I recently wrote about the purportedly "blind" trust created for President Jimmy Carter's peanut business. President Lyndon B. Johnson also had a "blind" trust created for his television station.
In 1943, Lady Bird Johnson purchased a small radio station in Austin, Texas for $17,500. Robert A. Caro, The Passage of Power: The Years of Lyndon Johnson, Vol. IV at 286 (2013). At the time, her husband, Lyndon B. Johnson, served in the House of Representatives. The future President would often boast that he had no interest in the business. Caro at 286. However, under Texas's community marital property law, the husband had a half-interest in his wife's business. Caro at 286. Mrs. Johnson's business would later also include a television station under the call sign KTBC. As Mr. Johnson rose through the ranks in the House, and later the Senate, Robert Caro observed, there was a "twenty-year-long string of strikingly favorable rulings by the Federal Communications Commission" for KTBC. Caro at 286. Coincidentally, Austin was "one of the few metropolitan areas with only a single commercial television station." Caro at 286. And Robert Dallek wrote that Johnson's "involvement in a business that largely depended on the actions of a Federal agency for its success created a clear conflict between his private interests and public position." Robert Dallek, Lyndon B. Johnson: Portrait of a President 52 (2004). Over the decades, KTBC would generate millions of dollars of profit for the Johnsons.
When Johnson became Vice President in 1963, his staff "urged him to sell the station" to avoid potential conflicts of interest. Len Costa, A Wink And A Nod, Legal Affairs (January 2006), https://perma.cc/5CVT-JS5P. But the Johnsons refused to divest the business. Instead, tax lawyer Sheldon Cohen set up a trust. Cohen was a partner at Arnold, Fortas, & Porter, the firm co-founded by Johnson's close associate, Abe Fortas. (Johnson kept his friends close; he would later appoint Fortas to the Supreme Court and appoint Cohen as Commissioner of the Internal Revenue Service.) Under the terms of the trust, Mrs. Johnson would still own the business, but she "temporarily transferred control of her shares of KTCB to two Texas lawyers who were old family friends." Costa. They were Donald S. Thomas, an Austin attorney, and Jesse Kellam, who was the executive director of KTBC. Dallek at 365. The trustees had full discretion over how to manage the shares, and had the right to sell them. Cohen insisted that there was no "unstated agreement by the lawyers not to sell the shares." Costa.
