Holiday Cheer, 2008-style
- Published: 23 December 2008 23 December 2008
Henry F. Potter, 70, may even be the first banker in history to be charged with grand larceny by stealing the cash of a depositor one day, and then using it the next day in an attempt to buy a pardon.
The theft allegation triggered other charges against Potter as other cases began linking the banker to a bevy of other financial scandals.
The money, a payment as part of the thrift’s banking relationship with First National, was misplaced in the bank’s lobby. Potter allegedly kept the money, according to Almira Sessions, Potter’s secretary.
Potter then called the state bank examiner’s office in Springfield, claiming that Bailey Building and Loan would show insufficient funds. He also claimed George Bailey, the thrift’s president, was under the influence of tsu-tsu, a Guatamalan plant with psychotropic side effects.
The result was a wild Christmas Eve in the small Illinois town, as Bailey eluded local police and reportedly babbled to an unseen companion he named Clarence Oddbody. Concerned townspeople rallied to Bailey – local druggist H.M. Gower called him “the soul of Bedford Falls” – and provided an emergency cash infusion to balance the books of the thrift, which was ineligible for the Treasury Department’s TARP financing..
The reported drug turned out to be flower pedals from his daughter, ZuZu.
A chance encounter at the local Martini’s Lounge later on Dec. 24 between Sessions and Charles Halton Carter, the examiner sent to investigate the Bailey thrift’s books, led to the revelation of the cash theft.
Potter, a notoriously tough person generally seen as a misanthrope in this close-knit community, reportedly refused to pay Sessions her year-end dividend, adding that he would be charging her rent space for her desk outside the banker’s office.
As a team of examiners rushed in for an unprecedented Christmas Day inspection of the First National’s records, Potter allegedly called Illinois Gov. Rod Blagojevich, offering the $10,000 as an immediate down-payment for a pardon on state offences.
“Yeah, that f___ing George Bailey, what did he ever do for me,” said Blagojevich, unaware of wiretaps of Potter’s telephones or the local bailout of the thrift. “He can go have his own f____ing wonderful life in jail. I’ll take the cash.”
The governor’s wife also made several unintelligible comments in the background, with the only audible phrase coming as, “don’t touch Bailey Park.”
Those words about the Bedford Falls subdivision led to a raft of federal charges against Potter yesterday, as investigators in several cases found the banker to be a key piece of several investigative puzzles.
Federal prosecutors in New York cited Potter as a major player in the sub-prime mortgage scandal, alleging that he secretly took out massively inflated mortgages on Bailey Park properties without the knowledge of the neighborhood’s mainly middle-class homeowners. He then masked the location of the properties – usually as Modesto, Calif. – and marketed the mortgages to the Lehman Brothers investment firm.
Those filings spurred another set of securities-fraud charges from different federal prosecutors yesterday in New York. They allege that Potter securitized the illegal mortgages already pledged to Lehman through a dummy corporation, and then sold the pooled mortgages to the hedge fund operated by Bernard “Bernie” Madoff until earlier this month.
Prosecutors claim the Potter securities – basically a fraud within a fraud – appear to be the only Madoff investments that provided a steady financial stream.
Prosecutors in both cases stressed that the original Bailey Park mortgages, held by the Bailey thrift, are safe and will be unaffected by the alleged swindle.
Wall Street tycoon Sam Wainwright, working with state and federal banking officials, purchased all the assets of First National and Potter’s multiple real-estate holdings in Bedford Falls. Potter had pledged all the properties in a number of illegal loan transactions.
Bedford Falls Town Officer Bert Bond said that Potter, after being arrested early yesterday morning, “was pretty damn smug about everything until (U.S. Attorney) Patrick Fitzgerald released that talk with the governor. And then the subpoenas and legal papers started flying in here like bees on honey.
“He’s bawling like a baby now. And, after putting up with his crap for all of my life, I don’t care.”
Wainwright, meanwhile, immediately transferred all the Potter assets to the personal possession of George Bailey, a lifelong friend.
“I guess he’s the richest man in town now,” Wainwright said.
Bailey was unavailable for comment.
And, by the way, the happiest of holidays and best wishes for a fruitful 2009.
© 2008 Western Business Media Inc.