Billie Sol Estes (born January 10, 1925) is an American former financier[1] best known a business scandal that sent him to jail for fraud multiple times and complicated by his ties to friend and later U.S. President Lyndon B. Johnson.[2] Estes currently lives in Granbury, Texas.
In the late 1950s, Estes was heavily involved in the Texas anhydrous ammonia business. He produced mortgages on nonexistent ammonia tanks by convincing local farmers to purchase them on credit, sight unseen, and lease them from the farmers for the same amount as the mortgage payment, paying them a convenience fee as well. He used the fraudulent mortgage holdings to obtain loans from banks outside Texas who were unable to easily check on the tanks.
At the same time, United States Department of Agriculture began controlling the price of cotton, specifying quotas to farmers. The program included an acreage allotment that normally was not transferable from the land it was associated with, but which could be transferred if the original land was taken by eminent domain.
Estes worked out a method to purchase large numbers of cotton allotments, by dealing with farmers who had been dispossessed of land through eminent domain. He convinced the farmers to purchase land from him in Texas and transfer their allotments there, with a mortgage agreement delaying the first payment for a year. Then he would lease the land and allotments back from the farmer for $50 per acre. Once the first payment came due, the farmer would intentionally default and the land would revert to Estes; in effect, Estes had purchased the cotton allotments with the lease fees. However, because the original sale and mortgage were a pretext rather than a genuine sale, it was illegal to transfer the cotton allotments this way. Estes, however, a smooth talker revered by many of his fellow members of the Churches of Christ, asserted the allegations as politics.[3]
Eventually, Estes' schemes collapsed, and in 1964 he was tried and convicted on charges related to the fraudulent ammonia tank mortgages on both federal and state charges and was sentenced to 24 years in prison. His state conviction was later overturned by the United States Supreme Court in Estes v. Texas, 381 U.S. 532 (1965). His appeal hinged upon the alleged impossibility of a fair trial due to the presence of television cameras and broadcast journalists in the courtroom. He prevailed by a 5-4 vote. Estes was released on parole in 1971. Eight years later, he was convicted of other fraud charges and served four more years.[2]
Oscar Griffin, Jr., the journalist who uncovered the scandal, later received the 1963 Pulitzer Prize.[4] His articles for a weekly newspaper in Pecos, Texas outlined how the businessman masterminded a byzantine scheme to borrow money using nonexistent fertilizer storage tanks as collateral, leading to the FBI's investigation.[2] When Griffin died in 2011, Estes remarked "It’s a good riddance that he left this world."[2]
Congress held hearings into the matter and other Estes activities that led the highest levels of the Administration of President John F. Kennedy, in particular Vice President Johnson, who had been a business associate with Estes in several matters. Some historians say the vice president tried to help Estes with questionable dealings with the Agriculture Department after the tank fraud has been exposed.[2] Others noted that Kennedy may have considered dropping Johnson from his ticket in 1964, partly because of the Johnson-Estes connection.[2]