Treharne - Rise and Fall

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Treharne - Rise and Fall - The Amazing Story of a Bubble That Burst Rise...
The Amazing Story of a Bubble That Burst Rise and Fall of El Paso Insurance High Flyer Spencer L. Treharne Finds And Loses Pot of Gold By THOMAS MARTIN Let no youth with Horatio Alger instincts, a minimum of scruples and a lively imagination despair that today he Is living in an age that frowns on initiative and cultivates the laggard. The youth should study the Texas insurance code, for at the end of that legal rainbow, dotted liberally liberally with big loopholes, he may find his pot of gold. If the budding Alger doesn't believe this, he should study the case of United Lloyd's of El Paso and particularly the rise and fall of the company's founder, Spencer L. Treharne. Treharne. The lush promise of Texas Texas insurance—and the loophole-ridden loophole-ridden Texas insurance laws that foster and fulfill this promise of the pot of gold beckoned to Mr. Treharne Treharne as they have beckoned to few men. The course he followed catapulted h i m Spencer L Treharne from the position of an ordinary general insurance agent writing countless policies to that of an insurance magnate who hobnobbed with at least one movie star, who went into business with a general of the U. S. Air Force, who lived in a summer resort in New Mexico, drove his Lincoln convertible convertible and flew around the state in his private airplane. That the attorney general later labeled his operations a fraud, and that a district court stripped him of his numerous numerous insurance companies is also important to the story. But the career of Spencer Treharne demonstrates, without without doubt, that a man bent on cleaning up in the insurance business can do so without too much trouble because Texas insurance laws and their enforcement aren't shaped to admit only fully-qualified insurance companies to the fold but in fact are designed to permit the organization and operation of fly-by-night operations. A man who had been a captain in the Air Force (at Hickham Hickham Field when it was bombed Dec. 7, 1941), Treharne was, by 1950, operating a string of insurance agencies that sold policies mainly to military personnel. There were, among others, the Armed Force Insurance Underwriters, Air Forces Insurance Underwriters, United Military Insurancs Underwriters, United Service Insurance Underwriters, Military Personnel Underwriters. Then Treharne formed his company—that came in 1952. He organized United Lloyd's oE El Paso. He did this simply by flashing a deposit slip on an El Paso bank before the State Insurance Commission. The deposit slip showed he had on deposit in the El Paso bank $60,000 (required for the guarantee fund) and a small surplus. The commission promptly Issued him the certificate to do business. On the surface, United Lloyd's did a thriving business. It wrote business at Ft. Bliss and Biggs Air Force Base and at other military installations around the country, according according to Treharne. By the middle of 1953 some 30,000 servicemen and civilians civilians were covered by United Lloyd's, and Treharne was branching out. He bought the airplane and the Lincoln convertible and, together with his partner in a real estate business, he bought a summer home at Ruidoso, N. M., which, he said, would be used for employes of Lloyd's. The real estate business was named Tex-Spence Properties. Properties. His partner in the business was Maj. Gen. Homer L. Sanders, formerly commanding general at Biggs Air Force Base, now with the Technical Air Command at Lane-ley Field, Va. Somewhere along in 1953, Treharne met Deborah Dean, a blonde dancer in a Juarez night club. They married March 20, 1953—even as the first omens of unrest began to rumble throughout the Treharne insurance empire. For it was about this that Attorney General John Ben Shepperd began to eye with suspicion the operations of United Lloyd's. To find out if his suspicions were well founded, the attorney attorney general put one of his ace assistants to work on the case. The assistant, Rudy G. Rice, began digging—and a year later had dug the foundation of Treharne's insurance insurance empire clear away. Attorney General Shepperd brought Treharne's companies companies into court in early 1954 and the empire began to disintegrate. The $60,000 Treharne put up to start United Lloyd's, Mr. Shepperd proved, consisted of $5000 of his money—and $55,000 he had borrowed from the El Paso bank shortly before he got his certificate from the insurance commission. commission. Several days after getting the certificate, the attorney general proved, Treharne repaid the bank money—leaving A Herald-Post Public Service Report to Make Your Insurance Dollars Safer his guarantee fund depleted and the company "hopelessly Insolvent" from the beginning. The attorney general and his assistants turned up other interesting memoranda. They found that when United Lloyd's submitted its annual annual statement to the insurance commission Dec. 31, 1952 it listed assets of 5147,122.04. ' ' The attorney general discovered that $70,000 ot this money was borrowed from an El Paso bank Dec. 31—and repaid Jan. 5, 195,1 On March 31, 1953, the attorney general proved, United Lloyd's told an insurance examiner it had $121,766.49 on deposit in an El Paso bank. The attorney general found, however, that $75,000 of this had been borrowed from the bank March 31—then repaid to the bank on April 4. The company listed, among its assets, by Oct. 31, 1953, a first mortgage note on a plot of land valued at $322,000. The land, just outside El Paso, was to be used for real estate development purposes, Treharne said. The attorney general investigated. He found that the land had been sold to Treharnc's father for only $30,000 several days before it was listed In the company's assets. The difference between $30,000 and $322,000, the attorney general said, was a "watered asset." All told, said Attorney General Shepperd, when his department department finally finished checking United Lloyd's It had (Continued on Page !). Col. 1)

Clipped from
  1. El Paso Herald-Post,
  2. 20 May 1954, Thu,
  3. Page 1

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  • Treharne - Rise and Fall

    mereasner – 24 Jun 2013

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