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Life with Paul and Billy Bob

6 minute read
Evan Thomas

Hit with some titillating charges, the Pentagon’s No. 2 exits

The 43-page complaint from the Securities and Exchange Commission was written in the usual dry legalese. But the bare facts that it laid out would make a fitting plot for J.R. and his cronies. The former chief executive of a $4 billion Dallas-based conglomerate, 64, has a “private personal relationship” with a company receptionist and provides her with “monetary support.” He shares “lunches, dinners, trips, vacations, and social gatherings” with a small circle of high-living Southerners and their women friends. Generously, but illegally, he also shares stock tips worth $1.9 million with his friends.

Adding piquancy to the plot are the identity of the executive and his most recent job: Deputy Secretary of Defense

Paul Thayer. Last week the SEC charged that Thayer, as chairman of LTV Corp. and board member of Anheuser-Busch Cos. and Allied Corp., improperly passed along inside information to his friends. The day before the SEC filed its civil complaint in a New York federal court, Thayer resigned as the Pentagon’s No. 2 man. Thayer termed the charges “entirely without merit” and vowed to fight them. At week’s end his replacement had been named: William Howard Taft IV, the self-effacing chief counsel of the Defense Department, a protégé of Defense Secretary Caspar Weinberger and great-grandson of the 27th President of the U.S.

The SEC complaint follows a ten-month investigation. It alleges that Thayer, who is married, has had a “personal relationship” since 1979 with Sandra Ryno, now 38, a divorcee and a former receptionist at LTV, the company he left a year ago for Washington. During 1981 and 1982, the SEC claims, Thayer passed stock tips to Ryno and seven other defendants in the suit. All seemed to come from soap-opera central casting.

One is Stockbroker Billy Bob Harris, 44, who is “a regular celebrity groupie,” says Writer Edwin (“Bud”) Shrake, a former Dallas sports columnist. Harris is friendly with Don Meredith, former Dallas Cowboy quarterback, ABC Monday Night Football commentator and TV pitchman; former Cowboy and Denver Bronco Quarterback Craig Morton, his onetime roommate; and country-and-western Singer Kenny Rogers. The broker’s parties are known for “wall-to-wall girls, champagne, hot tubs and more girls,” says Shrake. They were vividly portrayed in fictionalized form in the movie North Dallas Forty. Harris, who gave stock reports on Dallas TV, announced on television that he had undergone a lie-detector test, which, he claimed, proved his innocence.

According to the SEC, Harris used the stock tips to benefit Julie Williams, 26, a public relations firm employee who also teaches aerobic dancing at a health spa.

Williams, the complaint alleges, has a “close personal relationship” with Harris.

Others who profited from Thayer’s stock tips, the complaint goes on, included Gayle Schroder, 46, chairman of First American Bank and Trust of Baytown, Texas; Malcolm Davis, 48, a convicted gambler and president of a Dallas insurance agency; Dr.

Doyle Sharp, 52, an orthopedist; and Julia Rooker, 37> a former Braniff flight attendant who has a “close personal relation ship” with Sharp. One non-Texan rounded out the group: Atlanta Stockbroker William Mathis, a longtime Harris colleague, who was a halfback in the ’60s for pro football’s New York Jets.

According to the SEC, Thayer repeatedly told the group about the planned acquisitions, profits and dividends of Anheuser-Busch, Allied and LTV before public dissemination.

His friends would then buy shares in the companies or their targets and sell at a profit as soon as favorable news caused the stock to rise. In this fashion Thayer’s friends allegedly accumulated illegal profits of $1.9 million.

For example, in September 1982, shortly after he learned that Allied planned to try to take over Bendix Corp., Thayer allegedly contacted Ryno and Harris. On Sept. 22, Ryno bought 4,000 shares of Bendix at roughly $60 a share; five days later, after Allied’s tender offer had been made public, she sold it at about $73 a share, netting a profit of $51,000. U.S. securities law only penalizes tipsters who “benefit” from passing inside information, and the SEC does not claim that Thayer profited financially from his inside information. The commission will charge, instead, that Thayer benefited simply by improving his relationship with Ryno and the others. The complaint also accuses some of the defendants of trying to “impede and frustrate” the SEC investigation. The Justice Department is looking into possible perjury charges stemming from the SEC inquiry.

Despite Thayer’s claims of innocence, the embarrassing charges made his Defense Department post untenable. His departure leaves a large hole high up in the Pentagon hierarchy. Thayer had publicly criticized the military’s waste and cost overruns; privately, he liked to brag that he could cut the budget by 20% without sacrificing effectiveness. As de facto chairman of the Pentagon’s defense resources board, Thayer had day-to-day control over all agency actions and military procurement. To some defense professionals, he seemed both well placed and well suited to carrying out budget cuts: a hard-nosed businessman and a decorated World War II Navy aviator with a mastery of many weapons systems. But he had another reputation: that of a boisterous cowboy who talked too much and read too little.

Once in a single day, Thayer, whose favorite hobby is flying military jets, piloted an F16, an F-15 and an F18, danced into the small hours at a local disco, and returned in the morning to fly the prototype of a B-1 bomber. He is an avid wild-game hunter ( he decorates his office with his kills) , a motorcycle enthusiast, an expert skier and an amateur rodeo rider.

Thayer’s greatest weakness may have been that he lacked the full confidence of Weinberger, who seems more interested in boosting the defense budget than in cutting waste. When Thayer challenged Navy Secretary John Lehman on the need for a 600-ship Navy, Weinberger undercut Thayer at a meeting of top officials. “That session decapitated Thayer as far as the service chiefs were concerned , ‘ ‘ recalls a Pentagon insider.

This fall, as Thayer struggled with the Pentagon budget, he was reported to be increasingly distracted by his growing legal problems. Budget decisions on matters ranging from new weapons systems to new uniforms began to pile up on his desk; by mid-December the stack was 18 in. high.

Last week Thayer announced that he would devote his considerable energies and financial resources, reported to be about $12 million, to fighting the Government’s lawsuit.

> Unlike many other officials in “legal trouble, Thayer did not try to hang on while the evidence trickled out. An inveterate crapshooter, he may have gambled unwisely with the SEC, but as a former test pilot, he apparently knew when to bail out. — By Evan Thomas.

Reported by Anne Constable and Bruce van Voorst/Washington, with other bureaus

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