Paper chase

Far from fazing Morgan, however, Rosenbloom's response only reinforces his beliefs. "They deny it," he says. "They always do." By way of response, Morgan points to a typical clause in one of his dozens of contracts. The clause provides that "after the second year" of the "program," the bonds "are considered redeemed and sent to the Federal Reserve." Asked why the Fed would want to keep a lid on such a program, Morgan simply shrugs. "Why? I dunno. It's all a very secret business."

Morgan is correct--although the secrecy seems to have more to do with the law than with the Federal Reserve. According to three sets of experts consulted by the Observer, the historical document business smells a lot like securities, mail, and wire fraud.

By the time he came to the attention of the White House, Morgan had been trading antique bonds for eight years. "I got into it as a way to finance real estate," he says. "As you may recall, we had a banking crisis here in Texas."

Since then, he's gotten to the point where he "makes a pretty good living" off selling the bonds, which he buys for anywhere from $250 to $1,000 apiece and sells for whatever multiples he can get. (According to two traders, the Saginaws, for example, currently go for anywhere from $25,000 to $35,000 apiece, in 1997 cash, though it's unclear who exactly is willing to pay that price.)

But Morgan wasn't looking for a pretty good living. He was after the Big Payoff, which has yet to come. Yet even after eight years, he does not doubt that these "programs" actually exist. "I know they're real, because I've talked to people who've been paid," Morgan says. (He can't give names, though, because "they're all sworn to secrecy. They all signed confidentiality agreements.")

Like many of those in the business, Morgan has been looking for the Big Payoff in one form or another for most of his adult life. Morgan was raised in Lawson, a small burg near Seagoville that no longer exists; his father died when he was 3. "My mother had to borrow money to bury my father," he says. "She didn't remarry till I was 26." Obviously bright, Morgan graduated from North Dallas High School in 1955, at age 16; when he turned 17, he joined the Navy and for three years was a radar operator in an anti-submarine squadron.

After the Navy, he attended college at North Texas State, graduating in 1962. He immediately went to work teaching history at W.W. Samuells High School. He left the DISD in '66 to work for a chemical company as a sales manager. By the early '70s, he set out to make his fortune as an entrepreneur. Beginning in '73, Morgan shows up as officer and director of a series of corporations, among them laundries, restaurants, chemicals, even a hot tub dealership at Dallas' Old Town shopping center.

By the mid-'80s, like a good chunk of Dallas, Morgan turned to real estate to generate his pot of gold. In 1987, someone introduced him to a fellow named Charlie Knapp, the former head of American Savings & Loan, the first of the high-flying S&Ls. Sure, the feds were grousing about the pile of bad loans Knapp had left behind at American when they forced him out in 1985. But when Knapp vowed that his newest venture, Trafalgar Capital Corp., would become one of the largest mortgage lenders in the country, Wall Street pretty much believed him. So who was Bill Morgan to question Knapp, whose boasts had landed him on the front page of The New York Times' business section?

"He was going to finance real estate out of his supposed reservoir of cash," Morgan says. Knapp was to be the "financial partner," the source of funds; Morgan was to be the "development partner," the one who found the property and did all the work in exchange for a 50 percent share in the deals.

In 1987, while working for Knapp, Morgan met a California attorney named Lawrence W. Taggart. At the time, Taggart, a controversial former California S&L commissioner, was head of Knapp's nascent mortgage lending business, Trafalgar Capital. Despite his grandiose plans, Knapp had some very real difficulties. For one thing, real estate lending had virtually dried up, leaving Knapp and his associates scrambling for a way to finance deals.

"Larry [Taggart] was the guy who introduced me to the bonds, when we were trying to find a way to finance real estate," says Morgan.