You Can't Cheat an Honest Man - James Walsh [86]
Landbank responded by informing investors that Balboa Insurance had been replaced as mortgage insurance carrier by an entity called the Insurance Exchange of the Americas (IEA). While Balboa Insurance didn’t have the highest financial solvency ratings, IEA wasn’t rated at all.
At about the same time, Fannie Mae backed away from Landbank. It cited concerns over the mortgage insurance and rising delinquency and foreclosure numbers. This effectively shut down Landbank’s access to new money from investors.
In the fall of 1985, 43.7 percent of Landbank’s loans were 30 or more days delinquent and 29.2 percent were at least 60 days delinquent. Both numbers were exceptionally high. Within six months of Balboa Insurance’s first letters to investors, Landbank declared bankruptcy. More than $200 million in investments were left hanging. Days after taking over, a court-appointed trustee charged that the Runnellses had made off with up to $20 million. They’d been shifting funds through a maze of dummy corporations and made dozens of illegal “insider loans” to purchase land, houses and cars. The bankruptcy proceedings and a wave of civil lawsuits took up most of the next 18 months.
Even as these civil cases proceeded through the courts, Runnells remained desperately flambouyant. He’d taken hundreds of thousands of dollars in cash out of Landbank before it collapsed; and he used this money to support his flashy lifestyle. On one Caribbean gambling trip in January 1986, he lost $40,000 in a few days. In all, he paid bookies and casinos more than $600,000 over a two-year period.
As is often the case, criminal charges took longer to develop than civil charges. But they did finally follow.
Bill Runnells was indicted in March 1988 on 24 counts of tax fraud, bankruptcy fraud, criminal contempt and obstruction of justice. Runnells spoke with his lawyer by phone after the indictment was handed down; the two made arrangements for Runnells to appear at his April 6 arraignment.
He never showed up at the arraignment. Both he and his wife had disappeared. The same grand jury which had indicted Bill Runnells expanded the charges against him and his wife. The second, 74-count indictment charged the couple with wire fraud, bankruptcy fraud, racketeering and obstruction of justice.
The Runnellses eluded authorities for two years. They fled to Southern California where they became hypnotherapists, running clinics to help people lose weight and stop smoking. Runnells called himself Dr. William Austin and operated a company called The Pinnacle Method of America Inc. out of an office in working-class Santa Ana. The couple left California in September 1989, when they learned they were about to be profiled on the television true-crime program Unsolved Mysteries. After keeping a low profile for several weeks, they decided to settle down in a suburb of Dallas, Texas.
Runnells answered a classified ad for a job as a hypnotherapist at the Phoenix Centers for Addiction Control in Dallas. He applied for the position under a new alias—Dr. William Allen. He claimed to have a Ph.D. in psychology from...somewhere...in Georgia.
Since a person doesn’t have to have a doctorate—or any other degree—to perform hypnosis in Texas, the managers at Phoenix Centers didn’t check his background. They hired him part-time. “He was a very good hypnotist, one of our best,” said one co-worker. “He was able to hypnotize [customers] and they quit smoking. They were happy and we were happy. He was just a charmer.”
He was charming enough to open his own hypnotherapy clinic a few months later, taking many of the Phoenix Centers’ clients with him. But he wasn’t charming enough to elude the FBI. The Feds tracked him to southern California and—using leads gathered there—eventually tracked Runnells to Dallas.
Runnells answered the door when FBI agents rang the bell at his luxury