In 1987, Phil Gramm and his wife Wendy were building a house in Maryland. Gramm did not trust the craftspeople of Maryland (or so he later claimed), so he asked one of his campaign fundraisers, Jerry Stiles, to do the house’s interiors (cabinets, carpeting, etc.). A Dallas builder, Stiles–like Jim McDougal–financed his projects with the money in his S&Ls. Stiles was also under investigation by the Dallas office of the FBI for his flagrant corruption.
Stiles agreed to do Gramm’s interiors for $63,000. The work was done in Texas, then shipped to Maryland, together with carpenters who assembled it while living in nearby motels. The total bill came to $117,000.
Gramm, however, paid only the agreed-upon $63,000. FBI agents who later investigated Stiles on S&L-related charges found this $54,000 discrepancy suspicious. (“Jerry’s been building for 50 years and he’s going to be off by 50 percent? There’s no doubt in my mind that he knew what he was doing,” says one agent.)
When he learned the FBI was investigating Stiles, Gramm revealed his compromised situation to the Senate Ethics Committee and paid Stiles the $54,000 balance for the work. The Ethics Committee did not question the FBI agents familiar with the case, and subsequently the FBI investigation came to a swift and decisive halt. (“It died a graceful death,” says one of the agents.) After the dust settled, Stiles reimbursed Gramm the $54,000.
Stiles’ corrupt S&L empire collapsed in 1989, costing taxpayers an estimated $200 million. Stiles is currently serving a 55-year sentence in Texas for 11 counts of conspiracy and fraud.
