On a busy Friday just like any other, the Leroy Bank went bust. A crowd of edgy customers had gathered in the dissipating August heat, waiting for the bank to reopen after the ritual afternoon break. Then a brief typewritten message was taped to the door: “4:45 p.m. … The Leroy Bank (Unincorporated) of Leroy, located in Leroy, Texas, is hereby closed as of August 7, 1987, by order of the Banking Commissioner of Texas.”

That was all. Just a few words, but they were enough to spell disaster to the people of Leroy. The customers stood on the sidewalk for a while, uncomprehending. Then one woman stepped forward and began to rap on the door, demanding her safety-deposit box. She was met by a Texas Ranger, so she retreated. Others cursed or shouted questions toward the stone façade. Gradually the realization began to spread through the swelling crowd that spilled into the middle of the street and over to Billy Bettges’s grocery: The bank had really closed, their money was gone, and they might never get it back again.

Long after the sun had set and the bank examiners in business suits had piled into their cars and driven away, a crowd remained in front of the locked bank. Halfway into the night they lingered, bewildered and angry, hoping for an explanation. One man stormed up to the door and began kicking the glass. Others simply stood there, staring at the bank.

There was one person who might have been able to tell them that night why the Leroy Bank had closed. He was Bill Janes, the mayor of Leroy and the owner of the bank until just three months earlier. His house was not far away. Still, no one had the nerve to walk over, knock on his door, and ask what had happened.

It wasn’t as though the failure of a Texas bank was an extraordinary event in the summer of 1987. Statewide that year, 52 banks went under. But the Leroy Bank was a special case, an anachronism in the age of modern banking, because it was a private bank. That meant that its deposits were not insured. The bank closed, and the depositors were out of luck.

When big urban banks go under, few people are immediately affected. When a bank fails in a small rural town, however, nearly everyone is touched. In and around Leroy, hundreds of people lost their life’s savings. But the devastation ran even deeper, into the social fabric of the community. Friends and relatives turned against one another. The downfall of the bank changed their way of life, shattering the values that had held them together for generations.

A Private Trust

A mile and a half east of Leroy on a scruffy rise that overlooks Tehuacana Creek stands a white board-and-batten house that bears a historical marker. It had been built by W. H. Janes, a Kentucky native and Civil War veteran elected to a term as McLennan County commissioner in 1898. Four years later Janes moved his family to Leroy and backed his son, D.T., in opening a lumberyard. In 1907, in the midst of a national financial crisis, he and D.T. joined three other businessmen to start their own bank in an office at the lumberyard. Later that year they moved the bank into a brick building down the block.

In those days private banks were all over the country, often operating out of general stores or businesses such as the Janeses’ lumberyard. They arose out of the relationship between a proprietor and an employee or customer who needed to borrow money. Typically the borrower would offer some sort of collateral, and the deal was sealed with a handshake. Such an agreement worked best between two people who trusted one another. But as the demand for banking grew, a system with more regulation was required. In 1863, Congress authorized the Treasury Department to charter national banks. Not to be outdone, states soon began issuing their own charters.

But Texas was different. Pressure from farmers and ranchers, mistrustful of large financial institutions, kept the state from chartering banks until 1904. Private banks, oriented toward individual customers, retained their popularity in small communities. Their owners understood the seasonal ups and downs of farm and ranch work. Private bankers trusted their customers and took chances on them, basing loans as much on character as on collateral. Their customers responded with loyalty.

That was the style of banking perfected by the Janes family. Knowing their customers as well as they did, they could make allowances when a payment was late. And when a checking account was overdrawn, D.T. was likely to telephone his customer and leave a friendly message that “the pigs are out of the pen.”

During the tumultuous years of the Great Depression, the Leroy Bank held fast while other private banks went belly-up. As the Texas population shifted to cities, most of the remaining private banks converted to state or national charters. In 1923 the state outlawed new private banks but allowed existing ones to continue.

By that time D. T. Janes had become a man of influence in the community. He owned land all over McLennan County, including a large tract on the northwest side of Waco, where the Lake Air Mall and Lake Air Estates sit today. By 1953 D.T. was in a comfortable position to retire from the bank, and he transferred ownership of it to his son.

Tall, thin, and reserved, Bill Janes assumed control at the age of 37 without a hitch. With degrees from Baylor and Columbia universities, he was better educated and more cosmopolitan than either his father or his grandfather. Janes, like his father, taught Sunday school at the Leroy Church. His lessons were laced with erudition — he would bring a book or a magazine article to elaborate on a biblical theme. He played chess skillfully, wrote poetry, and brought a touch of class to the country bank.

Under Bill Janes’s leadership, the bank continued to conduct business in the time-honored way. Daily summaries of the bank’s balances were still recorded in large cloth-bound ledgers. Checking accounts were filed by name, not number. Customers still stored their valuables in cigar boxes, shoe boxes, and fishing-tackle boxes inside the vault.

Seated behind a glass partition, intent on his work, Janes would look up and wave when someone entered the bank. In shirt-sleeves and an open collar, he never seemed to mind doing business with a farmer wearing dirty overalls. He was unfailingly polite and patient, and he was a good listener. Customers who had taken out loans before could speak to him directly, with no need to meet a committee or fill out an application ­— often the terms of the loan weren’t even written down. Bill Janes always had plenty of advice, offering his opinion on everything from deeds and wills to property and personal savings.

Janes’s attitude toward his customers could be viewed in two ways. It could be described as a personal, caring approach that sprang from his concern for their well-being; most people undoubtedly saw it that way. It could also be seen as paternalistic. Maybe Janes just couldn’t resist telling his less-educated neighbors what he though was in their best interest. “He was always telling you what to do,” says one chary customer who withdrew her money from the bank in 1973, after banking there for four years. “He would say, ‘You should save money. You’re spending too much money.’ I never did care for that much.”

In an odd way, Janes was a part of Leroy yet apart from it. His professional and personal lives were intertwined with the fortunes of his hometown. But perhaps his education, his financial expertise, and his trips to Europe, helped distance him and his wife, Jessie Lee, from the other Leroy residents. In a town defined by close relationships, few could say they knew Bill Janes well.

In 1974, with Waco encroaching on Leroy, Janes led the town to incorporation and became its first mayor. He had a hand in nearly everything. Under his twelve-year leadership, Leroy got its first street-lights and street signs. Janes also researched the town’s past and published a pamphlet on the history of Leroy.

With such a man in charge, it’s not hard to understand why people of Leroy entrusted their money to the bank he owned, insurance or no insurance.

No Better Man

Even before the bank closed, Leroy was not a bustling town. Driving in from the interstate now, you might think you have stumbled onto an empty movie set. Most of the businesses are closed. At the corner of Commerce and First streets, the tiny bank is vacant. Faced with a layer of rectangular white stones, it looks incongruously fragile, as if it was made from a child’s toy blocks.

To a city person, the Leroy Bank hardly seems like the kind of place where a sane person would invest his life’s savings. But anyone looking in from the outside might fail to grasp how deep the loyalties run in a rural town of 253 people. Several of the farms surrounding Leroy are home to third and fourth generations of the same Czech and German families that settled there more than a century ago. They still trade stories and do business with their neighbors just as their parents and grandparents did before them. They could easily have done their banking at a federally insured institution in nearby Waco, fourteen miles to the south. But they preferred the Leroy Bank because they trusted it, and they trusted it because it was owned by Bill Janes.

On May 20, 1987, Janes sent a letter to each of his customers notifying them that he had sold the Leroy Bank. The sale was, he said, “in the best interest of the bank.” To those who asked him about it, Janes said that he was getting on in years and wanted to retire. His only son, who was working for an extermination company in Waco, would never follow in his footsteps. A responsible buyer had made an excellent offer, and Janes had decided the time was right. Not long after the letter went out, Janes held a reception in the church annex, where he introduced the new owner, Ronald Bailey, who was solid-looking, quiet, and serious. Janes described him as a business economist from Berkeley, California, someone who understood finance. Even though Janes had sold the bank, he assured everyone that he would stay on for one month.

Indeed, few things seemed to change. The imposing portrait of D. T. James still hung prominently on the rear wall of the Leroy bank. In the tiny lobby the same green vinyl couch sat next to the same potted pine. Behind the teller cages were the same women posting checks at the same unhurried pace. And Bill Janes was still at work, supremely confident, greeting customers as he sat next to Bailey behind the glass partition.

A couple of weeks after the Leroy Bank was sold, the Reverend Cecil Anderson stepped in to have a private word with Janes. Anderson was worried about his savings, set aside during a lifetime of farming, ranching, and weekend ministering at Southern Baptist church near Mount Calm.

Anderson, 77, had known Janes and his father for more than forty years, from their days at the Leroy Odd Fellows Lodge. Anderson had been reading in the newspapers about the closing of the Chilton Private Bank, about twenty miles from Leroy. The bank in Chilton had recently changed owners, and the same week that the Leroy Bank was sold, the Chilton bank had been closed. To Anderson, similarities between the banks ­— both were private and both had been sold­— were unsettling. Anderson told Janes he wanted to withdraw his savings. Aside from his social security checks, that was all the money he had. About half the money was in uninsured certificates of deposit, and he wanted to cash them in.

Anderson recalls that Janes informed him about the penalties associated with cashing in CDs before they mature and reassured Anderson that the money was in good hands. “He told me he was seventy years old, had been in the business quite a while, and wanted to get out and enjoy something else,” Anderson says. He decided to leave his money where it was, but he was wasn’t completely at ease.

Lenora Schutza also received the letter about the bank’s change in ownership. A widow in her seventies, Schutza lived west of Leroy on the farm that her grandfather, a German immigrant, had purchased. He had kept his money in the Leroy Bank and had done business with D. T. Janes, so there was little doubt in Schutza’s mind about the best place for her small savings. In 1978 her husband had cashed in an insurance policy and added the $14,000 to their savings account at the Leroy Bank, in order to take advantage of an extra 2 percent interest. After her husband’s death, Schutza made monthly trips to the bank to cash her government checks and pay her water and electric bills. She was nervous about her money but she trusted Janes. “I thought there wasn’t a better man than him,” she says.

Henry Young, another longtime customer, stopped by Janes’s house to inquire about his savings. A 79-year-old retired grocer from nearby Elm Mott, he had been banking with Janes more than twenty years. Young asked Janes why a man from California would be interested in a tiny bank in Texas. “He turned around and looked the other way,” says Young, “and finally he said, ‘Well, he just wanted a small bank.’ ” Like the others, Young did not withdraw his money.

A Scoundrel or a Saint?

During the first week of August, Leroy was abuzz with party preparations. There was to be an open house Saturday, August 8, in honor of Ronald Bailey and several longtime employees he had promoted. Invitations had been sent, a caterer was preparing food, and Bailey’s wife had flown in from California.

In Austin that week, state banking commissioner Kenneth Littlefield decided to take a look at the Leroy Bank. State banking examiners had become interested in the Leroy Bank after the closing of the Chilton Private Bank. Although the state did not explicitly have the authority to examine private banks ­— a provision granting it went into effect on August 31, 1987 ­— Littlefield sent a team of examiners to Leroy on Monday August 3. What they found was a mess. The bank’s records were in total disarray. Not only were the books ill-kept, they also did not balance. Liabilities exceeded assets by more than $1 million, meaning that the bank was clearly insolvent. Deposits totaled about $5 million. The bank’s loan portfolio was $3.5 million, but many of the loans looked questionable. The bank owed about $1 million to FirstRepublicBank Waco, the institution that cleared all of the Leroy Bank’s checks. But there was only $1000,000 in CDs and $20,000 in cash on hand.

On Thursday night Littlefield received even worse news. An official at the Federal Reserve Bank of Dallas called to say that the Leroy Bank didn’t have enough money to cover the checks written by its customers. That meant the bank was out of cash. There would be no party in Leroy. The notice went up on the door the following day, and the bank was closed.

On that hot Friday afternoon, the Reverend Anderson lost every cent of his savings, nearly $37,000. Lenora Schutza lost $24,030, and Henry Young lost $43,000. Of the 1,200 depositors at the Leroy Bank, more than half were over 65 years old. They had lived on savings-account interest and social security checks, which they had faithfully deposited the first of each month. When the Leroy Bank closed, a lot of those checks had just been deposited. Without them, many people had no money for medical and utility bills.

It was not simply the money that had vanished but what it represented — countless dreams of security and independence, plans for retirement, for travel, and for purchases large and small. One couple lost their burial fund. A twelve-year-old boy lost the money he had saved for a 4-H lamb.

As the magnitude of the loss sank in, a group of depositors formed an association to raise funds, collect food donations, and devise a strategy for recovering some of their money. They hired Bill Vannatta, a Waco attorney, and began to talk of law-suits and legal responsibility. Ronald Bailey was the obvious target. A couple of weeks after the bank closed, a small group of depositors held an emotional meeting with Bill Janes in the church annex. Some people were crying. Bill Janes, looking stiff and uncomfortable, stood up and made a short speech, the only time he commented in public on the bank’s failure. He said he would like to help put the bank back on its feet. To that end, he said, he was prepared to contribute $60,000.

No one said a word. Janes frowned, and then said he wanted to introduce Bill Tankersley, a retired electrician from California. Tankersley stood up and made a quiet announcement: He had just purchased the bank for one dollar from Ronald Bailey. Now people were utterly confused. Tankersley offered no explanation for why he had purchased the bank or what he intended to do with it.

Later, in depositions, Bailey would maintain that Tankersley had owned it all along and that Bailey had only been managing it. Tankersley would contend that the bank ran out of money because of a flood of withdrawals in the weeks after it was sold. In other words, the bank’s closing was all the fault of the depositors. To the people who just a few months before had resisted the urge to withdraw their money, that was the ultimate insult.

On August 27, a group of depositors filed suit in McLennan County district court against Bailey and Tankersley for breach of depository contract, fraud, and negligence. Still unresolved was the troublesome issue of what condition the bank had been in when Bill Janes sold it. Whenever anyone asked him about the bank, which wasn’t often, he insisted it was in solid shape at the time of the sale. But most of the time he said nothing.

A few days after the lawsuit was filed, Janes was driving down FM 308 when he approached his old friend Otis Richardson headed in the opposite direction. Janes flagged Richardson down and asked if he was involved in the lawsuit. Richardson said he was.

“I told him, ‘Mr. Janes, if you don’t have anything to hide, then you don’t have anything to worry about. But if you do, we’re coming after you,’ ” Richards says. Janes just turned around and walked away without saying a word.

As the weeks passed, Janes’s role in the bank’s failure became the focus of intense debate in every Leroy home. The question was whether his name should be added to the lawsuit. To the people who thought Janes was responsible for the bank’s troubles, his silence was interpreted as an admission of guilt. “If Bill Janes had ever come to me and said, ‘I’m sorry,’ don’t you know I would have forgiven him,” says depositor Hazel Witzel. “But he doesn’t even speak. He has been very unfriendly. Cold as he could be.”

For the first time, many people had to admit that Janes might not be the person they thought they knew. Suddenly he seemed to have assumed two irreconcilable identities. His supporters still idolized him and spoke about him in reverential terms.” Mr. Janes is a wonderful man who’s being used as a scapegoat,” one says. “He is truly suffering.” But others believed Janes was at the heart of the bank’s troubles. “We were living with a rascal all these years, and we didn’t know it,” says Hazel Witzel. Janes’s expertise at chess lent an air of cunning to his actions. “You take a person who’s a chess player,” one depositor whispered, looking over his shoulder. “They specialize in moves, whether they’re playing on a board or with people. It was one big chess game to him.”

As the former bank customers split into opposing camps, a wall arose, dividing a community that had long been cohesive. Lifelong friends found themselves arguing bitterly. Suspicion and anger crept into every conversation. People spent their time phoning one another and embellishing the latest theories.

The anti-Janes faction suspected that Janes’s defenders had been warned in advance of the bank’s demise and had taken their money out just in time. Whether that is true may never be known, but the rumor fueled animosity. One woman who was pro-Janes heard that her cousin was spreading such a story about her. “I was ready to tear her from limb to limb,” the woman recalls. The cousins quarreled; there were angry denials, then a strained reconciliation.

The pro-Janes element asserted that the anti-Janes group was vicious and out for blood. “To me, it all comes down to greed,” one Janes supporter says. “I personally know a number of these people to be vindictive. They just want somebody to suffer like they have.”

Turkeys for Christmas

Perhaps at any other time a woman like Judith Kearns would have been laughed off the streets of a little town like Leroy. She showed up in late August, only days after the lawsuit against Bailey and Tankersley had been filed. She introduced herself as someone who had been a childhood playmate of the Rockerfellers. She had flown out from Southern California, she said, to help people out of their straits. She said she had $8 million with which she planned to buy the bank and restore the depositors savings. Blinded by desperation, the people of Leroy listened to her story. The more they wanted to believe her, the better she sounded.

In early September Kearns called a meeting of the depositors at the community hall in the nearby town of Tours. Before a crowd of more than three hundred, she read an impressive proposal to recapitalize the bank and privately insure each account through Lloyds of London.

It was as though an angel of mercy had descended on Leroy, an angel with quirks. On certain subjects, Kearns maintained an odd secrecy, particularly on the source of her money. But if her proposal sounded too good to be true, it was also too good to ignore. Enticed by her rosy promises, the depositors set aside their reservations and mistrust. They set aside their differences over Janes, and gradually they let down their defenses. Kearns began visiting them in their homes and meeting their families. They cooked meals for her and told her their troubles. One woman gave Kearns the key to her house. “She was so unpretentious, you know,” says another. “Her explanation was that she wanted to put her money to good use to help poor people.”

In September Kearns filed an application with the state banking department to recapitalize the bank. She later met with Commissioner Littlefield in Austin to discuss the offer. Littlefield was skeptical from the start. It troubled him that Kearns refused to reveal fundamental information about her background. Even more disturbing was that she seemed to have no sound financial reason to want the bank. As one analyst in the banking department puts it, “It just didn’t make economic sense that someone would come in and throw eight million dollars into a hole that deep.”

Littlefield was impatient to start selling off the bank’s assets and collecting on the outstanding loans. Kearns tried to persuade him to hold off until she could wire the money to Waco. District court judge Bill Logue signed a restraining order delaying the liquidation so Kearns would have more time. Repeatedly she said she was on the verge of getting the money. But there were always technical difficulties, followed by elaborate, inventive excuses. On October 1 a group of depositors spent four and a half hours in a conference room at Waco’s MBank, waiting for the money to arrive from Kearns’s account is Lausanne, Switzerland. Kearns was in Dallas at the time, telling people in Leroy that she was making arrangements by phone to wire the money through a California bank. By closing time, the money had not arrived. The depositors went home downcast. Kearns called the next day to say that the transmission had been interrupted by an earthquake.

Frantic, the people of Leroy were not about to abandon hope. They had linked their fate to Judith Kearns, and they were going to stick with her no matter how far-fetched her stories. But they weren’t the only ones willing to give her the benefit of the doubt. Four times Judge Logue extended the restraining order to give Kearns a chance to produce the money. Each time hundreds of depositors would cram into the courtroom and pray —and Kearns would let them down. By late October, the depositors were panicking. If no money appeared by November 3, Logue would allow the restraining order to expire, and the bank could be liquidated.

On November 2 Kearns was once again in Dallas, telling people she was making arrangements. She called her friends in Leroy to report that everything was ready ­— all she lacked was $15,000 “to close the deal.” She turned to Jay and Nita Jones, her strongest supporters. The Joneses, in turn, went to the man they trusted the most, Bill Janes. Talking the matter over, they agreed that even though Kearns had disappointed them so far, they had not actually caught her in a lie. What if she was telling the truth and they ignored her? Could they afford to turn their back on Leroy’s only hope? They decided to loan Kearns the money.

Janes put up $10,000, and the Joneses gave her $5,000. The funds were transferred to Janes’s account at MBank in Waco, and from there they were wired to the New York company that was to lend Kearns the capital for the bank. They were assured that the money would be returned the following day.

A hearing was set for the morning of November 3. A crowd of depositors arrived early and pressed into the courtroom to wait and pray. As the minutes ticked by, there was no word from Kearns. The deadline came and went, but still no word from Kearns. Forty more minutes went by as everyone watched the clock. Still no word. Finally Logue let the restating order expire. The Leroy Bank would not open again.

That night Kearns called a depositor to apologize. Her connections had fallen through, she said, and she was sitting in a hotel room, thinking about the people of Leroy and crying.

After three months, the charade had come to an end. The people of Leroy saw that Kearns was not a savior, after all. But she didn’t simply vanish. Back in California, she continued to call her Leroy acquaintances from time to time to rattle off her latest scheme to revive the bank. In late December she called to say that she was sending turkeys to all of the Leroy Bank depositors for Christmas. They never arrived.

On the Auction Block

Judith Kearns left a bitter trail in Leroy. Those who had trusted here were now utterly disillusioned. More and more of the bank’s depositors were ready to believe that they had lost their money not because of chance or error but because someone had cheated them out of it. Three days after the liquidation order was signed, Janes’s name was added to the lawsuit (his wife’s was added in August 1988). About 40 depositors who backed Janes dropped out, leaving 376 plaintiffs.

On a sunny day in October 1988 the contents of the Leroy Bank went on the auction block. Everything from file cabinets to pencil sharpeners, even the rickety green couch, was auctioned off and carried away. From a storeroom at the back of the bank came carton after carton of unused giveaways — plastic pitchers, change purses, sink stoppers, egg separators, spatulas — all imprinted with the words “Another service of the Leroy Bank.”

All of the Leroy Bank’s loans were in the possession of NCNB, which had taken over FirstRepublicBank. The loan portfolio legally belonged to NCNB because that institution held a secured lien against the Leroy Bank for $1 million. But insiders who examined the portfolio said that it was a disaster: Records were poorly kept, if at all. Some loans were made on insufficient collateral; others were not pursued when they came due. Millions of dollars had flowed out of the bank and would never come back.

NCNB representatives are still trying to collect on the loans, value at $3.5 million. State banking officials privately say they will be lucky to get $600,000. Depositors, meanwhile, have filed claims against the bank worth more than $3.5 million.

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.