Louisiana Voice

The year was 1993 and the empire of high-rolling financier Steven Hoffenberg’s empire, built on an elaborate $500 million Ponzi scheme rivaled only by that of Bernie Madoff, lay in ruins, thanks to the efforts of the late John Hays, the chain-smoking, whiskey-drinking publisher of Ruston’s Morning Paper, a free-distribution shopper thrown in 25,000 driveways every Wednesday night.

Hays, in 1976, started his tabloid publication that offered a weekly map of garage sales in the area as the result of a running battle he had with Ruston’s Mayor—and cousin—Johnny Perritt, and after Tom Kelly, publisher of the larger daily newspaper where I cut my own journalistic teeth, The Ruston Daily Leader, rejected one of Hays’s letters to the editor in which he desired to protest a local tax issue.

By the time Hoffenberg came along with his TOWERS FINANCIAL CORP. investment scheme, Hays had already exposed a couple other smaller Ponzi Schemes: the so-called Pine Tree Caper and the $55 million ALIC Investment scam, shutting them down in their tracks.

Hoffenberg ended up being sentenced to 20 years in prison—he actually served 18 of those, unusual in today’s system of jurisprudence—and was ordered to pay a $1 million fine and $463 million in restitution to his victims. Following his 2013 release, he settled a civil suit with the U.S. Securities and Exchange Commission for $60 million.

It’s not as though Hoffenberg didn’t have friends in high places: he did. Among those who went to bat for him were Ben Barnes, a business ally of former Texas Gov. John Connally; Thomas B. Evans Jr., a former co-chairman of the Republican National Committee in Louisiana; Victoria Reggie, the daughter of a prominent state judge and the future wife of Ted Kennedy; Mickey Kantor, who would go on to serve as President Clinton’s trade representative; Prince Bandar bin Sultan Al Saud and one JEFFREY EPSTEIN, who he described as the “mastermind” behind the fraud of an insurance bond scheme and the “technician” of a Wall Street stock manipulation scheme.

Hoffenberg claimed in court documents that Epstein was intimately involved in the Ponzi scheme. Epstein left Towers Financial before its collapse and was never charged for his involvement.

That’s probably because Hoffenberg did not turn evidence against Epstein in the beginning, claiming—perhaps even fearing—that Epstein “had traction” with the U.S. Department of Justice. “You cannot grasp the magnitude of [Epstein’s] controlling effect,” he said of his one-time partner. He said Epstein had worked up a “detailed plan” to turn Towers Financial into a major player in funding money products around the world and to do so “illegally.”

From discovery of the Towers Investment scam through sentencing of Hoffenberg, Hays never let up. He kept relentless pressure on Hoffenberg and SEC regulators alike. The small-town editor Hays made such an impression on the professional news reporters that The New York Times published a two-page profile on him on April 4, 1993.

Hays CEASED PUBLICATION the Morning Paper a decade later, in July 2013, ending 37 years of hard-hitting journalism, when his cancer spread, weakening him to the point he could no longer pursue his craft. He DIED in August 2014. Wife Susan moved back to Austin, Texas, from which that had come way back in the 1970s, to be near their daughter.

It was with feelings of nostalgia mixed with sadness that I learned this week that the Ruston City Council is considering condemning John and Susan’s former home in Ruston. The house that John built himself—he was a contractor in a previous life—has not been lived in since Susan left 12 years ago and has fallen into disrepair.

As I reminisced about those heady days when journalism was real and the rewards tangible, I couldn’t help but wonder what new scandal, what other scam, he might have uncovered had he lived and continued publishing what was derisively called “that rag” in its earliest days of existence but which would live to gain the respect of a publication like The New York Times.