Billie Sol Estes
Billie Sol Estes was a Texan businessman and entrepreneur born in 1925, known for his early financial acumen and subsequent involvement in fraudulent schemes. Initially achieving success in agriculture-related businesses, he became a millionaire by the early 1950s. However, as government regulations impacted cotton production, Estes orchestrated a series of elaborate scams that exploited federal programs, particularly in fertilizer distribution and cotton allotments. His operations ultimately turned into a multimillion-dollar fraud that included fake mortgages and nonexistent storage tanks.
Estes' fraudulent activities came to light after local media investigations, leading to his arrest by the FBI in 1961. He faced multiple trials, resulting in convictions for fraud and conspiracy, and served seven years in prison after his sentences were upheld following legal appeals. The fallout from the Estes scandals prompted significant scrutiny of the U.S. Department of Agriculture and political figures, revealing widespread corruption and leading to institutional reforms, including the establishment of the Office of Inspector General. Estes’ story reflects the complexities of agricultural politics in mid-20th century America and serves as a cautionary tale about the intersection of business, law, and ethics.
Subject Terms
Billie Sol Estes
Texas swindler and con man
- Born: January 10, 1925
- Birthplace: Abilene, Texas
- Died: May 14, 2013
Major offenses: Swindling, fraud, interstate transportation of securities taken by fraud, and conspiracy
Active: 1950’s-1960’s
Locale: West Texas and Washington, D.C.
Sentence: Eight years in prison for swindling, reversed by the U.S. Supreme Court; fifteen years for mail fraud and conspiracy, upheld by the Supreme Court
Early Life
Born in 1925 near Clyde, Texas, Billie Sol Estes (BIHL-ee sahl EHS-teez) grew up on his family farm. His financial genius was revealed at an early age. While still in high school, he borrowed thirty-five hundred dollars from a local bank to buy government surplus grain to sell for profit. After he married in 1946, he moved to his own farm near Pecos, Texas. When electricity costs for irrigation pumps rose excessively, he formed a company providing natural gas-powered pumps to farmers. Then Estes started a business distributing cheap anhydrous ammonia fertilizer. By 1952, he was a millionaire and was named one of the Outstanding Young Men of the Year by the U.S. Junior Chamber of Commerce.
Criminal Career
In the late 1950’s, the U.S. Department of Agriculture established allotments and quotas for cotton farmers in order to control production. To offset resulting business losses, Estes turned his fertilizer business into a multimillion-dollar scam. In 1958 he owed $550,000 to Commercial Solvents of New York for fertilizer. Estes made a deal with the firm to defer the debt and lend him $350,000, plus$225,000 to build storage facilities. He used money from fertilizer sales to build grain storage facilities, then collected storage fees under federal price-support programs. He assigned the fees to Commercial Solvents to get more fertilizer for distribution. He undercut the prices of competitors until they went bankrupt, then bought the failed firms’ assets cheaply and absorbed their businesses. In 1959-1961, Commercial Solvents collected $7,000,000 in grain storage fees paid to Estes by the federal government.
Estes, however, still owed Commercial Solvents $5,700,000. He devised another scheme involving anhydrous ammonia storage tanks. He persuaded a Texas tank manufacturer to let area farmers buy nonexistent tanks, sign bogus mortgages on them, then lease them to Estes. Estes collected $30 million in loans and storage fees, and used nonexistent storage tanks and fake mortgages as collateral to borrow an addtional $22 million from finance companies in Chicago and New York.
Still in debt in 1960, Estes began yet another scheme using cotton allotments and the eminent domain exception for farmers whose lands were taken by government for public projects. Estes persuaded displaced farmers in Texas, Oklahoma, Alabama, and Georgia to buy Texas farmland from him, transfer their cotton allotments to the new land, and lease the lands and allotments to Estes. The lease default clause virtually ensured that Estes’ initial fifty-dollar-per-acre lease payment would effectively transfer ownership of three thousand acres of land and allotments to Estes. He then used nonexistent cotton crops as collateral for bank loans and claimed subsidies from the government for growing and storing the nonexistent cotton. The Agriculture Department finally investigated the deals and found them to be fraudulent. Estes was fined for growing cotton under illegal allotments.
Throughout the 1950’s and 1960’s, Estes made large contributions to the Democrat Party and to candidates for office, including Vice President Lyndon B. Johnson. It was Estes’ defeat in a Pecos school board election that led to the exposure of his massive fraud. A local newspaper, the Independent, had opposed Estes’ candidacy; to get revenge, Estes established a rival paper. The Independent investigated Estes and publicly exposed his storage tank fraud. The finance companies immediately sent investigators to Pecos, as did the Federal Bureau of Investigation (FBI).
Legal Action and Outcome
On March 29, 1961, the FBI arrested Estes on charges of interstate transportation of bogus mortgages. He was released on bond under federal indictment for fraud and state indictment for theft. In March, 1962, the FBI arrested Estes on charges of fraud and theft in a multimillion-dollar swindle involving storage tanks, phony mortgages, and cotton allotments. On April 5, 1962, a federal grand jury indicted Estes and several associates on fifty-seven counts of fraud and conspiracy. Trials were scheduled in Tyler, Texas, for September 24 and in El Paso for December 10, 1962. Estes’ trial in Tyler began on October 30, 1962; he was convicted of fraud and sentenced to eight years in prison. The U.S. Supreme Court reversed the conviction on June 7, 1965, because of pretrial publicity.
In the El Paso trial, Estes was charged with twenty-nine counts of mail fraud, interstate transportation of securities taken by fraud, and conspiracy. On December 11, 1962, the judge split the indictment, ordering trial to be held in Pecos on alleged violations that occurred in that jurisdiction. Trial in El Paso was set for March 11, 1963.
On March 28, 1963, the jury found Estes guilty of mail fraud and conspiracy. On April 16, 1963, he was sentenced to fifteen years’ imprisonment. After the Supreme Court refused to hear his appeal on January 15, 1965, Estes was committed to the federal penitentiary at Ft. Leavenworth, Kansas, and served seven years. After his release on parole in 1983, Estes and his family settled in Brady, Texas.
Impact
Congressional investigations revealed widespread political complicity in the Billie Sol Estes scandals. The U.S. Department of Agriculture subsidy programs came under intense scrutiny. Three agriculture officials were forced to resign, as was Assistant Secretary of Labor Jerry Holleman. Secretary of Agriculture Orville Freeman, with his own career in jeopardy, created the first Office of Inspector General, which led to legislation in 1978 establishing twelve federal Offices of Inspectors General. The Estes scandals became so embarrassing for Democrats that President John F. Kennedy considered dropping Vice President Johnson from the ticket in 1964 because of his close association with Estes.
Bibliography
Barmash, Isadore. Great Business Disasters: Swindlers, Burglars, and Frauds in American Industry. Chicago: Playboy, 1972. Chapter 3 discusses Estes’ initial success in agriculture and subsequent turn to illegal activities.
Estes, Pam. Billie Sol: King of Texas Wheeler-Dealers. Abilene, Tex.: Noble Craft Books, 1983. A daughter’s sympathetic account of Estes’ schemes.
Williams, Roger M. The Super Crooks: A Rogue’s Gallery of Famous Hustlers, Swindlers, and Thieves. Chicago: Playboy Paperbacks, 1974. Places Estes among the foremost scoundrels of the twentieth century.