The mechanics of the scheme were simple, yet highly effective: land promoters purchase cheap, unproductive land and have it assessed above market value by state appraisers. The promoters would then sell the land to the VLB on behalf of veterans for a profit, and kick back a portion of the money to those who allowed the fraudulent appraisals in the first place. The scam targeted block deals, which were handled exclusively and directly by Commissioner Giles. Many times, the veterans had no idea what they were signing up for, just following the lead of the swindler who made the original offer. The wronged veterans were under the impression that they were receiving free veterans’ benefits. They were paid by promoters to sign paperwork they often couldn’t read, and in some cases the forms were blank and filled in later. The promoters completed all the paperwork, provided the veterans’ down payments, and leased the land back from the veterans for three years, which allowed payments to be made without any knowledge or action on the part of the veteran. It was intended for the unsuspecting veterans to default on their payments after three years thinking they didn’t have to take any action when the leaseback agreements would expire. At that point, the land would revert to the state’s possession. Having paid for the land at inflated values, the state would unload the worthless land at a huge loss.
In the fall of 1954, events unfolded that set Towery down an investigative path that would lead to the fall of Bascom Giles, a Pulitzer Prize for Towery, and a black-eye for Texas state government and the GLO. An after-hours meeting between wealthy white businessmen and African-American veterans at the Cuero country club, an “unlikely place” for such a gathering, caught the eye of Towery. Through an African-American co-worker, he found out that “they were talking about land.” Days later, an African-American Cuero veteran, Elmo Battles, received a document from the VLB indicating he had purchased land. He asserted “I’ve bought no land. How could I buy land?”
In October 1954, Towery’s sources at the Cuero courthouse indicated increased activity in the county attorney’s office. Still not putting all of the pieces together, Towery met DeWitt County Attorney Wiley Cheatham, who confirmed his own investigations into the country club meeting and the Elmo Battles matter. Cheatham and his father, State Representative Tom Cheatham, had begun to raise questions about the Veterans’ Land Program. The irregularities Cheatham found were thought to possibly extend across county lines, and the story “might go all the way to the top.” Towery’s first article concerning “certain suspected irregularities in the sale of land under the Veterans Land Program” was published in the Cuero Record on November 11, 1954.
A series of additional articles published by Towery created statewide momentum for the developing story involving Commissioner Giles, who served as chairman of the Veterans Land Board. As more evidence was uncovered, it was demonstrated that Giles had been colluding with appraisers and land promoters under the terms of the Veterans Land Act to generate hundreds of thousands of dollars in profits for those involved, at the expense of taxpayers and unsuspecting veterans.
This pattern of fraud was repeated again and again throughout southwest Texas. As the massive scale of the operation was uncovered, the investigators expanded to include multiple district attorneys, the state Attorney General, State Auditor, the Department of Public Safety, and investigating committees in both the Texas Senate and House. Commissioner Giles, who was politically very-well liked, and thought to be a future contender for the Governor’s office, had just been elected to an extraordinary ninth term as Commissioner weeks prior to the publication of the investigation. However, increased attention prompted him to announce his resignation on January 2, 1955, stating “…in view of the recent publicity given to the Veterans Land Board, it now seems best to decline to qualify for the approaching term.”
The first indictments against Commissioner Giles came in March, 1955 in Travis County, including charges of theft, being an accomplice to theft, and conspiracy to commit theft, stemming from VLB transactions in Dimmit and Kinney Counties. In all, fifteen indictments would be leveled against Giles prior to his appearance in Austin’s Travis County Court on July 5, 1955.
Commissioner Giles was found guilty on July 28, 1955 of being an accomplice to the theft of $6,800, and was sentenced to six years in the state penitentiary. Following his conviction, Giles plead guilty to the rest of his pending charges, resulting in a total of twelve six-year sentences and one three-year sentence, to be served concurrently. He reported to the Texas State Penitentiary at Huntsville on January 16, 1956, becoming the first elected state official to be incarcerated for crimes that were committed while serving in public office. He would remain in prison until he was released in December of 1958.
Recovery & Recognition
The fallout from the VLB scandal was wide-ranging. In December of 1955, the Attorney General and State Auditor concluded there were 591 veterans and 39 sellers who participated in transactions that were “fraudulent, in whole or in part” totaling $3,554,994. Later estimates included as many as 1488 veterans in 125 transactions totaling $10,102,001.30.
Towery, who was “consumed” by the investigation, earned the 1955 Pulitzer Prize for Local Reporting. The victims of the scandal – the veterans who were tricked into signing up for the VLB program – actually came out ahead. Many had received cash or other incentives to sign their contracts, and they were able to keep these payments.
World War II hero James Earl Rudder was appointed by Governor Allen Shivers to replace Commissioner Giles. His main focus was cleaning up the tarnished images of the GLO and the VLB. He removed or accepted the resignation of the appraisers who worked under Giles and replaced them with people he felt he could trust. He also worked with legislators to close loopholes in the Veterans Land Act to prevent future abuses. After eighteen months on the job, Rudder asserted that “The General Land Office has now been restored to a place of confidence in the eyes of the public.”