Former Texas Insurance Commissioner John Osorio, who, in the 1970s, served a 14-month prison sentence stemming from a pension fund scam, stepped forward as the co-winner of a $60 million lottery jackpot Sept. 9.
Osorio, who served as Insurance Commissioner from 1955 to 1957, will split the winnings with his girlfriend, Lois
Loden. The couple showed up in Austin Sept. 11 to claim their cash prize after
taxes of $21 million.
This isn’t the first time Osorio has been in the limelight when it comes to large amounts of cash. He was convicted of embezzling $641,000 from an insurance company’s pension fund in 1972.
The ensuing scandal caused nearly all high-ranking Democratic state officials to be voted out of office that same year. It also resulted in legislative reform with regard to governing campaign finance reporting, open records and open meetings.
The Sharpstown Scandal, as it came to be known, centered initially on charges that state officials had made profitable bank-financed stock purchases in return for the passage of legislation desired by Houston developer Frank W. Sharp. When it was all said, state officials also had been charged with numerous other offenses, including nepotism and use of state-owned stamps to buy a pickup truck.
On Jan. 18, 1971, U.S. Securities and Exchange Commission attorneys filed a lawsuit in a Dallas federal court alleging stock fraud against former Democratic Attorney General Waggoner Carr, Osorio, Sharp, and a number of other defendants. The civil suit also named Sharp’s corporations, including the Sharpstown State Bank and National Bankers Life Insurance Corporation. It was also alleged that Gov. Preston Smith, Democratic Chairman and banking board member Elmer Baum, House Speaker Gus Mutscher, Jr., Ft. Worth Rep. Tommy Shannon, Mutscher aide Rush McGinty, and others had been bribed. According to the SEC, the bribe began with Sharp. He wanted passage of new state bank deposit insurance legislation that would benefit his own financial empire. The SEC alleged Sharp offered to provide more than $600,000 in loans from Sharpstown State Bank to the state officials with which to buy National Bankers Life stock.
The plan, the SEC alleged, called for that stock to be resold for windfall profits as Sharp artificially inflated the value of his insurance company’s stock. Osorio was accused of helping engineer the resulting deals.
Gov. Smith made it possible for Sharp’s bank bills to be considered at a special legislative session in September 1969. Afterward, Mutscher and Shannon allegedly pushed the bills through the legislature. Smith later vetoed the bills on the advice of the state’s top bank law experts, but not until he and Baum had reportedly made their profits.
Of course, many of those named in the allegations met their political death, along with half of the state’s legislature.
Gov. Davis was labeled an unindicted co-conspirator in the bribery case and lost his bid for reelection; Mutscher, Shannon and McGinty were sentenced to five years probation; Osorio received a 14-month sentence and probation; three-term Attorney General Carr lost his job; Lt. Gov. Ben Barnes’ reputation was ruined; and half of the legislature either left or were voted out of office. Sharp, however, pleaded guilty to minor offenses and was given three years probation and a fine of $5,000. He was also granted immunity in exchange for his testimony.