Loans From Butcher Banks to Tennessee’s Ford Questioned : 13-Year House Veteran Charged in Fraud

KNOXVILLE, Tenn. —  Rep. Harold E. Ford was indicted Friday on federal charges of bank, mail and tax fraud, along with four other men, including a banker awaiting sentencing on other charges.

The 19-count indictment alleges that C. H. Butcher Jr. used loans from his banks to buy political influence from Ford, a Memphis Democrat known for turning out the city’s black vote.

The indictment said loans from Butcher’s financial institutions were diverted from legitimate business enterprises to Ford’s personal uses.

“I say to all of the constituents that I represent that they need not worry,” Ford said. “There’s been no wrongdoing on my part. There’s been no wrongdoing in my association with the Butcher family over the period of time that they were leaders in the state.”

First elected to the House in 1974 as the state’s first black in Congress, Ford, 41, won reelection in 1982 with 72% of the vote and won 71% of the vote in 1984.

The alleged conspiracy was undertaken to permit Ford “to live an extravagant and lavish life style, well above his personal means,” the indictment said.

The conspiracy also was aimed at permitting Butcher and his brother Jake to “use the political influence of Harold E. Ford, his family and organization, for their personal, political and business purposes,” it said.

Jake Butcher was named as an unindicted co-conspirator. The two-time candidate for governor is serving 20 years in prison for bank and tax fraud.

Also indicted were David Crabtree, a former Butcher accountant and business associate, and Douglas R. Beaty, a lawyer retained by Butcher and Crabtree to be president of Tenn-Ford.

Tenn-Ford is a company created by Beaty “to receive funds from Southern Industrial Banking Corp. and to conceal the distribution of those funds for the benefit of Harold E. Ford,” the indictment said. Southern Industrial is a loan and thrift company of Butcher’s that went bankrupt in 1983.

Also indicted was Karl A. Schledwitz, a Memphis attorney and Butcher associate who was charged with helping Ford obtain the loans.

The indictment alleges that the five men took part in a conspiracy to defraud United American banks in Knoxville and Memphis, City & County banks of Anderson and Knox counties and Southern Industrial for Ford’s benefit.

The City & County banks and Southern Industrial were controlled by C. H. Butcher Jr., who is awaiting sentencing on bankruptcy fraud, tax fraud and money laundering.