executive stock purchase plan, which
     allowed him to buy Harken stock at 40 percent below market value.

     Such lavish executive compensation would suggest a company doing
     quite well indeed. But in reality, Harken had little going for
     itself. One Wall Street analyst called Harken's web of insider
     stock deals and mounting debt "a lot of jiggery-pokery." Harken
     was not making money and could not have continued into 1990
     without at least some means of convincing lenders and investors
     that the company would soon find a lot of oil.

     Suddenly, in January 1990, Harken Energy became the talk of the
     Texas oil industry. The company with no offshore-oil-drilling
     experience beat out a more-established international conglomerate,
     Amoco, in bagging the exclusive contract to drill in a promising
     new offshore oil field for the Persian Gulf nation of Bahrain. The
     deal had been arranged for Harken by two former Stephens, Inc.,
     brokers. A company insider claims the president's son did not
     initiate the deal -- but feels that his presence in the firm
     helped with the Bahrainis. "Hell, that's why he's on the damn
     board," the insider says. "...You say, `By the way, the
     president's son sits on our board.' You use that. There's nothing
     wrong with that."

     Junior has told acquaintances conflicting stories about his own
     involvement in the deal. He first claimed that he had "recused"
     himself from the deal; "George said he left the room when Bahrain
     was being discussed `because we can't even have the appearance of
     having anything to do with the government.' He was into a big rant
     about how unfair it was to be the president's son. He said, `I was
     so scrupulous I was never in the room when it was discussed.'"

     Junior alternately claimed, to reporters for the Wall Street
     Journal and D Magazine, that he had opposed the arrangement. But
     the company insider says, to the contrary, that Junior was excited
     about the Bahrain deal. "Like any member of the board, he was
     thrilled," the associate says. "His attitude was, `Holy shit, what
     a great deal!'"

     Through the Bahrain deal, the ties between BCCI and Harken Energy
     grew tighter. Sheikh Khalifah, the prime minister of Bahrain and
     brother of the emir, was also a shareholder in BCCI -- and it was
     Khalifah who played the key role in selecting Harken for the job.
     Sheikh Abdullah Bakhsh, in turn, was a business associate of BCCI
     front man Ghaith Pharoan; he bought a chunk of Harken's stock and
     placed his representative, Talat Othman, on Harken Energy's board
     of directors.

     Did Junior or any of the other Harken Energy executives trade on
     the Bush name in these speculative business deals? None of the
     principals will answer questions. But this much is known: after
     the Harken-Bahrain deal was settled, Othman was added to the list
     of fifteen Arabs who met with President George Bush and National
     Security Adviser Brent Scowcroft three times in 1990 -- once just
     two days after Iraq invaded Kuwait -- while serving on Harken's
     board of directors.

     The promise of hitting it big in the oil-rich gulf was certainly
     critical for Harken. News of the Bahrain deal kept investors
     buying stock and lenders making loans. Still, Harken had nowhere
     near the capital required for such a large offshore operation
     halfway around the world. This required real money. But not to
     worry: The billionaire Bass brothers stepped up to the plate and
     said they'd be happy to underwrite the cost of the drilling in
     return for a piece of the action. (Robert Bass is a member of
     President Bush's Team 100; he and other Bass family members have
     contributed $226,000 to George, Sr.'s, cause since 1988.)

     But even well-heeled friends like the Bass brothers could not
     protect Harken from the troubles of the world. Just four months
     after the Bahrain deal was sealed, storm clouds developed over the
     gulf region, threatening the oil-exploration deal. In May 1990,
     the U.S. State Department sent a chilling but still classified
     report to Scowcroft. The report warned that Iraqi president Saddam
     Hussein was out of control and was threatening his neighbors:

          May 16, 1990
          SECRET
          Attached is a paper containing a list of options for
          responding to recent actions and statements by the
          Government of Iraq. ...We ask that you pass this paper
          to Robert Gates [CIA] for his review.

     Under "options" the memo suggested:

          Ban Oil Purchases: The largest benefit Iraq receives
          from the US is through our oil purchases...
          PRO -- A total ban on oil purchases would have some
          short-term impact.
          CON -- Such action might also have an impact on US Oil
          prices.

     Oil companies had learned, during the years of the long Iran-Iraq
     war, that trouble in the gulf hurts companies with oil interests
     because, for one thing, at the first sound of a rifle shot in the
     gulf region, Lloyds of London jacks up insurance rates on oil
     tankers and company installations. The "wartime" rates are very
     high and cut deeply into company profits and investor confidence.
     If things really get out of hand, pipelines are destroyed and
     waterways are mined.

     The secret memo augured ill for Harken's fledgling venture. To
     compound matters, that same month, Harken's own financial advisers
     at Smith Barney produced a hand-wringing report voicing alarm at
     the company's rapidly deteriorating financial condition. (A former
     company official told Mother Jones that Harken owed more than $150
     million to banks and other creditors at the time.) Since Harken
     wasn't producing anything, it was hard to find a revenue stream,
     unless you count the river of fees, stock options, and salaries
     running into the pockets of Junior and other top Harken
     executives. Junior, as a member of Harken's restructuring
     committee, could not have been ignorant of the report, since the
     board had met in May and worked directly with the Smith Barney
     consultants.

     In June 1990, Junior suddenly unloaded the bulk of his Harken
     stock -- 212,140 shares -- for a tidy $848,560. A former business
     associate says that Junior's motivation was his desire to buy an
     expensive new house in Dallas, for which he wanted to pay cash.
     The June 1990 transaction was an insider stock sale, and security
     laws required that it be reported no later than July 10, 1990. But
     Junior filed no such report, at least not then.

     Then, in August, Iraqi troops marched into Kuwait, and Harken
     shares plummeted 25 percent. Junior would have lost $212,140 if
     he'd waited to sell his shares until then. Still, he didn't file
     his SEC disclosure until seven months later, in March 1991 -- well
     after U.S. troops had finished fighting and the gulf war had moved
     off the front pages. Harken stock rebounded briefly, but quickly
     collapsed again.

     Were government secrets discussed, directly or indirectly, that
     would have given Harken Energy a leg up in exploiting the Bahrain
     deal? The White House won't say. If Junior traded on exclusive,
     nonpublic, insider information, he committed a gross violation of
     SEC rules. Taken together, the company's critical need for success
     in its Bahraini deal and a possible oil embargo to be imposed by
     his father provided Junior with strong motivation to bail out of
     Harken stock before the public discovered either piece of news.
     (SEC spokesman John Heine says he is unaware of any enforcement
     action pending.)

     The folks at Harken Energy weren't the only ones in Texas taking
     care of Junior during the 1980s. He was appointed the managing
     partner of the Texas Rangers baseball team, even though his
     partnership contribution was only a fraction of the team's
     purchase price. Among those coughing up the money to buy the
     Rangers were William DeWitt and Mercer Reynolds, major
     contributors to the president's campaign who had also been in on
     the rescue of Junior's oil company.

     Junior doesn't deny that being a Bush has helped him become a
     millionaire. "I recognize what my talents are and what my
     weaknesses are," he told Texas reporters last year. "I don't get
     hung up on it. Being George Bush's son has its pluses and minuses
     in some people's minds. In my thinking, it's a plus."

     Junior might have been thinking that among the minuses were
     questions about his role at Harken. As this article was being
     prepared -- and in the midst of extensive interviewing of former
     and current Harken business associates -- Junior announced a
     six-month leave of absence as a consultant and member of the
     Harken board. His role in the presidential campaign, the statement
     said, precluded Junior's active involvement at Harken through the
     remainder of 1992.

     In any case, Junior is stepping away from a company in deep
     trouble. Harken stock is trading near its all-time low. Recently,
     test wells in Bahrain turned up dry and the company has not
     produced anything else. "Harken is not hard to understand -- it's
     easy," says Charles Strain, an energy-company analyst in Houston.
     "The company has only one real asset -- its Bahrain contract. If
     that field turns out to be dry, Harken's stock is worth, at the
     most, 25 cents a share. If they hit it big over there, the stock
     could be worth $30 to $40 dollars a share. It's a pure crapshoot."



     John Ellis ("Jeb") Bush

     After graduating from Texas University, Jeb Bush served a short
     apprenticeship at the Venezuelan branch of Texas Commerce Bank in
     Caracas before settling in Miami, in 1980, to work on his father's
     unsuccessful primary bid against Ronald Reagan. Campaigning for
     Dad was hardly a paying job. But Jeb was about to learn that being
     one of George Bush's sons means never having to circulate a
     résumé.

     In the next few years, financial support flowed to Jeb through
     Miami's right-wing Cuban community. Republican party politics and
     a series of business scandals -- including Medicaid fraud and
     shady S&L deals -- were inextricably intertwined. A former federal
     prosecutor told MJ that, when he looked into Jeb's lucrative
     business dealings with a now-fugitive Cuban, he considered two
     possibilities -- Jeb was either crooked or stupid. At the time, he
     concluded Jeb was merely stupid.



     Jeb and Armando Codina

     Shortly after arriving in Miami, Jeb was hired by Cuban-American
     developer Armando Codina to work at his Miami development company
     as an agent leasing office space. A couple of years later, Jeb and
     Codina became business partners, and in 1985 they purchased an
     office building in a deal partly financed by a savings and loan
     that later failed.

     The $4.56 million loan, from Broward Federal Savings in Sunrise,
     Florida, was granted in such a way that neither Codina's nor
     Bush's name appeared on the loan papers as the borrowers. A third
     man, J. Edward Houston, borrowed the $4.56 million from Broward
     and then re-lent it to the Bush partnership. When federal
     regulators closed Broward Savings in 1988, they found the loan,
     which had been secured by the Bush partnership, in default.

     As Jeb's father was finishing his second term as vice-president
     and running for the presidency, federal regulators had two
     options: to get Jeb Bush and his partner to repay the loan, or to
     foreclose on their office building. But regulators came up with a
     third solution. After reappraising the building, regulators
     decided it wasn't worth as much as was owed for it. The regulators
     reduced the amount owed by Bush and his partner from $4.56 million
     to just $500,000. The pair paid that amount and were allowed to
     keep their office building. Taxpayers picked up the tab for the
     unpaid $4 million.

     After the Broward Savings deal was revealed, Jeb described himself
     and his partner as "victims of circumstances."



     Jeb and Camilo Padrera

     By 1984, Jeb had been made chairman of the Dade County Republican
     party, and it was as Republican party chief that he nuzzled up to
     con man Camilo Padreda. Padreda was serving as Dade County GOP
     finance chairman and had raised money for the party from Miami's
     Cuban community. (He had also been a counterintelligence officer
     for deposed Cuban dictator Fulgencio Batista.) Padreda made his
     living as a developer who specialized in deals with the corrupt
     Department of Housing and Urban Development. In 1986, he hired Jeb
     as the leasing agent for a vacant commercial-office building,
     which Padreda had built with $1.4 million in federal loans --
     loans approved by HUD officials, oddly enough, even though they
     knew there was already a glut of vacant office space in Miami.

     Like so many of those who would attach themselves to the Bush sons
     over the years, Padreda brought some hefty luggage with him. In
     1982, four years before teaming up with Jeb, Padreda, along with
     another right-wing Cuban exile, Hernandez Cartaya, was indicted
     and accused of looting Jefferson Savings and Loan Association in
     McAllen, Texas. The federal indictment charged that the pair had
     embezzled over $500,000 from the thrift. (Cartaya was also charged
     with drug smuggling, money laundering, and gun running.) But the
     Jefferson Savings case would never go to trial.

     Soon after the indictment, FBI officials got a call from someone
     at the CIA warning the agents that Cartaya was one of their own --
     a veteran of the failed Bay of Pigs invasion -- according to a
     prosecutor who worked on the case. In short order, the charges
     against Padreda were dropped and the charges against Cartaya were
     reduced to a single count of tax evasion. (Assistant U.S. Attorney
     Jerome Sanford was furious and filed a demand with the CIA, under
     the Freedom of Information Act, for all documents relating to the
     agency's interference in his case. The CIA, citing
     national-security reasons, denied Sanford's request.)

     In 1989, Houston Post reporter Pete Brewton wrote about Jefferson
     Savings and Cartaya in a series of stories alleging that CIA
     operatives and contractors had systematically misused at least
     twenty-six savings and loans during the 1980s as part of a secret
     program to fund illegal "off-the-shelf" covert operations,
     particularly those aiding the Nicaraguan contras. (CIA officials
     denied the charge, but admitted to the House intelligence
     Committee in 1990 that former CIA operatives had been working at
     four of the S&Ls named in Brewton's article. A CIA spokesman
     claimed that agency operatives had done nothing illegal.)

     The Jefferson Savings affair occurred four years before Jeb Bush
     met Padreda, and it is possible he missed earlier reports. But he
     could hardly have passed over the next batch of stories involving
     Padreda's questionable practices, because they were spread across
     the front pages of Miami's papers in 1985, just months before the
     two teamed up. These stories, in Jeb's hometown paper, alleged
     that Padreda had improperly influenced a local politician -- the
     Dade County manager, to be precise, who'd been made a secret
     partner when Padreda ran into trouble getting a parcel of land
     rezoned. The property was promptly rezoned, and the county
     official made a quick $127,000 profit when Padreda, in turn,
     "sold" it to an offshore Padreda partnership. That partnership was
     controlled from Panama by a fugitive Miami attorney, who had
     already been indicted for laundering drug money. (The official
     resigned, but Padreda was not charged in the case.)

     Yet the 1985 scandal did not seem to lessen Jeb's enthusiasm for
     Camilo Padreda. Jeb enthusiastically accepted the task of finding
     tenants for Padreda's empty HUD-financed office building. Padreda,
     the government officials involved, and Jeb all refused to answer
     questions about the scandal. But of allegations that Padreda
     engaged in illegal behavior, there remains no doubt. In 1989, he
     pleaded guilty to charges that he defrauded HUD of millions of
     dollars during the 1980s.

     Jeb and Miguel Recarey

     With Miami awash in empty office space in 1986, it was no small
     event when bagged International Medical Centers as a key tenant
     for Padreda's HUD-financed building. IMC, which leased nearly all
     the space in Padreda's vacant building, was at the time one of the
     nation's fastest-growing health-maintenance organizations (HMO)
     and had become the largest recipient of federal Medicare funds.

     IMC was run by Cuban-American Miguel Recarey, a character with a
     host of idiosyncrasies. He carried a 9-mm Heckler & Koch
     semiautomatic pistol under his suit coat and kept a small arsenal
     of AR-15 and Uzi assault rifles at his Miami estate, where his
     bedroom was protected by bullet-proof windows and a steel door. It
     apparently wasn't his enemies Recarey feared so much as his
     friends. He had a long-standing relationship with Miami Mafia
     godfather Santo Trafficante, Jr., and had participated in the
     illfated, CIA-inspired mob assassination plot against Fidel Castro
     in the early 1960s. (Associates of Recarey add that Trafficante
     was the money behind Recarey's business ventures.)

     Recarey's brother, Jorge, also had ties to the CIA. So it was no
     surprise that IMC crawled with former spooks. Employee résumés
     were studded with references to the CIA, the Defense Intelligence
     Agency, and the Cuban Intelligence agency; there was even a fellow
     who claimed to have been a KGB agent, An agent with the U.S.
     Office of Labor Racketeering in Miami would later describe IMC as
     a company in which "a criminal enterprise interfaced with
     intelligence operations."

     Recarey also surrounded himself with those who could influence the
     political system. He hired Jeb Bush as IMC's "real-estate
     consultant." Though Jeb would never close a single real-estate
     deal, his contract called for him to earn up to $250,000 (he
     actually received $75,000). Jeb's real value to Recarey was not in
     real estate but in his help in facilitating the largest HMO
     Medicare fraud in U.S. history.

     Jeb phoned top Health and Human Services officials in Washington
     in 1985 to lobby for a special exemption from HHS rules for IMC.
     This highly unusual waiver was critical to Recarey's scam. Without
     it, the company would have been limited to a Medicare patient load
     of 50 percent. The balance of IMC's patients would have had to be
     private -- that is, paying -- customers. Recarey preferred the
     steady flow of federal Medicare money to the thought of actually
     running a real HMO. Former HHS chief of staff McClain Haddow (who
     later became a paid consultant to IMC) testified in 1987 Jeb that
     directly phoned then-HHS secretary Margaret Heckler and that it
     was that call that swung the decision to approve IMCs waiver.

     Jeb admits lobbying HHS for the waiver, but denies talking to
     Secretary Heckler -- and denies as well the charge that his call
     won the HHS exemption. "I just asked that IMC get a fair hearing,"
     said later. After the IMC scandal broke in 1987, Heckler left the
     country, having been appointed U.S. ambassador to Ireland, a post
     she held until 1989. (Heckler is now a private citizen living in
     Virginia. We left a detailed message with her secretary, outlining
     our questions, but she declined to respond.)

     In any case, the highly unusual waiver by federal officials
     allowed IMCs Medicare patient load to swell -- to 80 percent --
     and the money poured in. At its height in 1986, IMC was collecting
     over $30 million a month in Medicare payments; in all, the company
     would collect $1 billion from Medicare. (Jeb would not discuss the
     IMC affair with Mother Jones. But in an opinion piece he wrote for
     the Miami Herald last May, he insisted that he had worked hard for
     IMC, looking for real-estate deals, and had earned his $75,000 in
     commissions. While acknowledging making a telephone call to one of
     Heckler's assistants on IMC Is behalf, he claimed the waiver was
     not granted on his account. The allegation of a connection, Jeb
     wrote, "is unfair and untrue.")

     Despite Jeb's involvement, trouble began brewing for IMC when a
     low-level HHS special agent in Miami, Leon Weinstein, discovered
     that Recarey was defrauding Medicare through overcharges, false
     invoicing, and outright embezzlement. Weinstein had been following
     Recarey's activities since 1977, and as early as 1983 he believed
     he had enough information to put together a case. However, he
     found his HHS superiors less than receptive; they took no action
     on Weinstein's information.

     But Weinstein kept digging and in 1986 renewed his investigation
     of Recarey and IMC -- and again his HHS superiors blocked the
     probe. "Washington just refused to pursue my evidence," Weinstein,
     now retired, told Mother Jones last spring. "And they made it
     perfectly clear that I was not to pursue IMC. When I did, they
     threatened me and threatened my job."

     Weinstein dug in his heels. "I had them this time. I told my
     superiors I would fight this time because I had nothing to fear. I
     had just reached retirement age. They immediately backtracked," he
     says. Weinstein was allowed to continue his investigation --
     though HHS still took no formal action against Recarey. Eventually
     Weinstein turned to Congressmen Barney Frank (D-NY) and Pete Stark
     (D-CA) with his information, sparking congressional hearings into
     the scandal.

     Had it been up to HHS, Recarey would still be running his Medicare
     racket. But by chance, the now-disbanded U.S. Miami Organized
     Crime Strike Force was also investigating Recarey. (Recarey was
     bribing union officials in order to get them to sign workers up as
     patients at IMC, apparently so that IMC could meet its reduced
     non-Medicare patient requirements of 20 percent.) "We didn't know
     anything about the HHS investigation," former Organized Crime
     Strike Force special attorney Joe DeMaria says. "Recarey was
     bribing union officials.... But HHS never contacted us or told us
     anything."

     Before Recarey's trial on bribery charges began, DeMaria's
     investigators also caught Recarey using his former spooks to
     wiretap IMC employees in an effort to discover who was talking to
     federal agents. DeMaria had Recarey indicted a second time, for
     the illegal listening devices. During Recarey's trial on the
     bribery charge, a lawyer who handled the bribe money testified
     that the money IMC gave him was not bribe money but "commissions"
     he had earned while doing work for the company. "See, that
     commission thing was Recarey's MO. They didn't call them bribes,
     they called them commissions," DeMaria explains.

     After he was convicted, Recarey resigned from IMC and was
     immediately replaced by John Ward. (Ward had been law partner to
     Reagan-Bush campaign manager John Sears. And Sears had also been a
     lobbyist for IMC.) But Recarey's Medicare scam would never get to
     a public courtroom airing. Before his trial on the wiretap charge,
     Recarey skipped the country. His getaway was remarkable: just in
     time for his flight, the normally tight-fisted IRS expedited a
     $2.2 million income-tax refund, which Recarey claimed he had
     coming.

     The tax refund was a windfall for Recarey. "Yeah, that was his
     getaway money," says a former IRS investigator who worked in the
     Miami office at the time but asked not to be named. "Though there
     is a special IRS procedure to expedite tax refunds for companies
     in financial distress, I don't think you can overlook the
     possibility that there was influence from the administration."

     Recarey's last act before becoming a fugitive was an attempt to
     wire $30,000 into the bank account of Washington consultant and
     lobbyist Nick Panuzio -- whose partner was then managing George
     Bush's 1988 presidential campaign. (The wire transfer failed only
     because, in his haste, Recarey had gotten Panuzio's account number
     wrong.) It was only after Recarey was safely out of the country
     that the U.S. attorney in Miami -- a political appointee -- filed
     formal charges of Medicare fraud against him.

     Whistle-blower Leon Weinstein retired in disgust from HHS and
     tried to get the IMC case before a judge by filing a Qui Tam suit.
     Such suits allow a private citizen to sue to recover money for the
     government in return for a share of any settlement. In his case,
     Weinstein named IMC and Recarey as defendants. But HHS continued
     to fight Weinstein, first challenging his right to bring such a
     suit and later accusing him of stealing HHS documents before
     leaving his job. When the courts supported Weinstein, HHS then
     stepped in, took over his lawsuit, and shouldered him out. The
     case remains in the courts and is still unresolved.

     HHS officials now pursuing the litigation claim that Recarey
     defrauded the Medicare system of at least $12 million. Leon
     Weinstein says the government is lowballing the loss and that
     Recarey's take from his IMC scam could easily be many times that
     figure.

     Since skipping Miami in 1987, Recarey has been living comfortably
     in Caracas, Venezuela. Thomas Holladay, the consul general of the
     U.S. Embassy in Caracas, told Mother Jones that officials there
     were aware of Recarey's presence and had formally requested his
     extradition. "We made a formal request for his extradition,"
     Consul General Holladay says. "But we can't do anything until the
     Venezuelans turn him over to us, and they have not done that." The
     conversation then ended abruptly. "You know, I'm really not
     supposed to be talking to you about this," Holladay says.

     In May, following inquiries from Mother Jones, Congressman Pete
     Stark, who sits on the powerful House Ways and Means Committee,
     wrote to both the Department of Justice and the Venezuelan
     ambassador in Washington, demanding an explanation for six years
     of inaction on the Recarey case.

     Jeb and the Contras

     The fact that Recarey is living free in Caracas rather than in
     shackles at Fort Leavenworth could well be a result of the role
     IMC may have played in Oliver North's secret contra-supply
     network. Though members of the House Intelligence Committee
     claimed they found no reason to believe that Recarey was using
     IMC's Medicare facilities and funds to aid the contras, the
     evidence that IMC was involved remains compelling. In 1985, the
     same year that Jeb Bush was dialing for dollars to HHS officials
     for IMC, Jeb also hand-carried a letter from Guatemalan physician
     Dr. Mario Castejon to the White House -- directly to his father's
     office in the Executive Office Building. Dr. Castejon's letter to
     Vice President Bush requested U.S. medical aid for the contras.
     George Bush penned a note back to the doctor, referring him to Lt.
     Col. Oliver North -- whose pro-contra activities the president now
     claims he knew little about.

     An entry in North's diary reads:
     22-Jan-85
     Medical Support System for wounded FDN in Miami -- HMO in Miami
     has oked to help all WIA [wounded in action] ... Felix Rodriguez.

     (Rodriguez was a former CIA official who advised Vice-President
     Bush's national-security adviser, Donald Gregg, currently U.S.
     ambassador to South Korea.)

     Veteran CIA operative Jose Basulto told the Wall Street Journal in
     1987 that he had personally attended meetings at IMC headquarters
     in Miami along with contra leader Adolfo Calero and Felix
     Rodriguez. Basulto also said that he had personally brought sick
     and wounded contras to IMC hospitals in Miami, where they received
     free medical treatment.

     Former HHS agent Leon Weinstein is not surprised that Recarey has
     not been returned to the United States. "My investigation,"
     Weinstein says, "led me to conclude that there may have been a
     deliberate attempt to obstruct justice...because Recarey, his
     hospital, and his clinics were treating wounded contras from
     Nicaragua...and part of the $30 million a month he was given by
     the government to treat Medicare patients was used to set up field
     hospitals for the contras."

     Jeb and "Manny" Diaz

     Manuel C. Diaz, another Jeb Bush business associate, runs a
     commercial nursery with headquarters in Homestead, Florida. Manny
     Diaz's previous business sidekick, Charles Keating, Jr., is now
     sitting in a California prison. But during Keating's days at the
     helm of the $6 billion Lincoln Savings, Diaz became a Keating
     insider, confidant, and beneficiary. For example, in 1987, as
     federal regulators closed in on his crumbling empire, Keating
     instructed his attorneys to transfer a large chunk of prime
     Phoenix real estate to Diaz, for just $1. And right before filing
     for personal bankruptcy, Keating transferred his $2 million
     mansion on the island of Cat Cay in the Bahamas to Diaz.

     At the same time Diaz was palling around with Keating, Jeb, then
     serving as Florida's secretary of commerce, arranged a private
     meeting for Diaz with Florida's Republican governor Bob Martinez.
     Promptly afterward, Diaz Farms landed a lucrative, $1.72 million,
     state-highway-landscaping contract -- despite the fact that Diaz
     had little prior highway-landscaping experience. This raised howls
     of protest and charges of political influence-peddling from other
     contractors. But state officials explained that the extraordinary
     speed in issuing the contract had occurred because the state was
     anxious to spruce up 113 miles of freeway for the coming visit of
     the pope.

     Did Jeb know about Diaz's business association with Charles
     Keating? Did he have reason to believe Diaz was qualified for the
     Florida highway contract that he helped Diaz land? These are the
     kinds of detailed questions that the Florida chairman of the Bush
     re-election campaign refuses to answer.

     Neil Bush

     In the March/April issue of Mother Jones, I detailed Neil Bush's
     activities and therefore only sketch his involvement here. Neil
     served as a director of Silverado Banking, Savings and Loan in
     Denver, Colorado, from 1985 until 1988. During that time, the
     now-dead thrift made over $200 million in loans to Neil's two
     partners in JNB Exploration, Neil's abysmally unsuccessful oil
     company. Silverado's failure was due at least in part to the fact
     that Neil's two partners welshed on $132 million in loans.

     Federal regulators determined that, while Silverado was pumping
     loans to Neil's two associates, Neil was completely dependent on
     the two men for his income. The failure of Silverado -- its
     closure delayed until after the 1988 election -- cost taxpayers
     about $1 billion. After almost two years of hand-wringing had
     passed, an expert hired by regulators declared that Neil suffered
     from an "ethical disability," and he was required to pay a $50,000
     fine for his ethical lapses at Silverado. Neil's estimated
     $250,000 in legal bills generated by the scandal are reportedly
     being paid for him by a banking-industry lobbyist who is fighting
     to get banks deregulated.

     After Silverado failed, Neil started a new oil company, Apex
     Energy. This time, his money came from a $2.35 million loan
     through a Small Business Administration program, a loan arranged
     by an old family friend. When news of this reached the press in
     March 1991, the SBA discovered that the companies through which
     the loan was approved were technically insolvent, and it gave them
     up to thirty months to "self-liquidate." This meant that Apex
     would have to repay its SBA-guaranteed loans. Neil took this as
     his cue to move on, and he left Apex -- and its debts -- for
     others to worry about. If Apex Energy can't be sold for more than
     it owes, the SBA, and ultimately the taxpayers, will be stuck with
     the difference. The last time we checked, Apex's only known asset
     was an oil lease, which the company had purchased from Neil for
     $150,000 before he bailed out. That means taxpayers could get
     stiffed for another $2.2 million as a result of Neil Bush's
     wheeling and dealing. The public won't learn the precise outcome
     until later this year, though. The SBA allowed thirty months for
     liquidation of the SBA investment in Apex, putting the resolution
     date just past the 1992 general election.

     President George Bush claims that only a return to traditional
     family values can cure the "poverty of spirit" that plagues places
     like our decaying inner cities. But after a closer look,
     particularly at his adult children, one cannot help but wonder
     about the values that matter to his own family.

     Bush says he is proud of his sons. One of them rented himself out
     to a crooked developer who scammed HUD and helped pry millions out
     of Medicare to fuel a giant health-care scam. A second may have
     profited from an insider stock transaction in a gulf oil deal at
     the very time that U.S. soldiers were dying to make that region
     safe for oil. And the third son ran a savings and loan into the
     ground while shoveling millions of its taxpayer-backed dollars
     into the pockets of two deadbeat partners.

     When President Bush speaks of the lack of family values he, of
     course, is referring to broken marriages, single mothers, and
     inner-city kids who join gangs and sell dope. But are these the
     only villains -- or the most important ones -- responsible for the
     shredded social fabric? What about well-to-do white boys who trade
     on family connections, welsh on loans, run with con men, and leave
     financial ruin in their wake as they line their own pockets? What
     about grown men, with access to the most powerful public office in
     the land, who participate in scandal but show no remorse for any
     of it -- and who take no responsibility for the consequences of
     their own actions?

     It's certainly reasonable for candidate Bush to engage the public
     in a discussion of family values, to use his office as a bully
     pulpit on modern morals. But what of George Bush's inability or
     unwillingness to grasp the crisis of values festering within his
     own family? The pattern of behavior by the president's three sons
     raises questions -- about them and their father. These issues have
     yet to get the prime-time exposure of fictional Murphy Brown's
     fictional fatherless child.



     Stephen Pizzo is author of Inside Job: The Looting of America's
     Savings and Loans.

     Research assistance by Peter Willmert and Chris Rosché.

     © 1992 Mother Jones
     Reprinted for Fair Use Only.




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