Street Talk: Swim Fast, Little Fish

Fifteen years ago, Wayne Pickering was at the top of his game. The son of a well-respected family, he had a healthy income, a happy family, and the strut he earned as a high school quarterback. Then he brokered three land flips for a real estate promoter.

The year is 1986. Wayne Pickering, 33, is at the top of his game. His name is frequently in the papers, both for the raw land deals he closes and for the cars he races. Land is hot around Dallas. Every pasture has the potential to be a future World Trade Center. Pickering has his own real estate company, a healthy income, a good marriage, and two fine children. He is handsome and has the attractive cockiness of the high school quarterback he once was (Hillcrest 1970). The son of a well-to-do and respected family, he is one of life’s finalists.

Fast forward to the present. Pickering walks into my office. I haven’t laid eyes on him in seven years—since before he went to prison. I am surprised at how much he has aged. The cockiness is gone. In its place is a gaunt sort of wariness, which is not surprising given that he has been raked over the coals by the federal government for 11 years. He is divorced—twice since 1990—and broke. He’s a convicted felon, and his career is on hold as he tries to work out settlements with both the federal judicial system and the IRS.

In fact, Pickering has endured a series of miseries for which he is only partially to blame. His misfortunes teach us all a lesson about how bad things can get. And his legal problems also teach us how not to handle matters if you ever find yourself in serious legal trouble, even if you believe you have done nothing wrong.

A key player in the downfall of Wayne Pickering is Asomull Mukesh, a sort of international financial man of mystery and self-described “loan facilitator.” Mukesh, who is originally from Bombay, India, had brought together a number of investors throughout the world who were interested in the high returns that Dallas’ raw land seemed to present. The two found each other, and Pickering represented Mukesh’s group as broker when they started doing business around Dallas in the mid-’80s.

Not only did the relationship produce commission income for Pickering, but there were also ancillary benefits. Mukesh took Pickering around the world scouring for money. Pickering remembers meeting with the people in the Far East who manufactured Gloria Vanderbilt jeans, as well as with a number of Indian movie stars. Mukesh’s wife was a concert pianist, and the experience for Pickering was dazzling and profitable. He was Mukesh’s fair-haired boy.

To keep his many real estate balls in the air, Mukesh—as the real estate market got a little tighter—personally guaranteed a few land loans in the late ’80s. At this point, it was clear that the Dallas real estate market was severely overbuilt and overpriced.

Like hundreds of real estate operators who borrowed money for which they were personally liable, Mukesh must have known he had a problem. He needed to refinance. One of his relationships was with Lubbock-based Caprock Savings and Loan.

Mukesh entered into a series of transactions, which were known in the real estate parlance of the day as land flips. These “flips” served to mark up the collateral value of the loans, which staved off the day of reckoning for the S&Ls that had made the foolish loans. And they bought time for Mukesh and other investors.

As a favor to Mukesh and also for the money, Pickering basically served as a broker and as a nominal owner in three of these transactions for which he was paid $140,000. For most of us, this is a hefty sum for doing little else than signing your name, but it wasn’t much money by the real estate standards of the day or relative to the total value of the transactions involved. Pickering’s motivation was to make money and help a client and friend.

Long story short: Caprock Savings and Loan, along with countless other financial institutions, failed, costing the American taxpayer several hundred billion dollars. In the case of Caprock, the amount was $100 million. The government wanted scalps. The principal officers of Caprock went to jail, and Mukesh was also indicted.

On television and in the movies, the government prosecutors use the little fish to net the big fish. Frequently—and in the case of Caprock—the government offered reduced sentences to the big fish to go after the little fish. By “cooperating” with the government (read: helping the government indict others), Mukesh reduced his 10-year sentence to 30 months. He began serving his sentence in early 1994. By law, Mukesh would have been required to serve 85 percent of his 10-year sentence.

In March 1990, the FBI contacted Wayne Pickering and told him that they were investigating his role in the failure of Caprock. Consequently, Pickering hired Dan Guthrie Jr. as his criminal defense lawyer. (Ultimately, Pickering paid Guthrie more than $250,000.) In the meantime, the market for land had totally vanished, as had Pickering’s income. His glamorous life faded, and his happy marriage failed. He divorced shortly after the investigation began.

Prosecutors asked Mukesh if Pickering was part of Mukesh’s broad conspiracy. His answer? Yes. He said Pickering knew he was helping defraud Caprock. (Pickering, however, says that, at the time he signed his name, he never really gave the transactions much thought.) The investigation continued. Divorced and out of money, Pickering filed personal bankruptcy in January 1991. He sat and waited—and waited. Three years later, in January 1994, he was indicted on seven counts, among them: conspiracy to commit fraud, two counts of money laundering, and one count of aiding and abetting. There were six other indictees (the small fish) being brought to justice in the second round of Caprock prosecutions.

The trial, which began in August 1994, took four days, and jury deliberations took eight days. Pickering was absolved of money laundering. Even the U.S. Government couldn’t convince the jury that moving money from a checking account to a money market account is “money laundering.”

Despite 400 letters on his behalf, Pickering was found guilty of one count of bank fraud and one count of conspiracy to commit bank fraud. Federal District Judge Sidney Fitzwater almost apologized. Sentencing guidelines were mandatory. A probated or suspended sentence was not an option. He was sentenced to 30 months in a federal correctional facility. Pickering was ordered to make restitution of the $140,000 in commissions he wrongfully received. Of the seven little fish brought to trial in Pickering’s group, only Pickering was convicted. The conviction took place six years after the commissions were paid.

Sentencing occurred on November 19, 1994, and Pickering was ordered to report to El Reno Penitentiary in Oklahoma on January 3, 1995. His friends and family could visit him fairly easily. He did not have the money to pay for an appeal.

El Reno is minimum security, but Pickering was not denied the joys of prison—freezing weather, strip searches, overcrowding, etc. He spent a couple of relatively pleasant months at El Reno before being transferred to a new high-rise facility in Oklahoma City, which had been stepped up to maximum security because of the work of Timothy McVeigh.

On Thanksgiving 1995, Pickering was transferred once again to another federal prison in Florence, Colo. The transfer took place in the middle of the night. Pickering was shackled hand and foot and left standing outside at 5 a.m. in Florence for a couple of hours in sub-freezing weather. He remembers thinking to himself, “Is this really me? How could this have happened?”

In general, Pickering says that prison was not as bad as he had imagined. There was, for example, no threat of sexual assault. He had only one physical confrontation, and it was brief. “David Hernandez was a pretty good guy,” says Pickering. “He dropped something on my bunk and I said, ‘What are you doing, punk?’ He slugged me and then apologized. He said it was just a reaction. I didn’t know that in prison a ‘punk’ is somebody who’s willing to trade sex for favors.”

Pickering says that in prison, if you mind your own business and keep your head down, people leave you alone. “For example,” he says, “I would not sit in the rec room with 100 guys—most of whom are minority—and try to change the TV channel from the NBA game to the Golf Channel. I would use a little common sense.”

In March 1996, because of excellent behavior, Pickering was accepted into a federal work release program. He was given a pair of running shoes, jeans, a shirt, $55 cash, and a bus ticket back to the Greyhound station in downtown Dallas. On March 31, 1996, the bus arrived at 3 a.m. Pickering then took a cab to his halfway house in Hutchins, Texas. He spent the final six months of his incarceration working in a VA hospital in Oak Cliff for the sum of $80 per month.

On December 19, 1996, Pickering left the halfway house. He was on probation for the next three years, which meant that monthly he had to check in with his probation officer.

While he was in prison, Pickering had several hundred thousand dollars in accrued commissions, which were presided over by his second wife. But she didn’t pay the estimated tax, as Pickering understood she would do.

With no raw land real estate market in which to generate commissions, Pickering still has to figure out a way to make restitution of the $140,000 in wrongful commissions. Plus he owes the back taxes and penalties to the IRS for taxes that his second wife neglected to pay. (They are now divorced.)

Pickering’s spirit seems to be—at least for the moment—broken. He is not angry. In fact, he seems quite tranquil. He does say that he dislikes Andrea Pustejovsky, the federal attorney who prosecuted him, and he thinks that he made a poor choice in lawyers. If he can settle with the court and the IRS, then he can start trying to put his life back together.

It has been 13 years since he “earned” his “wrongful” commissions. He has been dealing with the U.S. government for 11 years. If you are the defendant in any case titled “The People of the United States Vs.,” you are at a tremendous disadvantage. Who and why the “people” of the United States choose to prosecute seems, at times, so random that it is almost comical—unless you are the defendant.

An overpaid and glamorous Wayne Pickering presented the sort of target that underpaid and unglamorous bureaucrats like to humble, regardless of relative merit. A criminal defense attorney, who would like to remain anonymous, has this to say: “If you have to be a criminal, be the big criminal. Organize the conspiracy. That way if you get caught, you can trade your hard time for all the little fish you can name.”

Shad Rowe is general partner for Greenbrier Partners. His articles have appeared in Forbes, Texas Monthly, and  Fortune magazines.

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