Printer Friendly

Regaining respect; Jim Henley's trial on fraud charges is over, but the anger and bitterness remain.

Regaining Respect

Jim Henley's Trial On Fraud Charges Is Over, But The Anger And Bitterness Remain

Jim Henley -- real estate salesman, Southern Baptist minister, social studies teacher -- is trying to put his life back together after a harrowing jury trial on fraud charges in connection with the failure of Madison Guaranty Savings and Loan.

The 42-year-old Houston resident was indicted three days before Thanksgiving this past November. He was found innocent in June of all charges against him: one count of conspiracy, one count of bank fraud and three counts of submitting false statements. The charges stemmed from his association as a real estate agent for a Madison Guaranty affiliate, which set out to develop a south Little Rock project known as Castle Grande.

During the two years he worked for the Madison Guaranty company, Henley says he sold more than 50 residential parcels and made about $40,000 a year in net income.

A Personal Campaign

Since leaving the U.S. District courtroom at Little Rock a free man, he has embarked on a campaign to clear his name and regain his self-respect. He is still angry and bitter about what took place.

As is the case with many acquittals, both the defendants and the prosecution came away sullied. "It was an embarrassing, humiliating defeat for U.S. Attorney Chuck Banks," says Henley. "We, along with our families, have been humiliated and traumatized beyond anything we've ever experienced."

Charged in the case with Henley were his brother David, who also was a real estate agent for the Madison affiliate, and James B. McDougal, who was married to their sister, Susan Henley, and was president and chief stockholder of Madison Guaranty.

"The real story is that of two brothers who committed neither mismanagement nor fraud, but who became pawns in the government's plan to send an S&L owner to prison," Henley says.

"After being assured they had no criminal intent, they were indicted, fingerprinted, had their mug shots taken and were told to testify against McDougal or the government would argue in the trial that they should serve a prison term," Henley says.

Balding and intense in his gaze, Henley's brow furrows as he discusses the case. He is short to medium in height and sports a closely cropped beard.

He grew up in Camden, is a graduate of the University of the Ozarks and Southwestern Baptist Theological Seminary and was pastor of the Second Baptist Church at Clarksville. He also directed sales training for six years in the circulation department of the Dallas Morning News.

The Ebb Of The Tide

"We got caught up in an attitude of let's throw the crooks in jail," he says. "The case took on a life of its own, and in the sweep of the flood tide..., innocent people are being swept along."

In an unusual move, U.S. District Judge George Howard Jr. dismissed charges against David Henley. After an eight-day trial, jurors returned verdicts of not guilty on all charges against Jim Henley and McDougal.

While his faith in the judicial process is reinforced, Jim Henley is dismayed with his treatment by the FBI and his prosecution by Banks despite what Henley considers an obvious conflict of interest.

In continuing to comment on the case, Henley says he is not defending McDougal, but trying to put the case into perspective.

Banks' alleged conflict of interest comes from the influence that U.S. Rep. John Paul Hammerschmidt exercised in getting him appointed as U.S. attorney, Henley says. Banks owes his job to the Republican congressman who nominated him, and Hammerschmidt will decide next year if Banks is to be nominated for another four-year term.

Henley says McDougal was prosecuted at Hammerschmidt's insistence because of the bitter rivalry between the two men that goes back to 1982 when McDougal ran against Hammerschmidt who won re-election to Congress. During that same election, Banks, running as a Republican, unsuccessfully tried to unseat U.S. Rep. Bill Alexander, a Democrat.

While on the stump, McDougal, who was known for his fiery rhetoric, lambasted both GOP members, who supposedly became quite ruffled and embarrassed by his comments.

"No one could stand up under the strength of his rhetoric," Henley says. "Hammerschmidt's ego was destroyed in front of the people he served as congressman, and it left him vengeful and embittered."

Henley calls Banks "a failed Republican political candidate who has his position not because of merit, but because of continued political patronage."

He says, "If there ever was a case that cried out for a special prosecutor, it would be the Madison Guaranty case because of this conflict of interest."

Both Banks and Hammerschmidt deny all of Henley's allegations.

"The man has been prosecuted and found not guilty, and now he wants to express his anger," Banks says. "He's free to say whatever he wants -- no matter how far-fetched or silly his statements are.

"John Paul Hammerschmidt had not even the most remote -- between here and Mars -- connection with the McDougal case," Banks says. "If Mr. Henley would stop and see what's going on nationwide, he would see arrows and spears are flying at both political persuasions (in S&L investigations)."

"Politics is not a part of the prosecution," Banks says. "It has nothing to do with what we do up here in any case. He's not the first to raise the issue, and he won't be the last. In many cases, people raise any number of issues of self-persecution."

The federal prosecutor may have been criticized when McDougal accompanied Congressman Alexander to a stump speech in the 1st District, but Banks says he never met McDougal before the trial.

Hammerschmidt, who knows the Henleys only from reports in the media, is more measured in his response to what he considers the falsehood of Henley's comments.

"I was never in touch with U.S. Attorney Banks in any way about McDougal or Henley. I never discuss cases with the Justice Department," he says.

The congressman who amassed 66 percent of the vote in defeating McDougal says, "I have always viewed the McDougal rhetoric as a little silly, but refrained from commenting, even when he financed more than half his campaign with self-loans at zero interest."

One of the first things Banks supposedly did after his appointment in November 1987 was to begin an investigation of Madison Guaranty, according to Henley.

Henley says Banks apparently over-ruled the FBI and charged him and his brother to put the heat on McDougal for a guilty plea.

When notified of the investigation, Henley says he freely went to the FBI and told them everything he knew because he did not do anything wrong.

After lengthy questioning, Gary Aaron, an FBI special agent, told him, according to Henley's account, "Jim, you have shown no criminal intent, and you received no money from the transactions." Henley says the special agent also led him to believe he would not be charged in the case. But in testimony at the trial, Aaron denied making the statements to Henley. Larry Deaton, an FBI spokesman, declined to comment on Henley's charges, except to say the court record stands.

"I have lived a sheltered life," Henley says. "I really thought they (the FBI) were a cut above the county sheriff who would beat you in the jail. I trusted them, the fool that I am. One of the things I have learned from this brutal experience is that no matter how innocent you may be, never even speak to the FBI without an attorney."

Given the resources of the federal government, Henley says, "You could make a case against any businessman in Arkansas, if the U.S. attorney wants to target him. You could make a case, but not necessarily get a conviction."

A Show Of Confidence

The ordeal was unpleasant, but gave Henley new insight as he teaches his students about citizenship at Sydney Lanier Middle School, a gifted and talented magnet in inner-city Houston.

It was the Monday after Thanksgiving that he told Brenda Lanclos, principal at Lanier Middle School, about his indictment. "It was shocking," she says. "All of the teachers and staff members were convinced that an injustice was being done to Mr. Henley, and that it surely was a mistake."

Lanclos, who was a character witness for him at the trial, says support never wavered for Henley. "He is everything we would want our teachers to be in working with students and leading them into good citizenship practices," she says.

A testament of school teachers' and officials' confidence in him is that after his indictment he was chosen to give talks on citizenship to school assemblies. Furthermore, out of all the classes in the Houston Independent School District, his comparative world culture class was chosen to host a visit by the Duchess of Kent in March.

During an interview with Arkansas Business (July 15 - July 29), Banks alluded to the difficulty distinguishing between fraud and ignorance in prosecuting the S&L cases. "My problem is I can't distinguish the fine line the U.S. attorney's office has been walking between incompetence and abuse of office," Henley says.

"I want to help Mr. Banks," Henley says sarcastically. "I want to simplify his task. Mr. Banks, if you want to know if a transaction was the result of fraud or greed, ask yourself the following questions:

* "Did the institution suffer any financial loss as a result of the transaction in question?"

* "Did the individual involved receive any money as a result of the transaction?"

Henley says in his case the answer is "No" to both questions.

"If Mr. Banks cannot figure out the difference between something that is a crime and something that is not a crime, I suggest he is not qualified to hold the position of U.S. attorney," according to Henley.

"I think Mr. Banks should go back to his family farm in Mississippi County and do what he does best -- spread fertilizer," Henley says.

Henley's favorite statistics regarding the government's prosecution of savings and loan cases are that since October 1988, the Justice Department obtained 182 indictments involving 237 institutions with 200 convictions and three acquittals -- those of Henley, his brother and McDougal.

PHOTO : PICKING UP THE PIECES: Jim Henley was acquitted but has a difficult time forgetting the ordeal of the Madison Guaranty Savings and Loan trial.
COPYRIGHT 1990 Journal Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1990 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:Madison Guaranty Savings and Loan
Author:Kern, David F.
Publication:Arkansas Business
Date:Sep 10, 1990
Previous Article:More on that Maumelle AA rating.
Next Article:Getting a brand new name for a brand new day.

Related Articles
Trading jobs: former S&L executives take on new callings in the outdoors, consulting, prison.
Fame and Fortune.
Condo controversy escalates.
Downtown sale.
Bank buy.

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters