There is something about the explosive smell of money in Little Rock's Ozark air that turns a young man's thoughts to suicide.
But one might have believed John Markle, a PhD economist and son of the actress Mercedes McCambridge, was sitting on top of the world in 1987. He had left Salomon Brothers eight years earlier to become the one-man futures trading operation for Stephens Inc. on East Capitol Street.
Markle had a lot of money to play with. He had no position limits, at least none that he knew about. "They're at least $800 million, because I once had that much at risk and nobody stopped me," he told Forbes on March 31, 1987.
He traded exclusively for the house account--essentially for the personal profit of the two brothers Wilton R. "Witt" and Jackson T. "Jack" Stephens, the only stockholders in Stephens Group, which controlled an empire that included the investment bank Stephens Inc., the multibank holding company Worthen Banking Corp., the Capital Hotel of Little Rock, the software firm Systematics, the nursing home operator Beverly Enterprises, the insurance holding company ICH Corp., and (the crown jewel) the natural gas company Stephens Production Co.
Witt Stephens, a former Bible saleman, had long controlled Arkansas politics through a simple mechanism: those local candidates he didn't support saw all their funding cut off. Naturally no local candidate could afford to be seen taking out-of-state money, assuming it was available.
But like many of the super-rich, the Stephens brothers were neither Republican nor Democrat. Jackson Stephens, who was a major fund-raiser for Jimmy Carter in 1976 and 1980, would also become one of George Bush's "Team 100" through $100,000 political donations in 1988 and 1992. The latter was the year that a Stephens-controlled bank would supply a $3.5 million line of credit to the campaign of Bill Clinton.
No, these boys weren't hard-core Democratics. It was Witt Stephens who started the rumor that Geraldine Ferraro was Benito Mussolini's grandniece, a stunt he found so entertaining that he repeated it four years later with a story that Michael Dukakis was Aristotle Onassis' nephew.
Such international wit was curious for a man who retired weekends to the family homestead in Prattsville, and boasted that he had left the state of Arkansas only once in fifteen years. Witt's brother Jack, on the other hand, could more likely be found on the 6,000-acre plantation that Jack owned in Chittlin Switch, Georgia, where he might be joined for a weekend of hunting by Wal-Mart founder Sam Walton, Oklahoma Govenor Henry Bellmon, or Joseph Williams, the chairman of Williams Cos., of pipeline and telecommunications fame.
Markle, perched in front of his data screens trading futures, probably didn't know about the monetary flows generated by Operation Black Eagle and siphoned through the Stephens' financial institutions. He just knew that the different parts of the Stephens empire--legally administered by the Rose Law Firm trio of Webster Hubbell, Vince Foster, and Hillary Rodham Clinton--generated a lot of cash. ("They have so much money it scares you," a Merrill Lynch vice president would tell Time magazine a few years later.)
First, there was Beverly Enterprises, the nation's largest nursing home operator. As explained by Stephens' executive Jon Jacoby, "In 1968 the Great Society started the nursing home business, and all you had to do was open the doors and they filled up." That same year Jack bought into a chain of nursing homes called Leisure Lodges, and took them over in 1975. Then, after helping Beverly Enterprises avoid a takeover they didn't want, he sold Leisure Lodges to Beverly in 1978.
The Stephens brothers then acquired control of Beverly and turned it into a cash cow. In 1980 the Stephens sold most of their Beverly stock at a handsome profit, but retained the real estate from Leisure Lodges, which was rented to Beverly, and also contracted to provide data processing services to Beverly through Jack's software firm Systematics. The Stephens also remained one of Beverly's primary bankers.
The Stephens brothers were thus nicely positioned to make out like a bandit if they could convince some politician to push through a system of National Health Care, which would provide a built-in government demand for both health and software services. The Stephens brothers had always favored the notion of private enterprise supplemented by government subsidies.
The Systematics contracts were overseen by Vince Foster and Hillary Rodham Clinton of the Rose Law Firm. Systematics provided data processing services and software to track the flows of money through banks, and the flows of people and money through the nursing home industry. Vince and Hillary represented Systematics in the Jackson Stephens-Bert Lance-BCCI attempted takeover of First American Bank in 1978. Hillary also became self-taught in intellectual property law, important for a software company. Stephens had even picked up some neat software from Earl "Cash" Brian who had once been influential at Beverly Enterprises at its Pasadena, California, headquarters.
Jack Stephens had purchased 49 percent of Systematics for $400,000 in 1968, and it had since become one of the largest suppliers of retail banking software. Banking customers could purchase Systematics software to do their back office data processing (i.e. to transfer money between accounts and between banks), or they could contract with Systematics to do all their data processing for them (this was called "outsourcing")--either on the premises, or at remote locations using telecommunication links.
The investment bank Stephens Inc. had, with White Weld (whose domestic operations were later absorbed into Merrill Lynch, while the eurobond operation became part of Morgan Stanley), underwritten the initial public offering of Wal-Mart in 1970. Other public offerings included Tyson Foods (which made about one-half McDonald's Chicken McNuggets), Beverly Enterprises, and Systematics. Jack Stephens had joined the firm in 1946, and was now its Chairman, while his son Warren was President.
In 1983 the Stephens brothers had acquired controlling interest in Arkansas' largest bank holding company, Worthen Banking Corp. Another major shareholder in Worthen would be Mochtar Riady, an Indonesian banker closely connected to President Suharto. Jackson Stephens met Riady in 1976, when Riady wanted to buy into an American bank. Two years later Riady and Stephens Inc. set up a joint venture, Stephens Finance Ltd., in Hong Kong to write letters of credit. Later, in 1983, Stephens and Riady bought Seng Heng Bank in Macao, and in 1984 they bought the Hong Kong Chinese Bank. Riady also controlled the Bank of Trade in San Francisco.
Hong Kong was then the banking center for the heroin trade, just as Panama was the banking center for the cocaine trade.
Stephens Link, a customized computer network designed for commercial banks, was launched in 1986. It tied together bank branches to Stephens Inc. trading and clearing operations. There were computer terminals in eight states and Panama. The good citizens of Panama, the home of the Stephens' friends Gabriel Lewis and Manuel Noriega, could purchase a variety of Stephens financial services and products without ever having to leave home.
Finally, there was Stephens Production Co., based in Ft. Smith, which owned perhaps a trillion cubic feet of natural gas in the Arkoma Basin. The property, purchased in 1953 for $5.4 million, was now worth at least a billion dollars. But the Stephens brothers valued the property at cost, which led to an understatement of their ranking among the world's wealthiest individuals.
And Markle, the futures trader, could put much of this wealth at risk, could bet it on the rolls of the market dice. Markle liked to think he could predict the future. He would quote from Michael Talbot's Beyond the Quantum: "The human biological organism possesses the ability to leap into the future, to actively tap into information about future events and process that information in the present."
Luckily, as is often the case, he was spared the vision of his own demise. He was fired on Friday the 13th (Nov. 1987). He had been asked, they said, about an unidentified, out-of-state brokerage account he controlled, and its relationship to a Stephens corporate account. Rumors would circulate saying maybe he was putting profitable trades in the secret account, and sticking Stephens with the unprofitable ones. But that's all they were, rumors. For Markle himself wasn't talking.
Three days after Markle was fired, there was a furious thunderstorm in Little Rock, during which, it is said, John Markle killed his wife, his two young daughters, and then himself. And to do the job, he used three different handguns. That's what they said.
Curious deaths, those. But this was Stephens country, and no one wanted to ask very many questions. They found it much safer to talk about the violent weather.
[to be continued]
Posted to the Internet October 22, 1995.