Bryan Burrough (60 page)

In early 1977 these festering resentments finally burst into the open, when Bunker and the first family demanded that Ray buy out their stock in Hunt Oil. The catalyst was Reunion. The first family accused Ray of taking a sweetheart loan from Hunt Oil to satisfy a brief cash crunch during construction. Ray denied this, saying the “loan” was a housekeeping matter involving the merger of one of his real estate partnerships into the Hunt Oil portfolio. Whatever the details, Bunker and Ray’s attorneys proved unable to come up with a mutually agreeable buyout price. On paper the 18 percent stake could be valued at $100 million or more, money Ray said he simply didn’t have at the moment.

The real problem, though, was the IRS. Ever since his father’s death Ray’s tax attorneys had been negotiating what promised to be a gigantic bill for taxes on the Hunt estate. Just how large the bill would be depended largely on a valuation of H. L. Hunt’s oil reserves at the time of his death. Ray’s attorneys were pushing for the lowest possible valuation. Selling stock in Hunt Oil, however, would value those reserves in harsh black and white. By pushing for the highest purchase price, the first family could, indirectly, pull the rug from beneath Ray’s negotiations with the IRS. Bunker and Herbert didn’t especially care; it was Ruth and the estate who had to pay the taxes, not them. To drive home the point, Bunker once again brought in John Connally, who told Ray’s men he was prepared to play “hard ball” and go straight to the IRS with higher valuations of Hunt Oil’s reserves.

Negotiations between the two sides of the family dragged on all through 1977, pushing relations toward a new low. Finally, in December, a settlement was reached. Ray agreed to transfer a group of assets, including a North Dakota pipeline and some timberlands, into a new subsidiary, which the first family would then buy with its stock. The settlement heralded a final split between the two families’ finances. As far as Ray was concerned, Bunker and Herbert and Lamar were now out of his hair once and for all. As if in celebration, that same month brought the symbolic birth of the Reunion project. Just before Christmas, Ray flipped a switch and for the first time lights blazed all around the giant geodesic ball atop the fifty-five-story Reunion Tower.

It was a defining moment for Ray Hunt. After years of work, Dallas had a new skyline, and a new Hunt family leader, one who actually seemed to care about the city and its people. Ray’s work, however, was far from over. It was time to deal with Frania Tye.

As executor of his father’s estate, it had fallen to Ray to deal with Frania Tye Lee and her lawyers. No one thought their two lawsuits would ever reach a court trial; the whole story was simply too embarrassing to the Hunt legacy. The question became how much “the Lee people” would accept to go away. Frania’s attorneys were angling for a number around a hundred million dollars. Ray and his lawyers just shook their heads.

The trial was set for federal court in Shreveport on January 9, 1978. Ray was expecting the worst, a media circus, teary testimony from the aging Frania, tales of how she had been wined, dined, hidden away, and eventually dumped by the heartless H. L. Hunt, whose Dallas children were billionaires while the Lee children still paid rent. To counter the sympathy she would no doubt attract, Ray badly needed the first family to come to Shreveport and present a united front, just as they had for Bunker and Herbert’s wiretapping trial three years earlier. Bunker told him to kiss off. Eventually, though, it dawned on his siblings how much everyone had to lose—not just their father’s legacy but a fair chunk of his millions—and they agreed to appear.

On the witness stand Frania was everything the Hunts had feared, a gray-haired, trembling grandmother, her voice quavering as she walked the six jurors through her whirlwind courtship with Major Franklin Hunt in 1925, their “marriage” in Tampa, the years together in Shreveport, her discovery of Hunt’s other wife in 1934, then the soap operas that led her to accept Hunt’s settlement and flee Texas in 1942. Frania agreed to part with her “husband,” she insisted, only after Hunt promised to take care of their children and remember them in his will.

“He promised me that in his will he would name me as wife, that he married me, that they’re his children, and that he would leave the same amount of funds that the first family had,” Frania said.

She stuck to her story throughout a cross-examination by Hunt attorneys, led by the man who had defended Bunker and Herbert in Lubbock, Phil Hirschkop. Asked why she had signed a settlement agreement that pointedly omitted any mention of their marriage, Frania said, “I signed that statement to protect Mr. Hunt from a bigamy charge. That was my contribution to his life.”

“You say you swore to facts that were not true?”

“Yes.”

“Doesn’t that bother you to do that?”

“At that time I did that for the man I loved. And women in love are not philosophers, nor do they know the law that well.”

“They know the truth, don’t they?”

“Yes,” Frania testified, “but they make a lot of sacrifices. I was thinking not only of him, but of all the children.”

It was an immensely sympathetic performance, and Frania’s attorneys followed it up with several sharp blows to the Hunt defense. They called in Hunt’s onetime aide, John Currington, who testified that H.L. had privately admitted marrying Frania. Then they revealed their secret weapon, a voided entry Frania and her son Hugh had discovered in a Tampa courthouse that clearly listed the marriage in 1925. The faded writing was the source of considerable intrigue. After its discovery—and certification by both sets of lawyers—someone had sliced the original entry from a courthouse ledger. Hunt attorneys brought forth a handwriting expert who argued that the entry was in a different hand from adjacent entries, suggesting it might be a forgery. The Hunts tried to date the ink but couldn’t. The damage had been done.

After two days of testimony, Bunker was ready to settle. He and his brothers and sisters lingered outside the courtroom during recesses, smiling and mingling with Ray’s side of the family just as they had in Lubbock. But no amount of public backslapping and cowboy boots could offset the impression Frania had made on the jurors. Phil Hirschkop took one of her lawyers aside and suggested the Hunts might consider a settlement. The lawyer, Roger Fritchie, said Frania might be willing to reduce her demands from one hundred million dollars to twenty-five million.

When Frania’s team concluded their courtroom presentations at noon on Friday, January 13, Hirschkop made the offer. The Hunts, he said, were willing to pay Frania $3.5 million but would not recognize her as Hunt’s wife. Hirschkop gave Frania’s attorneys until 5:30 that day to respond, at which point he would withdraw the offer. The appointed hour came and went. Frania’s lawyers never responded.

When the court recessed for the weekend, the first family scattered; Lamar took his wife, Norma, to Miami to watch Clint Murchison’s Cowboys beat the Denver Broncos in Super Bowl XI. Only Ray remained in Shreveport, studying the week’s testimony. The more he read, the worse he felt. Frania’s case appeared unbeatable. By Sunday night, when everyone reconvened, Ray was willing to increase the settlement offer to ten million dollars and recognize Frania as his father’s wife. The first family, however, would have none of it. They authorized Hirschkop to offer more money, but refused to recognize Frania.

On Monday both sides and their attorneys gathered in Judge Tom Stagg’s chambers to negotiate a deal. Frania was willing to settle on favorable terms, in large part because Judge Stagg had issued several rulings in the Hunts’ favor. Among other things, the judge ruled that the jury couldn’t consider Hunt’s supposed promise to include Frania and her children in his will because she could furnish no independent witness; her financial claims, as a result, would be limited to only the period when they lived as a man and wife, from 1925 to 1934.

It was over within hours. Frania agreed to accept $7.5 million, representing half of H. L. Hunt’s community property in 1942; the money would come from trusts left both Dallas branches of the family. In return Frania pledged to end both lawsuits. She would not be recognized as H. L. Hunt’s wife, even though it was now clear to everyone she had been. Afterward Frania approached Bunker in a hallway. “I just wanted you to know that I don’t have any hard feelings about this,” she said. “I’ve always liked you kids.”
⁸
Bunker managed a weak smile.

A month later, Ray returned to Shreveport to deliver the $7.5 million check. When he reached Judge Stagg’s chambers, however, he received a rude surprise: Frania didn’t want it. Actually, it appeared her son Hugh was the problem. Frania and all the other Hunt children had signed the settlement, but for reasons no one seemed to understand, Hugh refused. It took another ten long months before he reappeared in Shreveport to explain himself. Everyone gathered in the judge’s chambers, Ray with a group of lawyers from both sides. Hugh seemed unable to explain his opposition, but in questioning in front of Judge Stagg, the Hunt attorneys insinuated that he wanted to reserve his right to challenge any of his half siblings’ wills. The Hunts argued that the judge should simply force Hugh to sign.

And there things lay for months, an inconclusive final act to a sad family drama, when suddenly, with practically no warning, the Hunts found themselves caught up in the financial equivalent of a thermonuclear explosion. In the panic it injected into world markets, in the unprecedented audacity of its scope and aims, in its sheer Texas weirdness, it was unlike anything the world had ever before seen.

It was Bunker and his silver.

B
y all rights, Bunker Hunt should have emerged from the 1970s the world’s richest man, a position he may have briefly held for a period in the late 1960s. Oil prices had risen to all-time highs. Inflation pushed interest rates to records. All across Texas, new millionaires were once again hatching like mayflies. In Fort Worth, Sid Bass and Richard Rainwater, products of Yale and Stanford, were demonstrating what a modern, diversified investment strategy could do for even the smallest oil fortune. But in the 1970s Bunker and his brother Herbert, who pooled their investment capital, charted a far different course.

Over the years they had slowly diversified, going into sugar and real estate. Bunker was the big-picture man, the one who devised their ideas and strategies; Herbert was the detail man, the one who put his brother’s ideas into action. Bunker’s ideas, however, were at best unconventional. At worst, they were stupid. By and large, Bunker ignored the advice of Wall Street’s best and brightest. The product of a single semester at the University of Texas, a man who fervently believed in Jewish, Communist, and Rockefeller plots to subvert the world, he devised his own unique investment strategy: silver.

Afterward, everyone involved would offer a different story of how it all began. A New York commodities broker named Alvin Brodsky claimed to have been the first to interest Bunker in silver, in 1970, as did one of Bunker’s prep-school friends and a pair of Dallas silver brokers. Probably all four made the recommendation; silver was a popular investment at the time and was trading at historic lows. To understand why Bunker listened, it helps to understand his worldview. Bunker, like his father, believed the world was slowly falling apart. The Communists, the Jews, the Rockefellers, the Russians, the Chinese, the hippies—everyone was out to destroy the world and Bunker’s position in it. “Bunker,” noted a Los Angeles rare-coin dealer named Bruce McNall, who befriended him during the 1970s, “was just obsessed with the idea that the Russians were coming over the Rockies.”
¹

It’s impossible to know whether Bunker’s philosophy was a product of extreme nouveau riche insecurity, his father’s harem-scarem politics, or something else altogether. Whatever its cause, it channeled his mind to a place familiar to all the world’s worried wealthy, from Middle Eastern Jews to South American dictators, who for centuries have invested their money in tangible, inflation-resistant items: diamonds, silver, and especially gold, anything that could retain its value if a family, a country, or a world economy suddenly collapsed. Bunker was perhaps the ultimate case of the worried wealthy. As the tumult of the 1960s built to a crescendo, he had begun funneling much of his fortune, including his Libyan profits, into tangible investments.

At first, silver was just one of many. Bunker started small in 1970, when the price still hung near all-time lows, $1.50 per ounce. Working with Herbert, the two slowly increased their purchases over the next three years, buying five-thousand-ounce “penny packets” through a Wall Street brokerage, the Bache Group. Silver’s price rose steadily as they did, eventually doubling, to $3 per ounce, in 1973. It was then that Herbert read a book,
Silver Profits in the Seventies,
by Jerome A. Smith, an author of several financial newsletters who specialized in gloom-and-doom economics. Smith argued that the world faced an imminent economic and political collapse, and that the only safe hedge was gold and silver. He urged wealthy investors to buy both and store them in Switzerland—just in case Russia invaded the United States.

Bunker didn’t actually read the book—he was never much of a reader—but from what Herbert said, it sounded brilliant. In hindsight, in fact, the brothers appeared to follow Smith’s strategies to the letter. In mid-1973, working through a variety of brokers to mask their identities, they began buying silver contracts on the New York market. A silver contract entitles its owner to buy the metal at a specific price. No one actually buys the silver itself; a contract is a bet on the movement of prices. It’s simple: If you buy a December contract at ten dollars and the price of silver moves to twelve, you make a two-dollar profit. If it falls to eight, you post a two-dollar loss. What was unusual about the Hunts’ evolving strategy was the amazing number of contracts they bought—an initial twenty-million-ounce December 1973 contract, followed by several more large orders, until by early 1974 Bunker and Herbert sat atop contracts entitling them to buy fifty-five million ounces of silver—roughly 9 percent of
all the silver on Earth.
No one, not even governments, controlled more.