How To Rob Banks Without a Gun

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Even in these days of rampant white-collar crime, few businesses have been more riddled by fraud than banking. One of the latest lenders to surface as a possible wrongdoer is James Wasson, known to friends in Cushing, Okla. (pop. 7,720), as "the General." The title was more than a reflection of his close- cropped hair and commanding ways. Wasson, chairman of Cushing's First National Bank & Trust and a director of Citizens Bank in nearby Drumright (pop. 3,162), was a brigadier general in the Oklahoma National Guard.

The respect faded fast in 1986, when the two banks went belly-up. Soon thereafter Wasson left the Guard and resigned his banking posts. Last week a federal grand jury in Oklahoma City charged Wasson, 50, with 16 counts of fraud. The indictment handed up against him and a partner, Melvin Pulliam, 63, said the duo conspired to embezzle $1.3 million from the banks and the U.S. Government. Authorities contend that Wasson used the confidential records of soldiers who had served in his National Guard unit to create applications in their names for six bank loans guaranteed by the Small Business Administration. The proceeds were allegedly funneled to the two men through companies they owned.

Should they be convicted, Wasson and Pulliam will join a growing army of felons in the financial industry. The majority of the crimes, including fraudulent land deals, payouts to bogus borrowers and lavish living at depositors' expense, have been uncovered in Texas and California, where financial institutions grew especially fast in the early 1980s. But the problem is by no means restricted to those states. A report issued in January by the Comptroller of the Currency found that in 35% of the 189 U.S. bank failures from 1979 to 1987, fraud or insider abuse was "a significant factor." Among S and Ls, the malfeasance is even more pervasive. In testimony before Congress last year, representatives of the five U.S. bank-regulating agencies described an "epidemic" of fraud that had figured in as many as half the S and L failures since 1984.

Often the cash vanishes from vaults only to reappear in the wallets of executives, who use it for personal pleasure. After Bell Savings and Loan of San Mateo, Calif., failed in 1985 with losses totaling $495 million, authorities found that Partner David Butler had used corporate funds to buy expensive racing airplanes for his exclusive use. Butler pleaded guilty to two felony counts and is awaiting sentencing. In the ongoing investigation of the failure of Texas-based Vernon Savings and Loan, in which regulators charge that top officials have looted the S and L for their own gain, former Senior Vice President John Hill, 40, pleaded guilty in March to a single count of conspiracy. According to court papers, Hill had arranged "paid female companionship" at a 1985 company board meeting in Solana Beach, Calif., by flying in two prostitutes from Dallas and hiring as many as ten others locally. Vernon Savings picked up the tab.