When it comes to financial shell games and political flim-flam, it seems that the two have a lot in common, oftentimes including the same personality mixes whose names keep cropping up. Sometimes those names can materialize like a deadly vapor in proceedings separated by a couple of decades. And somehow, those years and events mysteriously converge to affect the lives of thousands—or millions—of people.
It was in late 1990 that the late John Hays, the cantankerous publisher of the weekly Morning Paper in Ruston began writing stories that raised questions about Towers Financial Corp. and its chairman, one Steven Hoffenberg.
At first, his stories attracted little interest. On paper, as the sportswriters would say, it was a mismatch. Hays, described by NEW YORK TIMES in an April 1993 story as “a hard-drinking, chain-smoking, cowboy-booted newspaper publisher” was pitted against Hoffenberg, who briefly ran The New York Post, eventually taken over by Rupert Murdoch. Hoffenberg owned two jets, a yacht, limousines, mansions, and a Fifth Avenue office. Hays drove an old van well past its prime. It quickly shaped up as an epic battle between a small-town publisher operating on a shoestring and a sophisticated New Yorker who had, it seemed, more money than God.
But investors were getting nervous in the late 1980s and early 1990s. Some of them called Hays who had a penchant for taking on phony investment schemes. Hays, as was his wont, began making calls that piqued the interest of Securities and Exchange Commission investigators as well as state regulators. He had worked with these same regulators in other scams, so he had the credentials necessary to make them sit up and pay attention whenever he called.
Hays even managed to attract the attention of major newspapers like the WASHINGTON POST
Hoffenberg had all the right political connections. He was a business ally of former Texas Gov. John Connally and with a former co-chairman of the Republican National Committee. Other friends in high places included Victoria Reggie, daughter of powerful Crowley Judge Edmund Reggie and the future wife of Sen. Edward Kennedy, New York City Mayor Mario Cuomo, and Mickey Kantor, President Bill Clinton’s trade representative. Heavy hitters, one and all.
Some of his connections, however, tended to hang back in the murky shadows of a darker side of society. https://porkinspolicyreview.com/tag/steven-hoffenberg/
When a Shreveport brokerage firm started peddling high-yielding notes for Towers in 1990, Hays said he immediately wondered “if some fellow up in New York has such a good deal, what would inspire him to come down here to northern Louisiana and make the local people rich?”
He started making calls and writing stories—stories that obviously did not sit well with Hoffenberg.
If Hays was suspicious of Hoffenberg, the feeling was more than mutual. “He’s not a credible person,” Hoffenberg said of Hays. “He runs a newspaper that is full of lies. I have never heard from anybody that John Hays was somebody we should take seriously. I mean, he gives his newspaper away; he throws it on people’s driveways.” Twenty-five years later, one could close his eyes and almost hear Donald Trump talking about another candidate or some reporter covering his campaign.
(Oh, just as a heads-up, keep that Trump comparison in mind. He’ll come up later in this story.)
Hoffenberg was correct in that last statement. Hays did indeed toss about 25,000 free copies a week in the driveways of Lincoln, Union, Bienville, and Jackson parishes.
But Hays also became a national clearinghouse for information between state regulatory agencies. He was credited by Arkansas authorities as providing information to them that allowed them to keep Hoffenberg and Towers Financial Corp. out of that state.
But not all states. Hays began making calls to regulators and learned that Towers was selling notes in states where it had failed to meet registration requirements. Enter the feds. More stories followed.
So, who won the war of words?
Well, Hoffenberg eventually entered a guilty plea to running a $475 million Ponzi scheme, the largest on record until Bernie Madoff dwarfed Hoffenberg’s financial chicanery. In 1997, Hoffenberg was sentenced to 20 years in federal prison for defrauding thousands of investors. http://www.nytimes.com/1997/03/08/business/hoffenberg-gets-20-year-sentence-in-fraud-case.html
His nemesis who he said “runs a newspaper that is full of lies” and a man he said he never heard “from anybody that John Hays was somebody we should take seriously,” was nominated for the Pulitzer Prize.
Someone once said never start a fight with someone who buys ink by the barrel and newsprint by the boxcar. Apparently Hoffenberg wasn’t listening.
The Hoffenberg/Towers Investment saga was the subject of a lengthy abstract by Gene Murray, Ph.D., assistant professor in the Department of Mass Communication at Grambling State University. http://list.msu.edu/cgi-bin/wa?A3=ind9710a&L=AEJMC&E=7BIT&P=1328897&B=–&T=TEXT%2FPLAIN;%20charset=US-ASCII
But let’s fast forward to 2016. John Hays has been dead for a year now, the Morning Paper stopped publication several months before his death when his cancer weakened him to the point he could no longer peddle his ads or chase down a good story.
Hoffenberg couldn’t get out of jail in 1996 because, he said, he was so broke he couldn’t post the $100,000 bail. http://www.nydailynews.com/archives/money/sec-hoffenberg-pay-stay-jail-article-1.730715
Twenty years later, however, he is back in the money—and he wanted everyone to know it. It’s almost enough to make you wonder if he may have had a few dollars stashed safely offshore all that time.
The man who couldn’t make $100,000 bail a couple of decades ago has recently pledged $50 million to his super PAC set up to coordinate a marketing campaign in support of Donald Trump. http://www.washingtonexaminer.com/ponzi-schemer-steven-hoffenberg-pledges-50-million-to-help-trump/article/2593931
Hoffenberg, who professes to be a born-again Christian (funny how prison can do that; just ask Chuck Colson), is also in the business of marketing something called the Christ Credit Card to more than 700,000 registered Christian churches through Towers Financial.
In addition to pledging $50 million of his own money to his super PAC, he also says he intends for his PAC to raise more than $1 billion in support of Trump. http://www.politico.com/story/2016/06/convicted-ponzi-schemer-ill-conduct-50-million-marketing-campaign-for-trump-224350
So much for Trump’s claim that he is financing his own campaign—or for Hoffenberg’s earlier claims of poverty.
The announcement by Hoffenberg was the first time he has explained why he founded the Get Our Jobs Back, Inc. PAC back in April. He is listed as treasurer and custodian of records by the Federal Election Commission. http://docquery.fec.gov/cgi-bin/forms/C00616078/1070515/
Could this be déjà vu all over again? Can you imagine someone like Hoffenberg having the ear of a President Trump?
We have only a few random observations to make about this latest development, this unholy alliance between two high-rolling carnival hucksters of dubious trustworthiness:
- Watch closely how he raises that much campaign cash.
- Does his credit card scheme figure in the mix?
- Old habits sometimes can be hard to break.
- Where is John Hays when we really need him?