When Robert Maxwell’s body plunged into the cold waters of the Atlantic on November 5th, 1991, he left in his wake a seemingly endless parade of unanswered questions about the many lives he had led. In his outward facing persona, he was a giant in the world of media, controlling everything from major publishing houses to newspapers. Towards the end, this facade had crumbled under the weight of revelations that he had systematically looted the pension funds of his employees. This points towards Maxwell’s other life: that of a serial criminal, whose crimes escalated from theft to involvement with a worldwide network of organized crime outfits— with the Russian mafia, the Japanese Yakuza, and Chinese Triads just being some key examples.
There was the life of Robert Maxwell the arms merchant, thanks to the globe-trotting activities of his close business partner, Nick Davies. This life was overshadowed by that of Robert Maxwell the spy, with an espionage career stretching back to jaunts with British intelligence during the Second World War. Work for MI6 seems to have been long-running for Maxwell, but he tirelessly collected fellow—and rival—intelligence agency contacts throughout the years. The most important of these was his connections to the Israeli intelligence apparatus, though he also nurtured ties to American intelligence, and to the Soviet KGB.
This impressive range of contacts saw Maxwell embroiled in the infamous PROMIS affair, a joint CIA-Mossad operation that involved a case management database software, developed by Bill Hamilton and his company Inslaw, which had been stolen by a joint effort involving Israeli spymaster Rafi Eitan and President Ronald Reagan’s Justice Department. One of the versions of PROMIS that was fitted with a “trap door” was weaponized by Systematics, a bank data processing firm owned by Arkansas financier Jackson Stephens, and by figures operating at a weapons development facility located on the Cabazon Indian Reservation in Indio, California. This trap door allowed intelligence agencies to peer into users of PROMIS, and so the software was sold to enemy and ally alike. Maxwell was selected as one of the ‘salesmen’ to peddle PROMIS abroad.
The entire operation advanced along several parallel tracks. Maxwell, working for the Israelis, marketed PROMIS to intelligence agencies and national security installations around the world and within the US, including to Los Alamos and Sandia laboratories. The version of PROMIS marketed by Systematics, meanwhile, was sold to large banking institutions, particularly those in Switzerland. This appears have to be been part of the CIA’s “follow the money” program, which tracked and monitored the financial flows of rival nations.
Against this backdrop there are lesser known, but by no means unimportant, activities that Maxwell engaged in. One of these was his attempted purchase in 1988 of a Texas savings and loan (S&L) institution that became known as Bluebonnet. Since his involvement with the company was brief, sputtering out at about four months of negotiations, it would be tempting to write it off as a footnote in the broader Maxwell story—except for the fact that effectively every person involved in the story of Bluebonnet and its sale was connected, in one way or another, to serious financial crime, arms dealing, and the theft and distribution of the PROMIS software.
Understanding Bluebonnet requires unpacking a tangled and diffuse web of fraudsters, intelligence assets, bankers and real estate developers who together rampaged across Texas and surrounding states during the mid-1980s, bilking and crashing a near-limitless number of thrifts and related lending institutions in a then-unprecedented spree of brazen financial crime. Much of this was exactly what the mainstream narrative of the S&L crisis said it was: runaway greed enabled by deregulatory fever, which allowed crooks to spirit away untold sums. Yet, this isn’t the full picture. In many instances, it seems that money was siphoned off into offshore accounts, where it was then used to help finance covert intelligence operations—support for the Contras of Nicaragua, and for the transfer of arms and sensitive technology to the Middle East.
It also requires understanding Maxwell’s unique relationship to Texas. The state and its long history of political corruption rumbles quietly below the story of Maxwell and many of his most notorious affiliates. Take Jeffrey Epstein, for example. His involvement with the Maxwells likely began with his introduction into the world of arms dealing, forged in large part by his alliance with British arms dealer Douglas Leese. According to Leese’s son, Julian Leese, Epstein reportedly first connected with Leese after meeting him at a party that was hosted by a person described as “a well-known oil baron down in Texas.” Per this account, Epstein had first met Leese’s other son, Nicholas, who then brokered the subsequent introduction between Epstein and his father.
The identity of this “oil baron” remains unknown, but ties made in Texas proved enduring for Epstein. In 1982, Epstein placed—and subsequently stole—hundreds of thousands of dollars from Chicago businessman Michael Stroll, which had been for the ostensible purpose of investing in Texas oil producers. As for his Texas-born relationship with Douglas Leese, arms trafficking wasn’t the only door opened for Epstein. Leese reportedly introduced Epstein to Steven Hoffenberg, who then brought him to work for his company, Towers Financial. In 1993, Towers Financial was unveiled as the operator of a massive Ponzi scheme—though the late Hoffenberg has more recently alleged that Epstein was using the company to wash profits from the lucrative arms trade.
Mark Thatcher, son of British Prime Minister Margaret Thatcher, was another associate of Robert Maxwell who arrived in Texas in this same period. He began visiting the state in 1983, and relocated his operations there three years later. Former Israeli intelligence officer Ari Ben-Menashe has charged that during his time in Texas, Thatcher was involved in the clandestine shipment of arms to Iraq—an allegation that spawned a spirited debate in the halls of British Parliament. Perhaps more importantly, Thatcher did have dealings with arms dealer Ian Smalley (also known by the pseudonym “Doctor Doom”), a known provider of weapon systems to both Iran and Iraq. Smalley, at the time, lived on a cattle ranch not far from Dallas, Texas.
Thatcher enjoyed the protection of powerful Texan political figures during his time in the Lone Star state. In 1986, he was facing eviction from his Dallas condominium due to “security requirements” put in place because of his fear of “terrorism.” The eviction was continuing apace until former Senator John Tower intervened, and apparently arranged for Thatcher to receive Federal protection.
It was notably John Tower himself who was Maxwell’s most important Texas contact. Tower had been brought to Maxwell’s attention by none other than Henry Kissinger, who had suggested that the former senator would be the person most suited to open doors necessary for Maxwell’s sale of PROMIS to specific state-run facilities in the United States. Kissinger reportedly made this suggestion to Maxwell sometime in early 1984, while Tower was still in office and serving as head of the Senate Armed Service Committee. Tower would act as Maxwell’s agent until 1986 when, having left office, he joined the board of Pergamon, Maxwell’s scientific publishing press. Throughout the period of his involvement with Maxwell, Tower was reportedly on Mossad’s payroll.
Tower’s impressive roster of contacts connected Maxwell to the commanding heights of the Reagan administration and the prevailing conservative establishment. He also placed the media mogul and spook into the direct proximity of a powerful network in Texas, one with deep complicity in both savings and loans fraud and shadowy covert operations.
Savings and Loans and “Off-the-shelf Operations”
John Tower’s political career long enjoyed the backing of one of Texas’ great political king-makers: construction magnate, land developer and banker Walter Mischer. Though it’s not exactly clear how Tower and Mischer first connected, Mischer headed up the Democrats for Tower, a Democratic Party outreach arm of Texans for Tower, in 1978. Mischer and Tower also moved in the same social circles. For example, mutual associates of each included Robert F. Stewart III, a prominent Texas businessman, and Eddie Chiles, the owner of a large petroleum industry services concern.
Besides Tower himself, Mischer had his own ties to the business circles around Robert Maxwell. One partner of Mischer’s in a major land development project in west Texas was a man named Robert O. Anderson, the figure behind the powerful Atlantic Richfield oil company. Anderson, in turn, was a frequent business partner of Tiny Rowland, a British businessman who counted Maxwell among his circle of closest friends (there are rumors that Rowland helped broker the sale of PROMIS to African countries where his company, Lonrho, had considerable sway). Among the ventures where Anderson and Rowland could be found together was at the British media company The Observer. In 1984, Rowland initiated talks with Maxwell to sell The Observer, though their negotiations bore little fruit.
Mischer’s flagship corporation was Allied Bank, a consolidated banking combine that had been set up in the 1970s and subsequently grew to be Houston’s fourth largest bank by the 1980s. It is through Allied that one can see a fuller picture of Mischer’s ties to the S&L crisis: one of the bank’s prominent customers was Herman K. Beebe, a Louisiana-bred businessman and mob insider who controlled a sprawling empire of banks, insurance companies, nursing homes, and hotel franchises through his Shreveport-based AMI, Inc. AMI borrowed heavily from Allied, and Beebe guaranteed loans from the bank to various fraud-ridden thrifts.
Since around 1976, Beebe became closely linked to former Texas lieutenant governor (and notorious S&L looter) Ben Barnes—himself an intimate crony of Walter Mischer. Despite the 1987 collapse of the multi-million dollar real estate empire that he controlled in partnership with former Texas governor John Connally, Barnes was listed as a director of Steven Hoffenberg’s Towers Financial in 1990, the same period that Epstein was affiliated with the company. Hoffenberg must have been impressed with Barnes’ financial track record, as the former politician was placed on his company’s audit committee.
Recent reporting by the New York Times illustrates how close Barnes himself was to intelligence circles. According to Barnes, in 1980, he participated in a “mission to the Middle East” spearheaded by Connally, the purpose of which was to “sabotage the re-election campaign” of President Jimmy Carter. The pair’s Middle Eastern tour entail meetings with various leaders, where Connally delivered a message intended to be passed to Iran, advising them not to release hostages prior to the election. A report on this trip was then provided to Reagan’s campaign manager and future CIA director William Casey.
Barnes also states, conveniently, that he was unaware of the intention of his trip when he agreed to accompany Connally. At any rate, Barnes’ story is just one example of several overlaps between the “October Surprise” plot against Jimmy Carter and the subsequent S&L crisis. William Casey’s alleged pilot during his meeting with Iranian representatives in Paris was Heinrich “Harry” Rupp, who was also involved in S&L-linked bank fraud in the mid-1980s (details of this fraud will be discussed in part 2 of this article). These sorts of murky ties to the underworld of covert operations also orbit a close associate of Barnes and Connally, Herman Beebe.
A 1985 Comptroller of the Currency report details well over a hundred banks and S&Ls where Beebe exerted hidden control. The report states that Beebe’s “influence and control flows through an extensive web of corporate enterprises and nominees.” Through this vast machine, Beebe became the ultimate wheeler-and-dealer, participating in the looting of countless S&Ls in a manner that confounded law enforcement and federal regulators alike. As journalists Stephen Pizzo and Mary Fricker recount, Beebe “could shift fraudulent deals not only from institution to institution and district to district but from regulatory system to regulatory system—which would make him almost impossible to stop.”
The 1985 Comptroller of the Currency report names Palmer National Bank of Washington, D.C. as one of the banks where Beebe held sway (he had, in fact, helped provide start-up capital for the institution). Palmer’s first chairman was Stefan Halper, the son-in-law of longtime CIA official—and ardent Cold Warrior—Ray S. Cline. During the course of the investigation into the Iran-Contra scandal, Palmer was revealed to have been utilized as a mechanism for moving covert funds destined for the Contras in Nicaragua.
Like his friend Beebe, the aforementioned Walter Mischer was also plugged into the intelligence apparatus, though the full details of his activities in that context remain obscure. Former Houston Post reporter Pete Brewton, in his book The Mafia, the CIA, and George Bush, recounts how multiple law enforcement and political sources informed him that Mischer had been recruited into something of a private intelligence apparatus that was organized by George H.W. Bush after Jimmy Carter became president and began his controversial reforms of the CIA. By the 1980s, under Reagan’s CIA director William Casey, it seems that Mischer continued to work within the orbit of the Agency.
According to Brewton’s sources, Mischer and Bush decided to use Mischer’s former son-in-law, Robert Corson, as a “cut-out” for their intelligence activities. Corson became known to law enforcement as a money launderer who was active in moving money around domestic banks and savings and loans and even ferrying money in and out of the country. The CIA might not have been the only intelligence service that Corson dealt with. “A Texas law enforcement official”, writes Brewton, “…confirmed Corson’s work for the CIA. This officer said that Corson also did work for the Israelis, but may not have known it because there were several layers of cutouts between Corson and the Israelis.”
