Billie Sol Estes Is Arrested for Corporate Fraud Summary

  • Last updated on November 11, 2022

Billie Sol Estes was one of the most successful businessmen in Texas during the middle of the twentieth century. However, his business was based on selling nonexistent fertilizer tanks to farmers and on defrauding lenders. The investigation became a major scandal especially because Estes claimed that Vice President Lyndon B. Johnson and other politicians benefited financially from his scheme.

Summary of Event

The arrest of Billie Sol Estes in 1962 was the culmination of a long period of fraud perpetration, first through a federal cotton subsidy program and then through borrowing on fertilizer tanks that did not exist. Estes defrauded lending institutions of millions of dollars by using the nonexistent tanks as collateral for multiple loans. [kw]Estes Is Arrested for Corporate Fraud, Billie Sol (Mar. 29, 1962) [kw]Fraud, Billie Sol Estes Is Arrested for Corporate (Mar. 29, 1962) Estes, Billie Sol Johnson, Lyndon B. [p]Johnson, Lyndon B.;and Billie Sol Estes[Estes] Internal Revenue Service;and Billie Sol Estes[Estes] Estes, Billie Sol Johnson, Lyndon B. [p]Johnson, Lyndon B.;and Billie Sol Estes[Estes] Internal Revenue Service;and Billie Sol Estes[Estes] [g]United States;Mar. 29, 1962: Billie Sol Estes Is Arrested for Corporate Fraud[01120] [c]Hoaxes, frauds, and charlatanism;Mar. 29, 1962: Billie Sol Estes Is Arrested for Corporate Fraud[01120] [c]Banking and finance;Mar. 29, 1962: Billie Sol Estes Is Arrested for Corporate Fraud[01120] [c]Business;Mar. 29, 1962: Billie Sol Estes Is Arrested for Corporate Fraud[01120] [c]Corruption;Mar. 29, 1962: Billie Sol Estes Is Arrested for Corporate Fraud[01120] [c]Government;Mar. 29, 1962: Billie Sol Estes Is Arrested for Corporate Fraud[01120] [c]Politics;Mar. 29, 1962: Billie Sol Estes Is Arrested for Corporate Fraud[01120] Dunn, John

Billie Sol Estes on the cover of Time magazine in 1962.

(Courtesy, Time, Inc.)

His scam was to sell tanks to farmers on an installment basis. The farmers, in turn, signed installment notes to pay for the tanks. Estes would take the notes to financial institutions and use them as security for loans. However, he used each note several times for several loans and ended up with more loans than notes from farmers. By the time his scheme was uncovered, Estes had obtained more than thirty thousand loans on eighteen hundred tanks of fertilizer.

Estes grew up in West Texas. His early life was perhaps an indicator of how he would live his life as an older child and an adult. By the time he was sixteen years old, he had a reputation as a shrewd manipulator. By his thirtieth birthday he was a millionaire. Before his fortieth birthday he was in Leavenworth Federal Penitentiary.

Estes amassed his early fortune through the federal surplus-cotton program. His business ethics were questionable even as a youth. As a boy, he sold a cow to a farmer with the promise that the cow would produce four gallons of milk. The farmer later complained that the cow was not producing the expected quantity of milk. Estes shrewdly replied that he never stated how long it would take the cow to produce four gallons.

By the 1960’s, Estes was the leading citizen of Pecos, Texas, and an active member of the local Church of Christ. He owned two airplanes and the most elegant mansion in town with a swimming pool and two tennis courts. He was so religious that when he invited guests to swim in his pool, men and women were not allowed to swim together. Men would swim first, followed by women, as prescribed by the precepts of the Church of Christ. In 1961, he ran for a position on the Pecos School Board with a platform that called for the elimination of dancing at all school functions and the requirement that cheerleaders wear longer skirts. He lost the election. He had been named one of the outstanding men of Texas, one of the ten most outstanding young men in the United States, and was a friend of former president Harry S. Truman and Vice President Lyndon B. Johnson. Estes’s daughter, Pam, later wrote that her father had occasionally supplied Johnson with great wads of money.

Estes apparently was generous, always ready to help out those in need, but his generosity came with a price: recognition. A friend stated that Estes often supplied an airplane and pilot, at no expense, to take the sick to distant cities for specialized medical care. However, Estes made sure that the public knew about such benevolence. Democratic politicians also were his beneficiaries.

Estes’s fraud scheme was exposed by a former friend, John Dunn, a doctor and a member of the conservative John Birch Society. Dunn had purchased part interest in the local newspaper, a newspaper that did not support the liberal beliefs of Estes and his friends. Estes tried to defame the doctor and drive the newspaper out of business. Dunn began an investigation of Estes’s activities and turned over his evidence to the Federal Bureau of Federal Bureau of Investigation;and Billie Sol Estes[Estes] Investigation and the U.S. Internal Revenue Service. Those records, some of which were stolen from Estes’s own office, showed evidence of fraud totaling more than forty million dollars. The U.S. Department of Agriculture already knew of the accusations against Estes and had begun an undercover investigation in 1961.

On June 3, 1961, an investigator from the Agricultural Stabilization and Conservation Service, Henry Marshall, was found dead in his car. Despite the presence of five gunshot wounds in Marshall’s body, the local justice of the peace attributed Marshall’s death to carbon monoxide poisoning because a hose, attached to the exhaust pipe, was in the car along with the body. Marshall’s body was buried without an autopsy. The suicide verdict was later overturned in 1979, when Estes testified that Johnson had ordered Marshall’s murder out of fear that Marshall was close to uncovering the fraud. On March 29, 1962, Estes was arrested by federal officials.

Before Estes went to trial, a congressional investigation had been formed to determine whether Estes had received favored treatment from government officials. In the spring of 1963, Estes received a fifteen-year sentence following his conviction for fraud. He was paroled eight years later. As to why Estes perpetrated his fraud, one friend described him as a scared little boy with an inferiority complex. Estes’s early motivation was a contempt for wealth. In the end, this contempt was reversed; he now glorified personal wealth and power.

Following his release from prison in 1971, Estes was in trouble again. In 1979, he was convicted of tax fraud and concealment of assets and sentenced to another ten years in prison. He was paroled in November, 1983. His 1979 tax-fraud trial was related to the unreported profits from his sale of fertilizer tanks. Estes also claimed to have paid ten million dollars to Johnson as business expenses, but he had no proof of the payments. The result was conviction and another prison sentence. The relationship between Estes and Johnson might have been corroborated, or denied, by three men: George Krutilek, Harold Orr, and Howard Pratt. However, all three were found dead of carbon monoxide poisoning. Although never accused of murder, Estes left a trail of bodies. One person summarized Estes as a “scandal magnet extraordinaire”; he was often in trouble in some form or another.

In 1984, after having been out of prison for a few months, Estes approached the U.S. attorney general and offered to provide information on past crimes if he could be exonerated from liability on those crimes and receive a pardon for his past convictions. He claimed to have direct evidence of seven murders, including that of President Kennedy, John F. [p]Kennedy, John F.;assassination of John F. Kennedy, and claimed the murders were ordered by Johnson. In fact, Estes claimed there had been eighteen such murders, but he had evidence on only seven of them. He said that he, too, would have been killed were it not for certain audiotapes in his possession. The tapes allegedly included conversations in which the killings were ordered. However, the government did not pursue the matter, and the purported tapes have never surfaced.


Estes’s fraud scheme led many to believe that big business in the United States was shady business. Accountants and auditors were affected because the case led to changes in auditing procedures. Both auditors and lenders had been misled by Estes with a shell game of switching identification plates on fertilizer tanks.

The fraud scheme and Estes’s conviction affected politics as well. Estes claimed he made payoffs to many prominent politicians, including Johnson. The immediate political consequences included the election of a Republican to the U.S. House of Representatives from west Texas in 1962. Democratic incumbent J. T. Rutherford was defeated because of his ties to Estes. Estes, Billie Sol Johnson, Lyndon B. [p]Johnson, Lyndon B.;and Billie Sol Estes[Estes] Internal Revenue Service;and Billie Sol Estes[Estes]

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Duscha, Julius. Taxpayers’ Hayride: The Farm Problem from the New Deal to the Billie Sol Estes Case. Boston: Little, Brown, 1964. This work explains the economic and political context that allowed Estes to prosper. Limited coverage of the fraud.
  • citation-type="booksimple"

    xlink:type="simple">Estes, Billie Sol. Billie Sol Estes: A Texas Legend. Granbury, Tex.: BS Productions, 2004. This autobiography tells much of the memories of Estes’s life, including his contention that Johnson was behind the assassination of President Kennedy.
  • citation-type="booksimple"

    xlink:type="simple">Estes, Pam. Billie Sol: King of Texas Wheeler-Dealers. Abilene, Tex.: Noble Craft Books, 1983. A somewhat biased biography written by Estes’s daughter. Still, the details are included but the interpretation does not always match that of the criminal court.
  • citation-type="booksimple"

    xlink:type="simple">Haley, J. Evetts. A Texan Looks at Lyndon: A Study in Illegitimate Power. 2d ed. Midland, Tex.: N. S. Haley Memorial Library Trust, 1990. Explores Estes’s accusations against Vice President Johnson.
  • citation-type="booksimple"

    xlink:type="simple">Morris, Willie. “A Smart Man Won’t Get Bloody.” In Fifty Years of the Texas Observer, edited by Molly Ivins and Char Miller. San Antonio, Tex.: Trinity University Press, 2004. Morris gives a brief summary of the Estes case and points out that Estes was reportedly worth over $150 million before he was indicted, and that he was financing more fertilizer tanks than existed in the country at that time.

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Categories: History