Family Value$

The inside story of how three of the Bush boys built private fortunes by trading on their father’s name, running with con men, lining their own pockets, and leaving financial ruin in their wake. A <I>Mother Jones</i> investigation.

Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.


Inside:

  • John Ellis Bush (“Jeb”)

  • George W. Bush, Jr.

  • Neil Bush
  • Last spring, President Bush bristled at a flurry of news accounts that questioned the business ethics of three of his sons. “The media ought to be ashamed of itself for what they’re doing,” Bush complained. “They [the boys] have a right to make a living, and their relationships are appropriate,” added a White House spokeswoman last June.

    Since George Bush has raised “family values” as a campaign issue repeatedly, though, it seems only fair to take a look at his own family. A computer search showed that over the past five years stories have periodically surfaced chronicling the individual business antics of the president’s sons—each riding comfortably through life in the slipstream of his father’s growing power and influence.

    Although a handful of good reporters for the New York Times, L.A. Times, Village Voice, and Wall Street Journal have diligently been digging through business records for months, something has been missing: an overview that “connects the dots” in the myriad deals that have been examined, making it clear that cashing in on influence has become a pattern of behavior extending through the first family.

    Instead of criticizing reporters, the president might more wisely begin listening to those in government who have watched his sons with mounting worry. A year ago, I sat across a desk from a Secret Service agent who had been assigned to Bush-family security. I rattled off the names of a half-dozen questionable characters who had found their way into business deals with the Bush boys. How had these characters been allowed to get even close to the president’s sons?

    The agent slumped back in his chair and sighed. “We warn them,” he said in a whisper. “But that’s all we can do. We can’t stop these kids from associating with someone they want to be with. All we can do after warning them is to sweep these guys with metal detectors when they come around.”

    What follows is a sourcebook of concerns about the president’s three sons.

    JOHN ELLIS BUSH (“JEB”), 39, MIAMI
    Florida State Chairman of the
    Bush Re-election Campaign

    After graduating from Texas University, Jeb Bush served a short apprenticeship at the Venezuelan branch of Texas Commerce Bank in Caracas before settling in Miami, in 1980, to work on his father’s unsuccessful primary bid against Ronald Reagan. Campaigning for Dad was hardly a paying job. But Jeb was about to learn that being one of George Bush’s sons means never having to circulate a résumé.

    In the next few years, financial support flowed to Jeb through Miami’s right-wing Cuban community. Republican party politics and a series of business scandals—including Medicaid fraud and shady S&L deals—were inextricably intertwined. A former federal prosecutor told MJ that, when he looked into Jeb’s lucrative business dealings with a now-fugitive Cuban, he considered two possibilities—Jeb was either crooked or stupid. At the time, he concluded Jeb was merely stupid.

    Jeb and Armando Codina
    Shortly after arriving in Miami, Jeb was hired by Cuban-American developer Armando Codina to work at his Miami development company as an agent leasing office space. A couple of years later, Jeb and Codina became business partners, and in 1985 they purchased an office building in a deal partly financed by a savings and loan that later failed.

    The $4.56 million loan, from Broward Federal Savings in Sunrise, Florida, was granted in such a way that neither Codina’s nor Bush’s name appeared on the loan papers as the borrowers. A third man, J. Edward Houston, borrowed the $4.56 million from Broward and then re-lent it to the Bush partnership. When federal regulators closed Broward Savings in 1988, they found the loan, which had been secured by the Bush partnership, in default.

    As Jeb’s father was finishing his second term as vice-president and running for the presidency, federal regulators had two options: to get Jeb Bush and his partner to repay the loan, or to foreclose on their office building. But regulators came up with a third solution. After reappraising the building, regulators decided it wasn’t worth as much as was owed for it. The regulators reduced the amount owed by Bush and his partner from $4.56 million to just $500,000. The pair paid that amount and were allowed to keep their office building. Taxpayers picked up the tab for the unpaid $4 million.

    After the Broward Savings deal was revealed, Jeb described himself and his partner as “victims of circumstances.”

    Jeb and Camilo Padrera
    By 1984, Jeb had been made chairman of the Dade County Republican party, and it was as Republican party chief that he nuzzled up to con man Camilo Padreda. Padreda was serving as Dade County GOP finance chairman and had raised money for the party from Miami’s Cuban community. (He had also been a counterintelligence officer for deposed Cuban dictator Fulgencio Batista.) Padreda made his living as a developer who specialized in deals with the corrupt Department of Housing and Urban Development. In 1986, he hired Jeb as the leasing agent for a vacant commercial-office building, which Padreda had built with $1.4 million in federal loans—loans approved by HUD officials, oddly enough, even though they knew there was already a glut of vacant office space in Miami.

    Like so many of those who would attach themselves to the Bush sons over the years, Padreda brought some hefty luggage with him. In 1982, four years before teaming up with Jeb, Padreda, along with another right-wing Cuban exile, Hernandez Cartaya, was indicted and accused of looting Jefferson Savings and Loan Association in McAllen, Texas. The federal indictment charged that the pair had embezzled over $500,000 from the thrift. (Cartaya was also charged with drug smuggling, money laundering, and gun running.) But the Jefferson Savings case would never go to trial.

    Soon after the indictment, FBI officials got a call from someone at the CIA warning the agents that Cartaya was one of their own—a veteran of the failed Bay of Pigs invasion—according to a prosecutor who worked on the case. In short order, the charges against Padreda were dropped and the charges against Cartaya were reduced to a single count of tax evasion. (Assistant U.S. Attorney Jerome Sanford was furious and filed a demand with the CIA, under the Freedom of Information Act, for all documents relating to the agency’s interference in his case. The CIA, citing national-security reasons, denied Sanford’s request.)

    In 1989, Houston Post reporter Pete Brewton wrote about Jefferson Savings and Cartaya in a series of stories alleging that CIA operatives and contractors had systematically misused at least twenty-six savings and loans during the 1980s as part of a secret program to fund illegal “off-the-shelf” covert operations, particularly those aiding the Nicaraguan contras. (CIA officials denied the charge, but admitted to the House intelligence Committee in 1990 that former CIA operatives had been working at four of the S&Ls named in Brewton’s article. A CIA spokesman claimed that agency operatives had done nothing illegal.)

    The Jefferson Savings affair occurred four years before Jeb Bush met Padreda, and it is possible he missed earlier reports. But he could hardly have passed over the next batch of stories involving Padreda’s questionable practices, because they were spread across the front pages of Miami’s papers in 1985, just months before the two teamed up. These stories, in Jeb’s hometown paper, alleged that Padreda had improperly influenced a local politician—the Dade County manager, to be precise, who’d been made a secret partner when Padreda ran into trouble getting a parcel of land rezoned. The property was promptly rezoned, and the county official made a quick $127,000 profit when Padreda, in turn, “sold” it to an offshore Padreda partnership. That partnership was controlled from Panama by a fugitive Miami attorney, who had already been indicted for laundering drug money. (The official resigned, but Padreda was not charged in the case.)

    Yet the 1985 scandal did not seem to lessen Jeb’s enthusiasm for Camilo Padreda. Jeb enthusiastically accepted the task of finding tenants for Padreda’s empty HUD-financed office building. Padreda, the government officials involved, and Jeb all refused to answer questions about the scandal. But of allegations that Padreda engaged in illegal behavior, there remains no doubt. In 1989, he pleaded guilty to charges that he defrauded HUD of millions of dollars during the 1980s.

    Jeb and Miguel Recarey
    With Miami awash in empty office space in 1986, it was no small event when bagged International Medical Centers as a key tenant for Padreda’s HUD-financed building. IMC, which leased nearly all the space in Padreda’s vacant building, was at the time one of the nation’s fastest-growing health-maintenance organizations (HMO) and had become the largest recipient of federal Medicare funds.

    IMC was run by Cuban-American Miguel Recarey, a character with a host of idiosyncrasies. He carried a 9-mm Heckler & Koch semiautomatic pistol under his suit coat and kept a small arsenal of AR-15 and Uzi assault rifles at his Miami estate, where his bedroom was protected by bullet-proof windows and a steel door. It apparently wasn’t his enemies Recarey feared so much as his friends. He had a long-standing relationship with Miami Mafia godfather Santo Trafficante, Jr., and had participated in the illfated, CIA-inspired mob assassination plot against Fidel Castro in the early 1960s. (Associates of Recarey add that Trafficante was the money behind Recarey’s business ventures.)

    Recarey’s brother, Jorge, also had ties to the CIA. So it was no surprise that IMC crawled with former spooks. Employee résumés were studded with references to the CIA, the Defense Intelligence Agency, and the Cuban Intelligence agency; there was even a fellow who claimed to have been a KGB agent, An agent with the U.S. Office of Labor Racketeering in Miami would later describe IMC as a company in which “a criminal enterprise interfaced with intelligence operations.”

    Recarey also surrounded himself with those who could influence the political system. He hired Jeb Bush as IMC’s “real-estate consultant.” Though Jeb would never close a single real-estate deal, his contract called for him to earn up to $250,000 (he actually received $75,000). Jeb’s real value to Recarey was not in real estate but in his help in facilitating the largest HMO Medicare fraud in U.S. history.

    Jeb phoned top Health and Human Services officials in Washington in 1985 to lobby for a special exemption from HHS rules for IMC. This highly unusual waiver was critical to Recarey’s scam. Without it, the company would have been limited to a Medicare patient load of 50 percent. The balance of IMC’s patients would have had to be private—that is, paying—customers. Recarey preferred the steady flow of federal Medicare money to the thought of actually running a real HMO. Former HHS chief of staff McClain Haddow (who later became a paid consultant to IMC) testified in 1987 Jeb that directly phoned then-HHS secretary Margaret Heckler and that it was that call that swung the decision to approve IMCs waiver.

    Jeb admits lobbying HHS for the waiver, but denies talking to Secretary Heckler—and denies as well the charge that his call won the HHS exemption. “I just asked that IMC get a fair hearing,” said later. After the IMC scandal broke in 1987, Heckler left the country, having been appointed U.S. ambassador to Ireland, a post she held until 1989. (Heckler is now a private citizen living in Virginia. We left a detailed message with her secretary, outlining our questions, but she declined to respond.)

    In any case, the highly unusual waiver by federal officials allowed IMCs Medicare patient load to swell—to 80 percent—and the money poured in. At its height in 1986, IMC was collecting over $30 million a month in Medicare payments; in all, the company would collect $1 billion from Medicare. (Jeb would not discuss the IMC affair with Mother Jones. But in an opinion piece he wrote for the Miami Herald last May, he insisted that he had worked hard for IMC, looking for real-estate deals, and had earned his $75,000 in commissions. While acknowledging making a telephone call to one of Heckler’s assistants on IMC Is behalf, he claimed the waiver was not granted on his account. The allegation of a connection, Jeb wrote, “is unfair and untrue.”)

    Despite Jeb’s involvement, trouble began brewing for IMC when a low-level HHS special agent in Miami, Leon Weinstein, discovered that Recarey was defrauding Medicare through overcharges, false invoicing, and outright embezzlement. Weinstein had been following Recarey’s activities since 1977, and as early as 1983 he believed he had enough information to put together a case. However, he found his HHS superiors less than receptive; they took no action on Weinstein’s information.

    But Weinstein kept digging and in 1986 renewed his investigation of Recarey and IMC—and again his HHS superiors blocked the probe. “Washington just refused to pursue my evidence,” Weinstein, now retired, told Mother Jones last spring. “And they made it perfectly clear that I was not to pursue IMC. When I did, they threatened me and threatened my job.”

    Weinstein dug in his heels. “I had them this time. I told my superiors I would fight this time because I had nothing to fear. I had just reached retirement age. They immediately backtracked,” he says. Weinstein was allowed to continue his investigation—though HHS still took no formal action against Recarey. Eventually Weinstein turned to Congressmen Barney Frank (D-NY) and Pete Stark (D-CA) with his information, sparking congressional hearings into the scandal.

    Had it been up to HHS, Recarey would still be running his Medicare racket. But by chance, the now-disbanded U.S. Miami Organized Crime Strike Force was also investigating Recarey. (Recarey was bribing union officials in order to get them to sign workers up as patients at IMC, apparently so that IMC could meet its reduced non-Medicare patient requirements of 20 percent.) “We didn’t know anything about the HHS investigation,” former Organized Crime Strike Force special attorney Joe DeMaria says. “Recarey was bribing union officials…. But HHS never contacted us or told us anything.”

    Before Recarey’s trial on bribery charges began, DeMaria’s investigators also caught Recarey using his former spooks to wiretap IMC employees in an effort to discover who was talking to federal agents. DeMaria had Recarey indicted a second time, for the illegal listening devices. During Recarey’s trial on the bribery charge, a lawyer who handled the bribe money testified that the money IMC gave him was not bribe money but “commissions” he had earned while doing work for the company. “See, that commission thing was Recarey’s MO. They didn’t call them bribes, they called them commissions,” DeMaria explains.

    After he was convicted, Recarey resigned from IMC and was immediately replaced by John Ward. (Ward had been law partner to Reagan-Bush campaign manager John Sears. And Sears had also been a lobbyist for IMC.) But Recarey’s Medicare scam would never get to a public courtroom airing. Before his trial on the wiretap charge, Recarey skipped the country. His getaway was remarkable: just in time for his flight, the normally tight-fisted IRS expedited a $2.2 million income-tax refund, which Recarey claimed he had coming.

    The tax refund was a windfall for Recarey. “Yeah, that was his getaway money,” says a former IRS investigator who worked in the Miami office at the time but asked not to be named. “Though there is a special IRS procedure to expedite tax refunds for companies in financial distress, I don’t think you can overlook the possibility that there was influence from the administration.”

    Recarey’s last act before becoming a fugitive was an attempt to wire $30,000 into the bank account of Washington consultant and lobbyist Nick Panuzio—whose partner was then managing George Bush’s 1988 presidential campaign. (The wire transfer failed only because, in his haste, Recarey had gotten Panuzio’s account number wrong.) It was only after Recarey was safely out of the country that the U.S. attorney in Miami—a political appointee—filed formal charges of Medicare fraud against him.

    Whistle-blower Leon Weinstein retired in disgust from HHS and tried to get the IMC case before a judge by filing a Qui Tam suit. Such suits allow a private citizen to sue to recover money for the government in return for a share of any settlement. In his case, Weinstein named IMC and Recarey as defendants. But HHS continued to fight Weinstein, first challenging his right to bring such a suit and later accusing him of stealing HHS documents before leaving his job. When the courts supported Weinstein, HHS then stepped in, took over his lawsuit, and shouldered him out. The case remains in the courts and is still unresolved.

    HHS officials now pursuing the litigation claim that Recarey defrauded the Medicare system of at least $12 million. Leon Weinstein says the government is lowballing the loss and that Recarey’s take from his IMC scam could easily be many times that figure.

    Since skipping Miami in 1987, Recarey has been living comfortably in Caracas, Venezuela. Thomas Holladay, the consul general of the U.S. Embassy in Caracas, told Mother Jones that officials there were aware of Recarey’s presence and had formally requested his extradition. “We made a formal request for his extradition,” Consul General Holladay says. “But we can’t do anything until the Venezuelans turn him over to us, and they have not done that.” The conversation then ended abruptly. “You know, I’m really not supposed to be talking to you about this,” Holladay says.

    In May, following inquiries from Mother Jones, Congressman Pete Stark, who sits on the powerful House Ways and Means Committee, wrote to both the Department of Justice and the Venezuelan ambassador in Washington, demanding an explanation for six years of inaction on the Recarey case.

    Jeb and the Contras
    The fact that Recarey is living free in Caracas rather than in shackles at Fort Leavenworth could well be a result of the role IMC may have played in Oliver North’s secret contra-supply network. Though members of the House Intelligence Committee claimed they found no reason to believe that Recarey was using IMC’s Medicare facilities and funds to aid the contras, the evidence that IMC was involved remains compelling. In 1985, the same year that Jeb Bush was dialing for dollars to HHS officials for IMC, Jeb also hand-carried a letter from Guatemalan physician Dr. Mario Castejon to the White House—directly to his father’s office in the Executive Office Building. Dr. Castejon’s letter to Vice President Bush requested U.S. medical aid for the contras. George Bush penned a note back to the doctor, referring him to Lt. Col. Oliver North—whose pro-contra activities the president now claims he knew little about.

    An entry in North’s diary reads:
    22-Jan-85
    Medical Support System for wounded FDN in Miami—HMO in Miami has oked to help all WIA [wounded in action] … Felix Rodriguez.

    (Rodriguez was a former CIA official who advised Vice-President Bush’s national-security adviser, Donald Gregg, currently U.S. ambassador to South Korea.)

    Veteran CIA operative Jose Basulto told the Wall Street Journal in 1987 that he had personally attended meetings at IMC headquarters in Miami along with contra leader Adolfo Calero and Felix Rodriguez. Basulto also said that he had personally brought sick and wounded contras to IMC hospitals in Miami, where they received free medical treatment. Former HHS agent Leon Weinstein is not surprised that Recarey has not been returned to the United States. “My investigation,” Weinstein says, “led me to conclude that there may have been a deliberate attempt to obstruct justice…because Recarey, his hospital, and his clinics were treating wounded contras from Nicaragua…and part of the $30 million a month he was given by the government to treat Medicare patients was used to set up field hospitals for the contras.”

    AN IMPORTANT UPDATE

    We’re falling behind our online fundraising goals and we can’t sustain coming up short on donations month after month. Perhaps you’ve heard? It is impossibly hard in the news business right now, with layoffs intensifying and fancy new startups and funding going kaput.

    The crisis facing journalism and democracy isn’t going away anytime soon. And neither is Mother Jones, our readers, or our unique way of doing in-depth reporting that exists to bring about change.

    Which is exactly why, despite the challenges we face, we just took a big gulp and joined forces with The Center for Investigative Reporting, a team of ace journalists who create the amazing podcast and public radio show Reveal.

    If you can part with even just a few bucks, please help us pick up the pace of donations. We simply can’t afford to keep falling behind on our fundraising targets month after month.

    Editor-in-Chief Clara Jeffery said it well to our team recently, and that team 100 percent includes readers like you who make it all possible: “This is a year to prove that we can pull off this merger, grow our audiences and impact, attract more funding and keep growing. More broadly, it’s a year when the very future of both journalism and democracy is on the line. We have to go for every important story, every reader/listener/viewer, and leave it all on the field. I’m very proud of all the hard work that’s gotten us to this moment, and confident that we can meet it.”

    Let’s do this. If you can right now, please support Mother Jones and investigative journalism with an urgently needed donation today.

    payment methods

    AN IMPORTANT UPDATE

    We’re falling behind our online fundraising goals and we can’t sustain coming up short on donations month after month. Perhaps you’ve heard? It is impossibly hard in the news business right now, with layoffs intensifying and fancy new startups and funding going kaput.

    The crisis facing journalism and democracy isn’t going away anytime soon. And neither is Mother Jones, our readers, or our unique way of doing in-depth reporting that exists to bring about change.

    Which is exactly why, despite the challenges we face, we just took a big gulp and joined forces with The Center for Investigative Reporting, a team of ace journalists who create the amazing podcast and public radio show Reveal.

    If you can part with even just a few bucks, please help us pick up the pace of donations. We simply can’t afford to keep falling behind on our fundraising targets month after month.

    Editor-in-Chief Clara Jeffery said it well to our team recently, and that team 100 percent includes readers like you who make it all possible: “This is a year to prove that we can pull off this merger, grow our audiences and impact, attract more funding and keep growing. More broadly, it’s a year when the very future of both journalism and democracy is on the line. We have to go for every important story, every reader/listener/viewer, and leave it all on the field. I’m very proud of all the hard work that’s gotten us to this moment, and confident that we can meet it.”

    Let’s do this. If you can right now, please support Mother Jones and investigative journalism with an urgently needed donation today.

    payment methods

    We Recommend

    Latest

    Sign up for our free newsletter

    Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

    Get our award-winning magazine

    Save big on a full year of investigations, ideas, and insights.

    Subscribe

    Support our journalism

    Help Mother Jones' reporters dig deep with a tax-deductible donation.

    Donate