WHEN THE FEDERAL GOVERNMENT sued Houston financier Charles Hurwitz in 1995 for more than a billion dollars, it seemed to many people that one of America’s most corrupt and notorious businessmen had finally been run to ground. He was accused of looting one of the biggest savings and loans in the state, United Savings Association of Texas, whose 1988 failure had cost taxpayers $1.6 billion. It was the usual, dreary story of eighties-era chicanery, said the government’s lawyers: Hurwitz had invested in high-risk junk bonds in collusion with his pal Michael Milken, the convicted stock felon; gambled with depositors’ money; and enriched himself while the company suffered staggering losses. The size of the suit seemed to match the scope of the skulduggery: It was one of the biggest cases ever mounted by the government against a banker.
Nor were Hurwitz’s predations limited to the banking world. By the time he was sued for destroying United Savings, he had already established himself as the principal enemy of the environmental movement in the American West, which saw him as a sort of implacable, Mephistophelian corporate predator. The story goes like this: Wielding Milken’s bonds, Hurwitz had engineered the hostile takeover in 1986 of a family-run, environmentally friendly California timber company called Pacific Lumber, which owned the largest private stands of old-growth redwoods in the United States. In order to pay off his crushing junk bond debt, Hurwitz both raided the company’s pension fund and doubled the harvest of the ancient trees, heedlessly destroying forests, habitat, and endangered species. His strategy was to strip the company and its forests bare and ship the profits back to Houston.
If the “rape of the redwoods” story sounds familiar, that’s because it has been splashed in headlines across the country for the past twenty years. It has been featured in countless newspapers and magazines and on television shows such as 60 Minutes. If you have heard of the endangered spotted owl or seen pictures of protesters in redwood trees, it is almost certainly because of Charles Hurwitz. The stories told how Wall Street greed had turned chain saws loose upon the pristine, mist-shrouded forests of the Northwest, how a raider from Houston had ruined a great, iconic American company. The parable was so pointed, so neatly Manichaean, and so easily grasped that it was impossible to resist, and almost no one in the media could. That the government had fingered Hurwitz as one of the chief scoundrels of the savings-and-loan scandal only made the story better.
There was just one problem. It wasn’t true. Virtually every statement in the first two paragraphs of this story is false. Charles Hurwitz did not cause the failure of United Savings. He did nothing wrong at all, in fact: no fraud, no self-dealing, no mismanagement, not even what might