House Bank List an Index of Lives Out of Control

By SARA FRITZ and MICHAEL ROSS

March 29, 1992 12 AM PT

TIMES STAFF WRITERS

WASHINGTON —

A messy divorce from a fourth wife. An unexpectedly tough election challenge. A bad investment in a tropical island resort. An indictment on fraud charges. An embarrassing entanglement with a savings and loan that led to an abrupt resignation.

Such are the roots of the House bank scandal. And it is not the traditional Washington imbroglio.

The worst offenders in the House bank case do not represent a saga of official misconduct, public corruption or misuse of office. Rather, they are actors in a tale of private weakness--of individuals enmeshed in webs of personal conduct who cut corners to escape the consequences.

Here is not the government inattention to a developing national crisis that brought on the savings and loan debacle. This is no covert operation run amok like Iran-Contra. Nor does it involve under-the-table payoffs to politicians, the heart of Abscam and a host of other scandals that dot American history.

This week, when the names of the House members with the largest overdrafts are published by the Ethics Committee, the list will expose real-life stories of financial mismanagement, family trauma and career disruption.

As one House Democrat explained, referring to the roughly two dozen lawmakers who wrote the biggest overdrafts: “There’s a sordid side to it. Almost in everybody’s case, it’s someone whose life got out of control.”

But unlike most Americans who have major upheavals in their lives, these House members had a safety net that existed nowhere else--a bank staffed by obsequious patronage employees who thought their job was to help them as much as possible through their difficulties.

“People were getting very large interest-free loans . . . because they were members of Congress,” complained one irate House member. “There was a group of people who understood that if you were short--say you lost money at a casino in New Jersey--you just wrote yourself a $25,000 loan. They were doing something they knew was wrong.”

In that sense, the central question raised by the House bank scandal is not whether these representatives are doing a good job in Washington. The question is should members of Congress, by virtue of their office, expect to be protected by the government when they encounter ordinary personal and financial problems?

Indeed, the House bank scandal has caused many members to ask whether their institution should be run by patronage employees, such as former Sergeant-at-Arms Jack Russ. Known as “Mr. Fixit,” Russ oversaw the bank and ingratiated himself with members by overlooking their overdrafts, fixing their traffic tickets and even providing police cars with sirens to escort them to the airport.

By all accounts, Russ, who has since resigned under pressure, was particularly solicitous of House members whose personal lives were crumbling. In fact, sources said, Russ has told friends that about $10,000 of his own bank overdrafts, which totaled at least $56,800, went to the late Rep. Mickey Leland (D-Tex.), a frequent gambler who was deeply in debt at the time of his death in a plane crash in Ethiopia in 1989.

“If somebody had a problem and needed money, they went to Jack, and he might say to them, ‘Don’t worry.’ . . . He’d look the other way,” explained a high-ranking Democrat. “Jack was a guy who wanted to help members. He would even take things into his own hands.”

Not all of the House members who overdrew their accounts at the House bank were having personal problems, financial or otherwise. Many say their overdrafts are attributable to sloppy accounting procedures at the bank, not their own mismanagement. Even some members with the biggest overdrafts, such as Rep. James H. Scheuer (D-N.Y.), have apparently convinced the Ethics Committee that they were not at fault.

But a preliminary roster of major abusers, contained on a list that was leaked to the news media, includes many people whose lives clearly were in turmoil during the 39-month period examined by the Ethics Committee.

The lineup includes at least five members whose marriages dissolved, two who made a bad investment in a Bahamian island resort, three who lost elections, one with a reputation for high living, one who had invested money with the owners of a failed savings and loan, one under indictment for fraud and one who resigned because of scandal.

Former Rep. Jim Bates (D-San Diego), who was defeated in 1990 and reportedly had $170,686 in overdrafts, said in a telephone interview that he had been told either by Russ or by employees of the bank: “If your account’s overdrawn, don’t worry about it. . . . It was understood that we were covered.”

Bates admitted that a $38,000 check he wrote to his campaign treasury was among his overdrafts.

Bates, who had served on a House subcommittee that oversaw the activities of the Capitol Police--another part of Russ’ empire--indicated that such favors were available to a limited number of House members.

“I knew him (Russ) more than most people,” Bates said. “I’d go to him for things--for example, if I needed a ride to the airport quick in one of the police cars. . . . He was like anyone else, they all have their little links and favorites.

“Some people weren’t into that,” Bates said. “They didn’t know what you could get. Others were aware of what you could get.”

Bates’ defeat in 1990 was widely blamed on sexual harassment charges filed against him by a congressional employee, even though the charges had been dismissed by the Ethics Committee before the 1988 election.

The publicity surrounding the House bank scandal has made many alleged abusers understandably reluctant to discuss their personal finances. Even so, a few who expect their names to appear on the Ethics Committee list freely acknowledged in interviews with The Times that they had problems during the 39-month period, which ended Oct. 3.

Rep. Robert W. Davis (R-Mich.), who went through a highly publicized divorce in 1989, called it the “worst financial period of my life.” In his latest financial disclosure statement, he reported having no personal assets other than his home and debts to three lending institutions within a range of $35,000 to $115,000.

Davis, 59, was divorced from his wife, Marty, in an acrimonious legal battle. At the time, he was living with a 28-year-old woman for whom he obtained a job on the staff of the House Merchant Marine and Fisheries Committee. His wife complained publicly that she was receiving so little support from Davis that she was thinking of applying for welfare.

Like Davis, three others whose names were on the preliminary list--Reps. Mickey Edwards (R-Okla.), Charles Hatcher (D-Ga.) and Charles A. Hayes (D-Ill.)--were divorced during the times they cashed overdrafts at the House bank.

For Edwards, it was his fourth divorce--a costly and embarrassingly public affair that further weakened his already perilous financial situation. Edwards, who reported having no assets or liabilities in 1990, had overdrafts said to have totaled $54,000.

His last ex-wife, Lisa Reagan, a mezzo-soprano and a former Miss Oklahoma, told the Daily Oklahoman last week that whenever Edwards had to cover an overdraft at the House bank, he would simply borrow from the House credit union, creating a growing spiral of debt.

“We had loans out the kazoo,” she said.

Hatcher, whose overdrafts may have totaled $273,361, was divorced last May and underwent open heart surgery during the period investigated. In the divorce settlement, he agreed to pay his ex-wife $20,000 in home equity and college expenses for his children.

Another recently divorced congressman, Hayes, whose overdrafts may have reached $296,681, reported no assets in 1990 and one outstanding personal loan of more than $15,000.

A 1987 divorce also apparently exacerbated the severe financial problems of Rep. Carl C. Perkins (D-Ky.), who is not seeking reelection in 1992. During his divorce, he caused a sensation among his constituents by telling the court that in order to maintain his lifestyle, he needed at least $23,600 a month, more than three times his congressional salary.

Perkins reportedly wrote bad checks with a face value of $565,651.

According to his financial disclosure reports, he was forced to sell the family farm and other property worth $450,000 in 1990 as well as horses, cattle and tobacco worth $80,000. While he still reported owning bank stock worth more than $250,000 and a townhouse worth at least $100,000, he had six bank loans totaling possibly as much as $300,000.

No one in Congress was surprised when the name of Rep. Charles Wilson (D-Tex.) showed up on the list with $143,857 in overdrafts. Wilson is widely known as “good-time Charlie” and for his preference for night life and beauty queens. In 1990, Wilson reported having three personal loans from Texas banks, each one exceeding $15,000.

“We hear he has a sizable number of loans outstanding throughout East Texas,” said Donna Peterson, Wilson’s Republican opponent in the November election. “As far as money is concerned, Charlie Wilson lives well beyond his means.” She said she had been told by Wilson’s many creditors in the district that “we have to reelect Wilson because otherwise, we’ll never get our money back.”

Nor were congressional insiders surprised to see former Rep. Tommy Robinson (R-Ark.) on the list, even though he is by no means good-time Charlie. Former aides said that Robinson, who ran unsuccessfully for governor in 1990, was always burdened with the costs of supporting members of his large extended family. One ex-aide said that Robinson made every purchase with a check and frequently received calls from the House bank about overdrafts.

“He figured out the system. He was using it to the hilt,” said a source close to Robinson, who declined to be identified. “He thought it was almost some kind of perk he was entitled to.”

Robinson received personal loans totaling $339,000 from Jerry Jones, a lifelong friend and owner of the Dallas Cowboys. In 1988, the two men formed a partnership to buy a farm. But when he decided to run for governor against another friend of Jones’, the two men had a falling out and Robinson was forced to borrow $1.2 million to hold onto the farm.

If members of Congress were not surprised to see Robinson and Wilson on the list, they were stunned to see the name of Rep. Stephen J. Solarz (D-N.Y.). His overdrafts may have reached $595,646.

Records show Solarz and his wife, Nina, own debt-free a vacation home on Fire Island worth more than $250,000 and receive rental income of at least $15,000 a year. They also reported annual income ranging from $5,000 to $15,000 from each of two blind trusts.

Solarz, who claimed he broke no rules and violated no laws, lives in one of Washington’s most elegant suburbs and entertains frequently. He appears to have used his House bank account like an interest-free credit card to write checks for roof repairs costing several thousand dollars as well as other regular living expenses without calculating how much he had on deposit.

His monthly home mortgage payment of $1,600 was paid from the account.

Perhaps the most unusual personal story to come out of the House bank scandal is the tale of an investment that eight members of Congress made in a tiny island in the Bahamas. Two of them--Reps. Robert J. Mrazek (D-N.Y.) and Edward F. Feighan (D-Ohio)--were listed among the major abusers of the House bank.

Mrazek reportedly had $351,609 in overdrafts, Feighan $218,994.

Mrazek admitted that a $32,542 check he wrote on his House bank account to cover two delinquent mortgage payments on the island last April resulted in an overdraft. But his aides said the overdraft amounted to only $2,000 and was covered two days later.

The 17-acre parcel of land, known as Pierre Island, was purchased for $475,000 with the idea of turning it into a resort. But it apparently became a financial albatross for the congressmen when real estate prices fell.

This was not the first time that Feighan had been involved in a controversy involving his finances. He was part owner of an asbestos removal company whose manager had been convicted of drug distribution and theft. Feighan sold his interest in the company after the story came to light in 1990.

Another congressman with major overdrafts was Rep. Ronald D. Coleman (D-Tex.). His liabilities in 1990 exceeded $120,000, including two personal loans. His overdrafts reportedly reached $275,849.

For some with big overdrafts, the problems were legal as well as financial.

Former House Assistant Majority Leader Tony Coelho (D-Merced) resigned abruptly in 1989 after the Justice Department began an investigation of an investment he made with the help of Thomas Spiegel, president of Columbia Savings & Loan. Coelho, who often complained of financial problems during that period, reportedly had overdrafts of $292,603.

Likewise, Rep. Harold E. Ford (D-Tenn.), whose overdrafts apparently reached $552,447, was indicted and tried on charges of bank and mail fraud in connection with an alleged influence-buying scheme. It has been estimated that Ford’s legal ordeal, which resulted in a mistrial, cost him $2 million. He paid much of the bill from campaign funds.

And Rep. Bill Alexander (D-Ark.), with overdrafts of $208,546, has weathered a lengthy Ethics Committee investigation of his troubled finances, including a loan he received from a Florida group that allegedly got a federal grant with his help. After making a bad real estate investment not long ago, Alexander, son of a farmer, shrugged it off, saying: “My dad said that when you lose a crop, you just work hard and make another one.”

Times staff writers Karen Tumulty, William J. Eaton and Art Pine also contributed to this story.

The 24 Worst Offenders

Here is a list of the 24 worst offenders in the House bank case. Some have disputed the Ethics Committee’s findings on overdrafts. The months listed refer to the number of months that overdrafts exceeded their next paychecks. ARKANSAS

Rep. Bill Alexander, D, 499 checks, 20 months.

Former Rep. Tommy Robinson, R, 996 checks, 16 months.

CALIFORNIA

Former Rep. Jim Bates, D, 89 checks, nine months.

Former Rep. Douglas H. Bosco, D, 124 checks, 13 months.

Former Rep. Tony Coelho, D, 316 checks, 12 months.

GEORGIA

Rep. Charles Hatcher, D, 819 checks, 35 months.

ILLINOIS

Rep. Charles A. Hayes, D, 716 checks, 15 months.

KENTUCKY

Rep. Carl C. Perkins, D, 514 checks, 14 months.