Jerry Barton Vs. The United States

How the federal government railroaded one of the country's top real estate developers

"The United States has not acted in a manner worthy of the great just nation it is"-- Judge Loren Smith

When his kids were growing up in the 1960s, Gerald C. Barton greeted them almost every evening after school with the same question: "What did you do for your country today?" Paraphrasing President Kennedy's famous challenge was Barton's way of instilling a sense of civic duty in his son and two daughters. Barton also inspired by example. In 1970, at age 38, he left his business for a year to work as an unpaid adviser to the governor of Oklahoma, his home state. "Even today, if someone knocked on my door and said, `I'm from the government,' I'd say, `Thank God you're here,"' says Barton, now 68.

The tenacity of Barton's faith in government surpasses the understanding of his closest friends. Over the past decade, federal authorities subjected Barton and his colleagues at Landmark Land Co. to an ordeal of a sort that is not supposed to happen in America. In recent years, Barton's children often have reversed the question that their father put to them so long ago, asking him in so many words, "What did your country do to you today?"

As the founder and chief executive of Landmark Land, Barton had established himself in the 1970s and 1980s as America's leading developer of first-class golf resort communities. La Quinta, PGA West, Carmel Valley Ranch, and Kiawah Island are among the deluxe properties that bear Landmark's distinctive stamp. Says Rees Jones, a leading U.S. golf course architect: "Landmark was probably the best there ever was at building tournament-caliber golf courses within a larger development."

But in 1982, Barton made a fateful misstep, contracting with the U.S. government to acquire an insolvent savings and loan association in New Orleans. For the next seven years, Landmark worked harmoniously with S&L regulators against the backdrop of a mounting financial crisis. But the relationship took a disastrous turn in 1989 with Congress' enactment of harsh reform legislation meant to root out S&L fraud and corruption. In 1992, the government seized Landmark's assets, fired most of its remaining 3,500 employees, and launched an all-encompassing criminal investigation.

EXONERATED. Even before a grand jury was impaneled, S&L regulators fined Barton and three other Landmark directors $1 million apiece plus $500,000 each per day. At the same time, the authorities froze not only the Landmark Four's bank accounts but those of their close relatives as well. Barton, whose net worth once had exceeded $100 million, lost everything but his house, which he mortgaged to pay his legal bills. Barton soldiered on, but David Scott Cone, Landmark's earnest, tightly wound controller, apparently crumpled under the pressure brought to bear by the government. Cone, a 39-year-old father of two teenage girls, blew his head off with a shotgun in November, 1992.

The New Orleans grand jury sat for 18 months--three times the usual term--but never handed down a single indictment against Landmark or any of its senior executives. On Sept. 7, 1999, a U.S. District Court in Louisiana exonerated Barton and his colleagues by dismissing the last of the civil charges brought against them. Even before this latest victory, Landmark had gained the upper hand in its long legal battle with the government. In late 1997, the U.S. Court of Federal Claims ruled that the government had breached its S&L acquisition contracts with Landmark. A trial is now under way in the same court to fix the amount of damages the U.S. must pay Landmark. The company is seeking $750 million.

"REAL POUNDING." All Americans are innocent until proven guilty, but few have had their innocence vetted as thoroughly as Barton's. "Jerry Barton was unquestionably one of the most significant victims of the anti-S&L hysteria," says William B. Dockser, chairman of CRI Inc., a real estate investment company that had extensive dealings with Landmark in the 1980s. "He's a seriously honest man who took a real pounding."

Landmark is only one of 125 S&L owners that brought breach-of-contract suits against the government. The Justice Dept. is vigorously contesting almost all of them. "A lot of the damage claims are extremely inflated," says Stuart Schiffer, a deputy assistant attorney general. Even so, by Justice's own rough estimate, resolving these so-called Winstar cases could add $32 billion to the $154.5 billion already expended on the S&L bailout. Schiffer would not speak specifically about Landmark.

This bitterly contested litigation also has reinflamed the politically explosive issue of how blame for the S&L fiasco should be apportioned. There is a lingering popular perception that the mess was perpetrated by crooked operators who turned S&Ls into their personal piggybanks. The escapades of such S&L high rollers as Charles H. Keating Jr., David Paul, and Don Dixon received lots of press attention. But all the available evidence suggests that fraud was only a minor cause of the thrift debacle. In 1993, a commission appointed by Congress found that fraud accounted for no more than 15% of the cost of the S&L bailout. Most other estimates are much lower, 3% to 5%.

A far more consequential ingredient was the record-setting surge in interest rates that began in the late 1970s and peaked at 21% in 1981. To attract deposits, many S&Ls were forced to pay much higher rates than they could earn on their mortgage portfolios. By some estimates, fully half of the nation's 4,000 S&Ls were headed inexorably to insolvency by the early 1980s.

But instead of arranging a costly burial, Congress and the Reagan Administration applied the suspect balm of partial deregulation. The government continued to insure deposits even as it freed thrifts to try to earn their way out of looming insolvency by moving into higher-risk sorts of lending and investing. At the same time, regulators relied heavily on accounting gimmickry to repackage insolvent thrifts for resale. Most important, buyers could take the difference between the purchase price and the market value of a failed institution and count it as capital. In this way, Washington created many billions of dollars of so-called supervisory goodwill.

The government's hastily improvised damage control backfired, giving rise to a monumental wave of ill-conceived S&L investments. In 1989, Congress finally faced up to the magnitude of thrift losses, appropriating $145 billion through the Financial Institutions Reform, Recovery & Enforcement Act (FIRREA). The bill wiped out supervisory goodwill, rendering many S&Ls instantly insolvent. It also shifted responsibility for policing thrifts to a new agency, the Office of Thrift Supervision (OTS), which was given draconian powers to root out and prosecute S&L crime.

Like the other thrift operators that sued for breach of contract in the mid-1990s, Landmark essentially argued that a deal is a deal, period. The Justice Dept. countered that the U.S. should be immune from liability for its "sovereign acts" because of its overarching duty to safeguard the national interest. In 1996, the issue reached the U.S. Supreme Court, which ruled 7 to 2 that the government had indeed breached its contracts with Winstar Corp., a Minnesota thrift, and two other S&Ls, paving the way for similar suits. In the majority opinion, Justice David H. Souter wrote that "it would...have been madness" for S&L purchasers to enter into contracts that the government could break at will.

The action then shifted to the Court of Claims in Washington, where the damage cases of all 125 different plaintiffs were to be individually adjudicated. In late 1997, Chief Judge Loren A. Smith issued his first ruling in the matter, finding in favor of Landmark and three other plaintiffs and lambasting the government for its handling of the case: "The United States has not acted in a manner worthy of the great, just Nation it is. Because the dollars at stake appear to be so large, the government has raised legal and factual arguments that have little or no basis in law, fact, or logic."

Landmark's S&L nightmare offers a particularly revealing look at the FIRREA debacle. When the bill was passed, Landmark's thrift--Oak Tree Savings Bank--ranked among the best-capitalized S&Ls in the country. With $600 million in equity capital underpinning $2.5 billion in assets, Oak Tree's 24% capital ratio vastly exceeded the required minimum of 3%--even after its $150 million in supervisory goodwill was stripped out. Nor did Barton bear any resemblance to the stereotypical self-dealing S&L miscreant. "Most of us who knew Jerry well were shocked by what happened to him," says Representative Sam Farr (D-Calif.). "He is not a bitter man, but he has every right to be."

DISARMING MIXTURE. Barton has spent long hours pondering the essence of golf's appeal but has never played a single hole. His devotion to property development is so complete that he simply has no interest in recreation. "Jerry is a workaholic in every sense of the word," says Bernard G. Ille, a former Landmark director and longtime Barton family friend. "His hobby is his business."

But if Barton is as driven as any Wall Street warrior, his manner is strictly Main Street casual. He stopped wearing a wristwatch years ago and comports himself with a cheerful congeniality that makes it seem as if there is nothing he would rather do than sit and talk to anyone who crosses his path. Barton's conversation is a disarming mixture of plain talk, humor, and erudition, as befits an Oklahoma country boy who studied political history at Oxford University and metaphysics at the University of Chicago.

Born in 1931 in tiny Stroud, Barton grew up in a part of the country devastated by the twin scourges of drought and the Depression. His parents, R. Lewis and Dollye Barton, made a decent living as school teachers. But many of their neighbors survived only by grasping lifelines extended from Washington. "I grew up a New Deal Democrat," Barton says. "I thought the government was there to help you."

When the school board in Stroud banned married couples from the classroom, the Bartons resigned and went into business, founding Stroud's first movie theater. In 1941, the family moved to Oklahoma City. Barton Theatre Co. bought up farms ringing the city and at its peak owned a dozen theaters, mostly drive-ins.

Jerry caught the entrepreneurial bug early. By 15, he had saved enough money from the popcorn concession he operated at one of the family theaters to buy a house at a busy intersection in the suburbs. He sold the lot to a gas station developer, moved the house to a cheaper lot, rented it out, used the income to buy another house, and so on. By the time he went off to the University of Oklahoma at Norman, he owned 17 rental properties.

Barton went on to law school at Oklahoma and spent three years in Washington as a lawyer for the Defense Dept., returning to Oklahoma City in 1958. Over the next dozen years, he methodically built a seven-figure net worth by developing just about anything he could persuade a bank to finance--shopping centers, bowling alleys, even a church or two. In 1971, Barton acquired a bankrupt corporation that owned thousands of acres of land in Louisiana and an American Stock Exchange listing. It was through this vehicle, renamed Landmark Land, that Barton discovered his calling: golf resort development.

Landmark's first project, begun in 1973, was Oak Tree, a 1,094-acre residential community in Edmond, Okla. It was a resounding success, largely because the golf course that was its centerpiece was hailed as one of America's 50 best. It was the first of many Landmark courses designed by Pete Dye, a star golf architect nicknamed the "Marquis de Sod" because of the difficulty of his courses. Landmark was especially active in Southern California, where it developed five gated communities. Many Landmark executives, including Barton, moved to California.

Although Landmark quickly won the respect of the golf world, Wall Street was another matter. Its thinly traded stock bumped along at $1 to $2 a share for most of the 1970s. But in the early 1980s, Barton's costly investments in real estate began to pay off. The stock soared from 8 in 1982 to a high of 25 3/8 in 1986. Barton held 29% of the stock, but many of Landmark's employees also shared in the bonanza through the company's 401(k) plan.

The idea of acquiring an insolvent S&L first occurred to Barton as he pondered the problems of Landmark's homebuilding operations in Louisiana during the recession of 1981-82. If Landmark were to acquire and revive a failed thrift, it not only would be able to spur home sales by providing mortgages but also would gain a relatively cheap source of financing for its resort development projects.

True to form, Barton accentuated the positive. "Dad always takes the optimistic view," says G. Douglas Barton, a longtime Landmark exec himself. "There's no negative in it." In fact, there was a reason that few developers bought insolvent thrifts: It was highly risky. Converting negative net worth into working capital might bring a dead thrift back to life, but it did nothing to solve the business problems that had killed it in the first place.

In 1982, Landmark acquired Dixie Federal Savings & Loan Assn., Louisiana's largest insolvent thrift. Landmark's assistance agreement with the government gave it 40 years to write off $101 million in supervisory goodwill. Initially, Landmark's financial exposure was limited to the $20 million worth of real estate it contributed to Dixie's recapitalization. But in 1983, Barton decided to transfer Landmark's remaining real estate to Dixie and make it his principal property development vehicle.

Barton brought in new S&L executives, who managed to steadily reduce the thrift's operating losses with imaginative solutions to chronic problems. For example, the new Dixie opened its own factory to refurbish the hundreds of mobile homes that the old Dixie had repossessed and left to rust in trailer parks. In 1986, Landmark absorbed a second, smaller insolvent thrift, St. Bernard Federal Savings & Loan Assn. in Chalmette, La. In approving the purchase, the Federal Home Loan Board's regional office in Little Rock, offered a ringing endorsement of Barton and company: "Since Dixie was acquired...the association has been turned around and is considered to be one of the better operated associations in this district."

As Barton had envisioned, S&L ownership enabled Landmark to finance its real estate projects at three-fourths of a percentage point below market rates. It is hard to say whether Landmark's savings exceeded the modest operating losses sustained by Dixie and St. Bernard's, which were merged and renamed Oak Tree Savings. But Landmark was able to post a net profit every year except 1987 while the value of its real estate holdings soared--to nearly $1.9 billion by mid-1989, according to Deloitte & Touche.

Even so, in 1988, Barton boldly set out to reinvent Landmark. He created a new subsidiary, Oak Tree Capital, to manage insolvent S&Ls under contract to the government and to acquire thrift-tainted real estate for its own account. "We were going to make this a really big business," Barton says. At the same time, he put up for sale every piece of property Landmark owned. Japanese investors had bid up the price of prime U.S. commercial real estate to irresistible and, in Barton's view, unsustainable levels.

Had Barton been able to implement his strategy, he might well be a billionaire today. Landmark was able sell much of its undeveloped acreage at a hefty profit and was well into negotiations with several bidders eager to buy its resorts. But then, in August of 1989, along came FIRREA, which invalidated Landmark's basic business strategy while casting a pall over the entire S&L industry.

DOUBLE WHAMMY. The bill gave S&Ls five years to phase out of real estate ownership, but imposed penalties designed to accelerate the process. On June 30, 1990, thrifts had to write off 10% of the value of their property portfolio. The mandatory writedown rose to 15% the next year and 20% the following year, and so on--even as supervisory goodwill was being stripped from S&L balance sheets. This double devaluation whammy could send even a healthy institution spiraling into insolvency if it did not swiftly decouple its thrift and real estate operations.

FIRREA created two new agencies: the OTS, which regulated solvent thrifts, and the Resolution Trust Corp. (RTC), which took over insolvent ones. Acting on the premise that regulatory laxity had exacerbated the thrift industry's financial woes, Congress granted the OTS extraordinary enforcement powers. The political pressure brought to bear on the OTS district office in Dallas was especially intense. No other part of the country had been afflicted by as many thrift failures as had the five states under its jurisdiction: Texas, Louisiana, Oklahoma, New Mexico, and Mississippi.

To run the Dallas office, the OTS brought in Billy C. Wood, a native Texan of taciturn demeanor and authoritarian bent. Gregory V. Goggans, the OTS resident examiner for Oak Tree Savings, referred to Wood, his boss, as "The Big Kahuna" in his court testimony for the Landmark case. "If Billy Wood said it, that's the way it was going to be...." Goggans testified. "Anybody that crossed Billy Wood in the Dallas office wasn't around much longer."

Suddenly Barton's very style of doing business was a provocation. Steeped in the nuances of real estate finance and taxation, he often crafted the sort of complex transactions that tended to arouse the suspicions of regulators. What is more, he was so confident of his own judgment that he often did not bother to bring in outside appraisers to value Landmark's properties. While the FHLB was generally willing to give Barton the benefit of the doubt, the OTS was not. They required documentation--and lots of it.

On Sept. 8, 1989, one month after FIRREA was enacted, Goggans completed a six-month examination of Oak Tree. Goggans recommended that the S&L be forced to write off $77 million of its $178 million in loans to CRI, its largest borrower, even though the company had not missed a single loan payment. The problem, as the examiner saw it, was that the La Quinta Hotel in Palm Springs and the other properties securing the loans were worth only $101 million. Barton disagreed vehemently and made use of every form of recourse open to him, including belatedly hiring independent appraisers. Although the outside experts generally sided with Barton, the OTS forced Landmark to rescind a $32 million profit it booked on one sale to CRI and set up $63 million in loan loss reserves. Wood and Goggans both declined to be interviewed, citing a Justice Dept. request made of all its witnesses in the Landmark case.

While the La Quinta and other accounting disputes played out, Barton was trying with increasing desperation to extricate his real estate business from his S&L without destroying either. Two leading contenders emerged: Robert M. Bass, a Texas oil billionaire who had acquired a large California thrift in insolvency, and Barry G. Hon, a wealthy Orange County homebuilder. Each hankered for the same basic assets, Landmark's prime resorts in California and other states (table, page 78).

"UNSAFE, UNSOUND." Hon outbid the Bass Group, offering $992 million for 19 golf courses, four hotels, and thousands of acres of undeveloped land. Barton told Landmark's directors that the company could generate another $200 million to $300 million if regulators were willing to give him time to sell the assets individually. Still, the Hon sale would enable Oak Tree to book a $470 million profit, which would go a long way toward ensuring the thrift's ability to continue meeting FIRREA's stringent capital requirements.

On Apr. 10, Barton flew to Dallas and hand-delivered to Neil J. Twomey, the OTS caseload manager for Oak Tree, a signed purchase agreement. Assuming the sale as good as done, Barton flew back to Dallas on May 4 to tell Twomey of his plans to sell the remaining half of Landmark's real estate. Twomey handed Barton a letter rejecting the deal as "unsafe and currently proposed"--mainly because Hon planned to finance its purchase with a $770 million loan from Oak Tree. The decision was especially puzzling since the OTS had just acknowledged the difficulties most thrifts had encountered selling into a glutted property market by issuing a ruling allowing exactly this sort of transaction.

The phrasing of Twomey's letter seemed to leave open the possibility that Hon could gain OTS approval by revising his offer. Hon was eager to try, but later complained that Twomey and the OTS "stonewalled" him. "They wouldn't talk with us on the phone, they wouldn't write us a letter, they wouldn't do anything," Hon testified in a deposition. Says Twomey: "I am not in a position to comment."

Immediately after the Hon deal collapsed, the Bass Group reapproached Landmark, offering about $900 million for the same package of properties. Put off by what he saw as Bass's low-ball bid, Barton hired Salomon Brothers to organize a global solicitation. The investment bank gathered 25 offers for all or part of Landmark's resort holdings. On July 18, a team of Salomon bankers spent several hours briefing Wood, Twomey, and other OTS officials on the negotiations.

Five days later, Twomey scandalized Landmark executives--as well as some of his colleagues--by resigning from the OTS to take a job in California with an S&L owned by the Bass Group. Landmark alleged in its suit against the government that Twomey had supplied confidential information to the Bass Group. Worse, Landmark charged, Twomey had blocked its sale to Hon because he "was seeking to force Landmark to sell the real estate to his soon-to-be-employer, Bass." Says a spokesperson for the Bass Group: "The allegations are false, and the facts in the matter speak for themselves." Twomey vehemently denied any wrongdoing when questioned by government investigators. The Office of the Inspector General found no evidence of wrongdoing by Twomey. "However," the OIG's report states, "the investigation did result in finding that an obvious perception was raised that Mr. Twomey's actions were improper."

The Hon offer may have been Landmark's best chance, but it was not its last one. The high bidder in the Salomon auction was Daiichi Real Estate, which offered $847 million for the same properties for which Hon had bid $992 million. However, the Japanese giant offered more cash--$303 million to $220 million. The parties reached an agreement in late 1990 and nervously awaited the OTS's verdict.

Billy Wood expressed no opinion about the transaction but stipulated the deal close by Mar. 31, 1991. This was a demanding schedule for so large a transaction, but it suited Barton's purposes. By this time, the U.S. economy was stumbling into a brief but severe recession, crimping Landmark's operations across the board and leaving it in violation of the S&L capital requirements set by FIRREA. The combination of operating losses and OTS-mandated writedowns would produce a horrendous loss of $221 million for 1990.

The OTS had required all of 24 days to categorically reject the Hon deal. But now, with Landmark's survival hanging ever more precariously in the balance, the OTS set about evaluating the Daiichi offer in painstaking fashion, even hiring a Wall Street investment banking adviser, Kidder Peabody & Co. Landmark and Daiichi met Wood's deadlines, Kidder took a favorable opinion of the sale, and yet the OTS never did rule. In September, 1991, Daiichi withdrew its bid.

In its lawsuit, Landmark alleged that the government had "slowed down the Daiichi transaction in every way possible" and that "after months of consideration, the government made unreasonable and unnecessary demands on Daiichi, killing the deal." OTS Director Timothy Ryan told reporters at the time that Daiichi had failed to disclose the names of Japanese investors who were joining it in the purchase. "This fell apart because of internal decisions in Japan," Ryan said.

On Sept. 29, 1991, the attention of the golf world was riveted on Landmark's newest creation, the Ocean Course on Kiawah Island, S.C. It was not until the German Bernhard Langer missed a putt on the 18th green that the U.S. was assured victory in one of the greatest Ryder Cup matches in history. Memorialized as "The War at the Shore," the Ryder Cup brought the Ocean Course recognition as one of the world's great new golf courses.

Landmark had acquired the island site in early 1989 and promptly persuaded the PGA of America to switch the Ryder Cup from its PGA West course in California to what was then nothing but a sand dune. Even as it was scrambling to sell its resorts before the OTS seized them, Landmark also was racing to complete the Ocean Course for the Ryder Cup.

Barton's enjoyment of the Ocean Course's triumphant debut was undercut by the likelihood that the OTS soon would seize Oak Tree Savings. The S&L was insolvent, but the resorts were still humming along. Based on his dealings with the OTS, Barton feared that the government would be unable or unwilling to preserve the value of the resorts and safeguard the interests of their residents and club members.

On Oct. 10, Barton seized the legal initiative by instructing Landmark's lawyers to seek Chapter 11 protection for Oak Tree's real estate subsidiaries. According to an OTS spokesman, this was the first and only time a thrift used the federal bankruptcy code to forestall OTS action. Despite the novelty of the move, a federal bankruptcy court in South Carolina immediately issued a restraining order, as Barton had hoped.

The OTS and RTC seized Oak Tree's thrift operations and also lowered the boom on Barton and three other directors. The government fined each of them $500,000 a day every day the Chapter 11 filing was in effect and froze their bank accounts and those of their immediate relatives as well. Under FIRREA, the OTS could impose such penalties without a hearing or offering any evidence of wrongdoing. Not long afterward, the U.S. Attorney in New Orleans opened a grand jury investigation into allegations of mismanagement and self-enrichment against Barton and other Landmark executives.

Chapter 11 has long been a legally sanctioned haven for troubled companies to keep their creditors at bay while reorganizing. However, in bringing suit in federal court to overturn Landmark's bankruptcy protection, the OTS argued that its Chapter 11 filing was illegal because it violated an agreement Barton had signed in early 1991, promising to seek the agency's approval for any "material transaction." What is more, prosecutors reportedly tried to persuade the grand jury that Landmark's bankruptcy filing was the product of a longstanding conspiracy to defraud the U.S. government. The U.S. Attorney's office in New Orleans declined to comment.

FALSE REPORTS? Scott Cone, Landmark's controller, made himself a prime target merely by signing the Chapter 11 papers. But according to his widow, Cone also was spoiling for a fight. "He was just incredulous that anyone would think Landmark would ever do something wrong," says his widow, Debbie Cone Kreller. In April, 1992, the OTS brought an administrative action against Cone, accusing him and one of his subordinates of perpetrating a "massive deception" by filing false reports with the agency. Cone and his colleague denied the charges.

In August, 1992, a federal appeals court stripped Landmark of its Chapter 11 protection. The court did not address the charges the OTS had levied against Barton and his colleagues but did find that FIRREA gave regulators powers that overrode the federal bankruptcy code: "The RTC cannot be considered just another creditor of a company in bankruptcy." The RTC soon seized all Landmark's properties.

Up to this point, Landmark had been allowed to pay Cone's legal bills. But now the controller was on his own, broke and unemployed. On Oct. 30, Cone settled with the OTS, admitting no wrongdoing but consenting never again to work for a bank or thrift. According to Landmark sources, officials continued to try to pressure Cone into providing evidence against Barton by refusing to give written assurance that it would not sue him to pay their attorney's fees in the matter.

Cone killed himself the day before Thanksgiving. His widow was taken directly from her husband's funeral to the sheriff's office in Covington, La. There, according to Kreller, FBI agents pressured her into letting them search her house, even implying that Barton had had her husband murdered. She refused. Over the next few weeks, government agents showed up several times at her house, demanding to search the premises, she says. Since no warrant was ever produced, Kreller would not let them in.

AUCTIONED OFF. Finally, she was frightened into cooperating by a telephone call from Patrice Harris Sullivan, an assistant U.S. attorney in New Orleans. According to Kreller, Sullivan implied that she and her daughters might be in danger. Not sure what that danger might be, Kreller accepted Harris' offer of protection. A pair of FBI agents immediately drove Kreller to New Orleans. "They were very nice but kept asking me questions like, Did I know Jerry Barton? Had I ever been to a party at his house?" She carried with her a box of her husband's papers. She turned the box over to a judge and took a bus home.

Kreller never was called before the grand jury. Sullivan did not respond to requests for comment. An FBI spokesman said the bureau would have no comment on the matter, because Landmark's case against the government is still pending.

If not for FIRREA, Oak Tree Savings might well have survived the recession of 1991, as Landmark subsidized its losses from the vast storehouse of real estate value it had built over 20 years. It is also possible that Oak Tree might have survived FIRREA had regulators approved either the Hon or Daiichi deals. At a minimum, these transactions would have cut Oak Tree's losses.

As it was, though, Oak Tree Savings was liquidated by the government at a gross cost of about $1.4 billion, ranking it tenth on the list of costliest S&L bailouts. In 1993, the RTC auctioned off Landmark's prime resorts for $404 million, or about 55% of book value. Not long after the sale, the OTS amended its administrative charges against Barton and his three fellow directors. The agency dropped its allegations of self-enrichment and reduced the accumulated fines, to $16.7 million in Barton's case. The OTS action is still pending but has been dormant since 1994 and is unlikely to be revived.

Even the head of the OTS apparently had second thoughts about FIRREA, at least in terms of its impact on the 350 thrifts that owned real estate development companies at the time the bill was enacted. "For many of these institutions, these assets are not that bad. In fact, some of them are very good," Ryan said in testimony before Congress in March, 1992.

For his part, Barton seems to be well on his way to restoring his reputation as a preeminent golf developer. His new company, Landmark National, has completed one resort in Texas and another in Mississippi. Among the half-dozen other projects under development is a Greg Norman-designed course on a spectacular strip of sand dune near the rustic village of Doonbeg in County Clare, Ireland. Barton sees the project as potentially the crowning achievement of his career.

Barton insists that he is thinking more about the future than the past, but acknowledges that he is not without regrets. Like many former Landmark Land executives, he cannot talk for long about Scott Cone without getting emotional. And the destruction of the company he spent much of his life building still rankles. But even if the current trial ends with only a modest damage award, Barton says he will be satisfied that justice was done. "There is no way for a government to confront its mistakes very easily. But in the end, the system did work," he says. "There was recourse, and you wouldn't have had that in every country."

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