Rush for Gold How Silverado Operated

Time Magazine

August 13, 1990

Stew Webb Federal Whistleblower

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Rush for Gold: How Silverado Operated

August 13, 1990

Time Magazine

By: Jonathan Beaty National Correspondent

The collapse of Denver's Silverado Banking has exposed

much more than just the questionable business relationships

of President Bush's son Neil. The fall of Colorado's No. 3

savings and loan has put the spotlight on a group of go-go

bankers and developers who, with access to Silverado's money,

built political influence in Colorado and even Washington.

Congressional investigators are just beginning to probe

the way in which Silverado was entwined in dubious deals

with M.D.C. Holdings, the state's largest home builder.

Former employees of Silverado and M.D.C. have told Time that

the home builder made improper campaign contributions to

local and national politicians. Among those donations were

payments made to the 1987 re-election campaign of Denver

Mayor Frederico Pena in the hope of ensuring that key portions

of a hugh new $ 2.9 billion airport, then still on the drawing

board, would be located on land owned by Silverado and M.D.C.

Most Denver residents welcome the 52-sq-mi. project, not only

to ease air-traffic congestion but also to provide an economic

stimulant to a city that has been nearly paralyzed since the oil

bust of the mid- 1980s. When Pena first ran for office in 1983,

he opposed the new airport, advocating instead an expansion

of Denver's Stapleton International Airport. But after he was

elected, Pena became a supporter of the popular project.

Throughout 1984, as Denver secretly negotiated with

neighboring Adams County for a new site, M.D.C. and Silverado

quietly began buying up farmland that would eventually be

selected as part of the development corridor leading to the

airport. "Despite all the millions of profits they were showing

on paper, M.D.C. and Silverado had been running on empty

for a long time, and they looked at potential profits from the

new airport as a savior," says a former key employee of

M.D.C.'s housing arm. (Richmond Homes/Richmond American)

The new owners of the potentially valuable land were members

of an emerging power elite in Denver, who proceeded to

orchestrate formidable civic support for the airport project.

The main boosters: developer Bill Walters, a colleague of

Neil Bush's and then president of the Denver Chamber of

Commerce; Michael Wise, then chairman of Silverado: and

Larry Mizel, chairman of M.D.C.

Mizel met with Pena in 1986 to urge an accelerated time-table

for the airport construction. Pena, citing a study forecasting the

creation of 20,000 new jobs, announced a plan to move up the

airport's opening date more than a year, to 1992.

When Pena entered a tight race for re-election in 1987, M.D.C.

was a principal backer.

Public records show that M.D.C. and its executives contributed

$ 34,000 to his campaign. In fact, the company funneled

additional thousands to Pena through back channels. To disguise

the extent of its political influence, former employees say,

M.D.C. coerced many of its building subcontractors into making

contributions to Pena and then allowed them to recoup the money

by submitting phony bills for construction work. Asked about these

contributions, a Pena spokesman said, "We have absolutely no

knowledge of this."

Local contractors went along with the arrangement because

M.D.C., relying heavily on junk bonds and a series of loans from

Silverado, was one of the last big developers to continue building

projects in Denver after the oil boom collapsed. "There was

little work in Denver, and M.D.C. said we would be blackballed if

we didn't go along," a contractor participant says.

According to a major building contractor, the contribution scheme

was not limited to local politics. The contractor told Time that

M.D.C. directed their company to contribute thousands of dollars

to Senators, to the Republican National Committee and to a 1986

senatorial fund raiser at which Mizel was the host and President

Reagan was a guest. Asked about these illegal contributions,

M.D.C. said it "recently became aware of assertions that some

of its employees were involved in using corporate funds to

reimburse subcontractors for political contributions."

The company said it was investigating the allegations.

M.D.C.'s Mizel and Silverado's Wise were major, aboveboard

fund raisers for Bush and Reagan, and were hosts for dinners

that netted as much as $ 1 million for the candidates.

Congressional investigators aim to find out whether, the hefty

fund raising by the Denver executives influenced federal

regulators to postpone the seizure of Silverado for almost

two years.

In the end, time ran out for the bug-clout club formed by

Denver's go-go boys. They failed to benefit from the airport's

progress because the Federal Government finally seized

Silverado six months before Denver voters gave final approval

for the giant project. ----By Jonathan Beaty / Denver

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