The Trial of Joe Russo

An intimate look at how -- and why -- Houston's high flyer of the '80s was taken apart in court

In the eyes of the defense, Joe Russo had simply been carrying out business as usual in the 1980s, doing what scores of others had done -- pushing the envelope, perhaps, but still caught up in the same ecstatic charge to the next deal that had overwhelmed much of Houston commerce. To convict him of malfeasance would be to convict the city itself. He was not the creator of his times, but a product of them; not villain, but victim. To this the prosecution said a simple "no." Russo, and Russo alone, was the creator of his fate.

And just below the surface of this dialectic lurked a single, suspenseful question: would super salesman Joe Russo take the risk of appearing on the stand? As the days ground on, it seemed unthinkable that he could resist the impulse to embark on his most important selling job of all.

August 18: The Battle is Joined
Today is Joe and Sally Russo's 38th wedding anniversary, but complaining prosecutors broke up the devoted tableau the couple presented during jury selection -- when Russo sat just inside the courtroom rail, holding hands with the composed, patrician-looking woman who once caught his eye at a UT football game. With Sally consigned to the spectator section by Judge Harmon, Russo listens, stoic and alone, as Mike Clark lays out the case against him. In a nutshell, the government claims he and the Piperis made a secret deal to swap bad loans through three of their banking institutions, with $1.5 million going for Russo's purchase of UPI stock and $750,000 toward the elder Piperi's speculations in the stock market. The loans ultimately failed; the banks did too. The phrase "federally insured institutions" echoes like a gong, the better to impress upon the largely working-class jury that when "you're backed by the taxpayers' money, you have to play by the rules."

The defendants did not, Clark says, sketching out the irregularities that swarmed through the lending process on both sides. Both loans, he tells the jury, were based on deceptive financial statements and pushed through without sufficient scrutiny; the spotty loan files were papered over after the fact. He contends Russo had an unusual personal involvement in the Piperi loans, and he calls both Piperi the Younger and the Russo Companies "straw borrowers", since the benefits ultimately went to Piperi the Elder and Russo himself. The impropriety lay not in bank owners lending each other money, says Clark, a tall, measured presence whose deep voice resonates with a laconic skepticism; it lay in the way the defendants masked the simultaneous timing and reciprocal nature of the loans from bank examiners and some of their own bank officers. These were not arm's-length loans, Clark finishes, looking straight at the jury. "The defendants treated these institutions as their personal piggy banks."

No way, the assembled defense lawyers spend the next several hours protesting. The transactions were no more than business as usual in the freewheeling '80s. With his disarming country-boy delivery, Mike DeGeurin draws his client, Ronald A. Piperi, as a humble striver after the American dream who worked his way through law school delivering butter and cheese. From a law and building career in Killeen, he made the leap to the banking business (a common one in those heady days of deregulation), buying a "little S&L" called First Savings of Orange. Within three years, Orange ballooned from $30 million to $800 million in assets, and suddenly Piperi was living on River Oaks Boulevard and dealing with "the star of Texas," as DeGeurin describes Russo -- a man whose projects were said to turn to gold.

Dan Cogdell, dark hair slicked back and pocket hankie standing at attention, conjures an image of little Ronald Drew Piperi sweeping the floors of his dad's law office, mowing the grass at his dad's apartment complexes, studying psychology (but failing to graduate) at SMU. And, ultimately, playing the Good Son when his father told him to come work at his new S&L. He suggests that his client was too naive and inexperienced to have been a driving force in the loans. The real players? Drew's father and Joe Russo. If Berg and DeGeurin are less than thrilled to hear this, they betray nothing; such are the strains of a conspiracy trial.

An equally fervent Berg declares it an honor to represent Russo, painting him as Houston's ultimate Horatio Alger. He invokes Russo's "extremely modest" Fourth Ward roots for the jury -- half of whom are African-American -- working in Russo's momma and daddy, the paper route he threw to make ends meet as a novice real-estate broker, his big break when Texaco leased all of his first building. Berg waxes eloquent about Russo's successively larger structures: how he was "the first one" to create landscaped esplanades at his own expense, how -- irony of ironies! -- even the federal prosecutors officed until recently in the "crown jewel" of Russo's buildings, the downtown Lyric Center. Then comes the litany of Russo's civic deeds. "He brought 911, the emergency number, to Houston!" Berg informs the jury. Not to mention the lights he funded at Memorial Park, his NAACP Man of the Year award, the way "he never forgot where he came from, 320 West Bell." It is much the same story rehearsed in umpteen mid-'80s press clippings, with a key difference: now it is meant to persuade a jury that "this is not the kind of man you will find involved in deception."

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