Lee Zurik Investigation: 'Dirty Deeds' part 1 - FOX 8 WVUE New Orleans News, Weather, Sports

Lee Zurik Investigation: 'Dirty Deeds' cost Louisiana hundreds of millions

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"I would categorize this as the one of the biggest frauds in the history of the United States," says Keith Cressionnie.

Cressionnie has spent half of his life, 30 years, looking into that alleged fraud. He and his friend, Norman Billiot, have the paperwork to prove their years of work.

The alleged fraud took place in the 1930's, but stick with us -- we're going to show how it impacts you today.

"The general populace, they're going to be shocked," says Bob Barton, a former journalist who has written about the issue. "It's one of the biggest raw deals, in my opinion, that the state has ever engaged in. And it continues to be a raw deal."

This story starts in 1934. Former Louisiana governor and, at the time, U.S. Senator Huey Long sets up the Win or Lose Corporation. The owners, as listed in documentation, were state Senator James A. Noe, New Orleans hotel owner Seymour Weiss and Long's secretary, Earle Christenberry. Long left his name off the paperwork, but records show he was a partner of Win or Lose.

Long was killed in 1935. But Win or Lose kept operating with his wife and friends.

In January of 1936, James Noe became governor of Louisiana. Nine days after his inauguration, he assigned a lucrative oil and mineral lease to W.T. Burton, a Lake Charles businessman with little to no experience in drilling oil. A 1936 letterhead shows Burton as a general contractor, with specialty in boating, towing and dredging.

"They just invited a wildcat, start-up oil and gas company called Texaco to come over and help them start up a program, and they did and they called it 'Win or Lose' and signed a contract with them," says Barton.

The lease would be called State Lease 340 -- 500,000 acres just off the coast of south central Louisiana, much of it in St. Mary Parish.

The 1936 deal called for the state to receive 12.5 percent of the royalties; W.T. Burton would keep the rest. These days, when the state awards such a lease, it receives between 20 and 25 percent of the royalties.

Burton paid the state $75,000 for the lease, and days later assigned a large portion of it to the Texas Company, which later became Texaco. The Texas Company paid Burton $95,000, so he quickly made a $20,000 profit – remember, that's $20,000 in 1936.

Burton would keep a portion of the royalties himself. But in February of 1936, he handed over more of his interest in State Lease 340 to the Win or Lose Corporation, Gov. James Noe and late Sen. Huey Long's company.

"I think it's fraud in political office, you're going to be in a business and give yourself state leases like that," remarks Cressionnie.

So essentially, Noe assigned the lease to W.T. Burton, and Burton assigned part of that lease back to Noe and his friends with Win or Lose. It made Noe, Huey Long's family and friends rich.

In the first 20 years, Win or Lose made $4,358,309 off this one oil lease. In today's dollars, that's $38,258,914.

"There is no Win or Lose about it," says Barton. "It's all win."

We've found little written about Win or Lose. It got a short mention in Huey Long's biography. One of the only newspaper writers who delved into it is Bob Barton from Bossier City, who became a state representative for four years and now owns a restaurant in New Orleans.

"Our little weekly paper tried to publish some information about what was going on," he tells us.

When we asked Barton why he thought so little has been written about Win or Lose over the years, he says, "It's a political mess. It's a complicated system that happened a long time ago."

We've spent two years digging through the complicated mess, looking at tens of thousands of documents, many 70 years old, even combing through state archives -- the only public documentation that shows how much Win or Lose actually made.

LSU historian Alecia Long (no relation to the late senator) points out that a deal like State Lease 340 could be called the norm, back in the Huey Long days.

"It was simply assumed that, in order to get deals done, a certain amount of graft would be taken off the top of any particular deal," Long tells us.

If so, this may be the only deal in Louisiana history that is still paying such dividends, 70 years later.

"I don't know how this government allows this to happen," Cressionnie says.

As long as drilling continues, the oil lease continues and the money does too. The contract from 1936 has no end date, so the rights to the royalties continue to be passed down from generation to generation.

"It's a right of birth," says Barton. "I mean, if you're in the Win or Lose Corporation as it is now set up, it's a right of birth. You will get money forever."

So Huey and Rose Long passed down the rights to their kids, who have now passed them down to their grandkids -- each transfer, approved by the State Mineral Board.

Barton tells us, "The state, for whatever reason, has continued to perpetuate these contracts. And the folks who are involved, the heirs to the Win or Lose Corporation, continue to reap millions of dollars in benefits, and apparently will continue to do so."

The state has never formally challenged this lease, never formally challenged the transfers. Many people told us, off the record, that's because of who is involved – some very powerful people.

"Most of them are decent people," says Barton. "But they've inherited millions of dollars through an act that took place in the 30's."

Governor Bobby Jindal appointed a descendant of W.T. Burton, Jack Lawton, to the LSU Board.

State Senator Gerald Long does not appear to make money off Win or Lose. But he's a third cousin to Huey Long, and if the Senate Natural Resources Committee would ever take up Win or Lose now, it would go through that committee's chairman: Gerald Long.

"For a variety of reasons – and I'm sure people are smart enough to figure out what those reasons are – it has continued to perpetuate itself," says Barton. "And there millions and millions and millions and millions of dollars [sic] every year that could be state revenue that is not state revenue. It goes to private individuals. It's a raw deal."

It's a raw deal that has been a loss for the state, but a lucrative win for a long line of heirs of the late Huey Long.

Since 1936, Long's family and all the other descendants of State Lease 340 have been paid about $273 million. We used the Bureau of Labor Statistics' official inflation calculator and recalculated payments made every year. In today's dollars, off this single lease, the holders have made about $811 million.

"It's just an atrocity for someone to receive that amount of money through political action," says Cressionnie. "That's a breach of their sworn oath of duty to the state. How can that be a duty to the state for three governors to get together, form a company and reap all of this money from it, without it being fraud?"

Today, interest in State Lease 340 has been passed down to more than 200 different people. We communicated with a few. The heirs point to a lawsuit filed by Louis Roussel against James Noe. A copy of a Motion for Summary Judgment, put together by Noe's attorneys, responds to allegations of fraud.

A St. Mary Parish judge said that Roussel could not sue Noe -- that was up to the state Attorney General. The judge did rule, though, that Noe did nothing wrong.

But another suit involving Leander Perez may contradict that judge's ruling.

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