The case of State Lease 318

One attorney for the state didn't mince words when he wrote about State Lease 318.

In a 1941 memo, attorney Edward Gay wrote, "This lease was obtained through a conspiracy to defraud the state of Louisiana."

Several other state records, more than 65 years old, raise some serious questions about what transpired that eventually put a portion of this lease into the hands of the Win or Lose Corporation -- cronies and relatives of Huey P. Long.

In the summer of 1935, Governor O.K. Allen assigned this massive 470-thousand acre lease to W.T. Burton. The property was in most southeast Louisiana parishes, including Orleans, Jefferson, St. Tammany, Tangipahoa, St. Charles and St. John.

For the lease, Burton paid the state almost $33,000. Two weeks later, Burton assigned part of the lease to the Texas Company, which later became Texaco. For that, he received a $70,000 check, making a quick $38,000 profit -- that's $38,000 in 1936, or $627,114.82 when converted to today's dollars.

The state has no official documentation that shows Burton also assigned part of Lease 318 to the Win or Lose Corporation. But through a state investigation from 1939, we found Burton transferred part of the lease to Win or Lose, giving members a part of all royalties.

That state investigation says, "A conspiracy was effected between Burton and James A. Noe whereby Burton was to secure this lease for $32,750, assign the lease to the Texas Company for $70,500 and retain" part of the lease. The documents show Burton assigned part of the lease to Win or Lose, and also gave its members part of the money he made off the lease sale -- the difference between what he paid the state and what the Texas Company paid him.

The investigation showed Burton set aside most of the money he received from the Texas Company for the Win or Lose Corporation -- about $27,000, or $461,000 in today's dollars.

From Burton's assignment to the Texas Company, James Noe made $8500. The estate of Huey Long made $8600. Former owner of the old Roosevelt Hotel, Seymour Weiss, received $6700 -- he was a close confidant of Huey Long. Earle Christenberry, long's former secretary, received $279. And Long's alleged mistress, Alice Lee Grosjean also received $279. And finally, through Win or Lose, Burton paid governor O.K. Allen $3300. Remember, Governor Allen assigned the lease to Burton days earlier.

The state investigation says they secured this information from the U.S. Attorney's office in New Orleans, which had launched an investigation.

Sometime before the state detailed its investigation in July of 1937, W.T. Burton went before a federal grand jury and testified that "it was agreed between he and James Noe those payments would be made."

The investigation continued four years later, in 1941. FOX 8 News found a federal subpoena, asking for records on State Leases 309 and 318.

The feds wanted the state's advertisement for bids: W.T. Burton's bid and all other bids received. The document indicates the state received no other bids.

The government also asked for the lease with Burton, the assignment of the lease to the Texas Company and a document that shows Win or Lose assigned the lease back to Burton. After Burton assigned part of the lease to Win or Lose and paid the principals money, apparently a federal investigation ensued, and Win or Lose reassigned the lease back to Burton, divesting their interest.

Days before the state had to deliver the documents to the federal grand jury, the U.S. Attorney's office said the case would be continued indefinitely.