Neil Bush Tied to Firm That Had Role in Land Scheme : Thrifts: The President’s son reportedly was a director of a Silverado Savings unit that acted as a phony buyer of lots to aid a Denver developer.
Neil Bush served on the board of a Silverado savings and loan affiliate that helped a Denver home builder evade securities laws, according to federal documents quoted in a newspaper Sunday.
The President’s son already is awaiting an administrative law judge’s ruling on whether he was guilty of conflicts of interest while serving on the board of the failed Denver savings and loan. The failure of Silverado in December, 1988, is expected to cost taxpayers $1 billion.
The Denver Post reported Sunday that it had obtained Securities and Exchange Commission documents about Bush’s role on a management committee of Silverado-Elektra Ventures Ltd., the land development arm of Silverado.
Silverado-Elektra was a joint venture between Silverado Banking, Savings & Loan and Elektra Brokerage Co., a Denver real estate firm. S&Ls; spun off land companies after federal deregulation of the industry in the early 1980s allowed thrifts to invest directly in real estate.
Bush has declined to comment on his role as a board member. His attorney, James Nesland, said Bush served on the panel from late 1985 or early 1986 until 1988.
Bush’s actions on the oversight committee may or may not become part of a $200-million negligence lawsuit filed by the Federal Deposit Insurance Corp. against Bush and other Silverado directors and officers, said FDIC spokesman David Barr.
“We’re reserving that comment until it comes to trial,” Barr said. “That doesn’t mean it’s going to be an issue at the trial.”
The documents show that the committee approved Silverado-Elektra’s role as a phony buyer of some Houston residential lots from MDC Holdings Inc., a Denver home builder, the newspaper reported.
The SEC documents indicated that the Silverado committee knew Silverado-Elektra was to be a straw buyer. Straw buyers typically are employed to disguise property ownership and do not use their own money.
“During the course of its internal review, representatives of the party (Silverado-Elektra) that purchased the residential lots from MDC stated that they would not have purchased the lots had they not felt assured of selling them to the third party,” the documents said.
The Post said previous testimony by then-MDC President David Mandarich showed the home builder wanted to sell several hundred lots in the depressed Houston market to Bellamah Homes of New Mexico. MDC also wanted to buy lots near Castle Rock from a Bellamah Homes subsidiary.
Because MDC is a publicly traded company, federal securities laws prevent it from exchanging properties with Bellamah and then recording a profit on the sale of the Houston lots.
The SEC documents indicate that MDC asked Silverado-Elektra to buy the Houston lots for $3.7 million. The same day, MDC contracted to buy the Castle Rock land from Bellamah Homes, and three days later, Silverado-Elektra sold the Houston lots to Bellamah homes, the documents showed.
The SEC disciplined MDC in September, 1989, for its handling of eight real estate transactions between 1985 and 1987, including employing Silverado-Elektra as a straw buyer and booking profits on the Houston sale. MDC neither admitted nor denied guilt but agreed to make changes in some of its accounting practices.