The Day Leroy Died
When a small town’s uninsured bank collapsed, all that remained were suspicion, ruined dreams, and despair.
(Page 4 of 4)
On May 26, 1989, the Texas Attorney General’s Office filed its own civil charges of fraud, negligence, and deceptive trade practices against Bill and Jessie Lee Janes, Bill Tankersley, and Ronald Bailey. There is a critical difference between the state’s and the depositors’ cases: The state is representing all of the depositors in the bank, not just the 376 plaintiffs in the earlier lawsuit.
A couple of weeks later, Judge James Clawson of Bell County consolidated the cases and set October 23 as the trial date. The consolidation was bitterly opposed by many depositors. To them, the state had always been the enemy. It was the state’s examiners who had shut down the bank in the first place. It was the state’s liquidators who had sold the bank’s property. And it was the state’s attorneys who had waited nearly two years to file charges while the depositors were paying for their own lawyer. “We’ve kept it boiling all this time,” Bill Vannatta, the depositors’ attorney, says, “and then they come and take it over.”
Vannatta and his clients worry that the state does not really care about the depositors. Before the state stepped in, Janes had been willing to settle out of court for $150,000 and Bailey had offered to put in another $10,000. But the depositors were not willing to settle. The attorney general’s office may see things differently. Even if state attorneys pursue the case aggressively and win a judgment, Bill and Jessie Lee Janes — the only defendants believed to have assets worth pursuing — could always file bankruptcy. Their assets could be tied up indefinitely as other creditors stake their claims. State attorneys may decide that settling makes more sense. But the chances of the depositors recovering more than a few cents on the dollar are slim. Once NCNB, which has first claim on any assets, recovers its share, hardly anything will be left for the depositors.
There is a great deal of confusion about what went wrong at the bank. Still unknown is how much withdrawals by skittish depositors contributed to its insolvency. Banking officials say that they also don’t know whether Bailey or Tankersley legally owned the bank at the time it closed. And they don’t know precisely how much Bailey and Tankersley contributed to the bank’s downfall or how much may have been beyond their control.
One thing is certain: The bank’s troubles began long before it was sold in the spring of 1987. “That kind of damage doesn’t happen in a couple of months.” Says banking department attorney Carlos J. Contreras III. Commissioner Littlefield says, “I can understand why people thought a lot of Janes, but as a banker, your first responsibility is to protect the interests of the depositors. You’re not loaning your own money. You’re loaning theirs.”
Janes has insisted in depositions that the bank was sound when he sold it. He says he did not seek out a buyer; Bailey and Tankersley approached him out of the blue in the spring of 1987 with an offer. Janes says he checked them out by calling a lawyer-friend in San Francisco, who then contacted a California regulatory agency. Bailey and Tankersley flew out from California and spent about eight hours perusing financial statements in Janes’s living room. Janes acknowledges that he didn’t run a credit check or try to find out whether the two men were solvent. For their part, Bailey and Tankersley say they just looked over the statements and took Janes at his word. The price agreed upon was $750,000, but that amount changed several times as Janes and Bailey altered the terms of their agreement. In the end, Janes got no cash from the deal. All he received, he says, was the assumption of $143,000 of the Leroy Bank’s debt.
In depositions, Bailey and Tankersley each say the other actually owned the bank. Bailey says Tankersley provided the cash and hired him to manage it. Tankersley agrees that he came up with the money but says he loaned it to Bailey to buy the bank. Their testimony leaves significant questions unanswered. Why would Janes sell his family business so quickly to two men he says he hardly knew? And if the bank was sound, as he says, why would he sell it for so little?
Bank examiners are still trying to unravel another mystery at the Leroy Bank — transactions of international finance. After the bank changed hands, a series of deposits was made in the Leroy Bank by several offshore firms in the Dominican Republic. Tankersley was an agent for one of those companies. During the three months before the bank failed, four of those companies obtained loans from the bank totaling $1.6 million — loans that were never repaid. And on August 7, 1987, the same day the bank closed, two of the companies overdrew their accounts by about $4,000 each. Could Janes have been there and not known what was going on? Or was he merely there for show?
Other unexpected connections have surfaced. One of the companies that Tankersley was connected to had an affinity for Texas private banks. It was a depositor at both the Leroy Bank and the failed Chilton bank, and the checks to buy the Leroy Bank from Janes were drawn on the two tiny banks.
Another mystery: It also turns out that Bailey and Tankersley knew Judith Kearns. Tankersley says that Bailey introduced him to him to Kearns. In his deposition, however, Bailey says that Tankersley knew Kearns before he did. Kearns herself might not have been the angel of mercy the people of Leroy believed her to be. A couple who knew Kearns in California say that she went to Leroy, not on her own, but as a broker repersenting a group of investors. Lorna Van Orden, one of those investors, says that she and her husband bankrolled Kearns’s trips between Texas and California. They backed Kearns, she says, because they believed that she truly wanted to help the people of Leroy. The Van Ordens have never recovered their investment.
Tankersley, reached at his home in Norwalk, California, refused to talk about the lawsuit. He said he was unemployed and didn’t have enough money to hire a lawyer, so he planned to defend himself. “I don’t anticipated any problems,” he said breezily, “because I didn’t actually make any of the decisions.” Bailey could not be reached for comment.
In Leroy, time has begun to work its own subtle changes. Ten of the depositors have died. Some who are weary of the struggle are trying to forget. Others continue to accuse one another. They stew over the facts, exhausting every possible theory about Janes and the bank failure.
In their desperation, some people even entertain elaborate conspiracy theories. One such theory contends that unnamed powerful people in the Texas government would not let the case go to court because they had used the bank to launder money. Why would anyone be interested in a tiny, unregulated rural bank? Because it’s untouched by bank examiners. Any bank owner willing to ignore a few federal reporting laws could assure depositors of complete privacy. He would be the only one who knew that the money was there. There would be almost no limit to what he could do with the money at his disposal, provided he had no scruples.
Jay and Nita Jones say that they never recovered the $5,000 they lent to Judith Kearns. The Reverend Cecil Anderson put aside his plans for retirement and has gone back to part-time farming. He also reads meters for the water company. Lenora Schutza injured her back and stays in bed most of the day. She spends a lot of time thinking about the lost money and how it could have eased her life. And she thinks about Bill Janes. “He was so nice and friendly,” she says, “if he could help you in any way…” Her voice trails off. “He used to smile a lot. They say he’s still smiling. I don’t know how he can smile when he’s hurt us so bad.”
A Quiet Life
“Many people have lost greatly, and we regret that deeply,” says Bill Janes. He sits uneasily in his living room, he face pensive. He will not talk about the bank, because of the lawsuit against him. But he is willing to discuss Leroy, the town where he spent his childhood, raised two children, and contributed a lifetime of service.
Bill and Jessie Lee have led a quiet lifestyle since the bank closed. He has resigned from his position as mayor. Around town, it’s widely known that he has received threats on his life. The Janeses still attend church, but they have narrowed their circle of friends and keep company only with those who support them. Much of their social life revolves around the church, where Jessie Lee continues to teach Sunday school and Bill led one on The Road Less Traveled, M. Scott Peck’s guide to psychological and ethical well-being.
As Janes speaks, he keeps his face turned aside, his gaze fixed on the window, which looks out from his house onto a green pasture sloping gently toward a creekbed. Occasionally he turns to stare directly, a grieved look in his eyes.
Across the room, Jessie Lee starts to sniffle. She is more indignant than her husband. The controversy surrounding the bank failure has been magnified because the town is so small, she contents; banks fail every day with hardly a fuss. “You think about so many banks closing and people having gone on with their lives,” she says. “I think it’s time to think about the future and what we can do — not dwell on the past.”
Then she comes over to the couch to show off the family album. Its pages are crammed with yellowed newspaper clippings arranged in chronological order. There are photos of her husband alongside his father at the bank, articles about her husband helping farmers make repairs after the 1953 tornado, articles on soil-conservation projects and chess championships. The final clipping describes the sale of the bank in May 1987. After that, the pages of the album are blank.
My Library
