‘Whirlwind’ investor J.R. McConnell’s star status quickly faded.
‘Whirlwind’ investor shunned publicity but hungered for society recognition
This article ran on Sunday, June 14, 1987.
J.R. McConnell was walking tall last summer as he stepped up on stage in front of his latest real estate project to hand Johnny Cash the keys to Galveston.
That balmy night in June, 5,000 people gathered on Galveston’s Strand to hear Cash and the Houston Symphony and watch McConnell open his $20 million Old Galveston Square shopping complex.
McConnell stood together with Sam Houston IV to spotlight a 130-pound bust of Sam Houston, a symbolic award presented to Galveston millionaire George Mitchell and Mary Moody Northen.
In many ways, last summer was McConnell’s peak and the beginning of the end for his $430 million real estate empire.
“For a while, J.R. was really quite a hero down there,” said a long-time Galveston resident and McConnell business associate. “He was playing benefactor-at-large in Galveston.”
J.R. and wife Mary quickly faded from the limelight as he and his companies ended up in bankruptcy court. He is the subject of an FBI investigation of allegations that a large part of his empire was built on fraudulent practices.
For a man with his own $1 million airliner, a stable of limousines and Mercedes Benzes, two dozen replica Model A’s, a couple of trolley cars, a jumbo yacht and a financial statement that showed $33 million in the bank, it was a steep fall into bankruptcy.
McConnell, a tall man with thin blond hair and pale complexion, had all the trappings of riches but rarely broke away from his work schedule to enjoy them. A typical McConnell work day began at 8 a.m. and ended at midnight, fellow workers said.
McConnell enjoyed snow skiing, but more often than not stayed in luxury accommodations in mountain resorts that were rented as perks for business associates and employees instead of for his own use. Recreation was a business tool.
McConnell occasionally threw lavish parties but lived a modest lifestyle, employees said. Above all, he lived for the deals. Talking on the phone was his avocation.
“He was a whirlwind,” said an attorney who did business with him. “I don’t think he ever had a phone conversation that lasted more than five minutes.”
Energetic and high strung, McConnell was described by several who worked with him as a shrewd and creative workaholic. He was big on ideas, but light on followthrough, associates said.
McConnell would launch into an idea on a whim. He once got the idea to beef up his fleet of parade vehicles, so he leased 24 replicas of 1929 Model A’s along with a couple of vintage cable cars.
At antique auctions in Atlanta and elsewhere, McConnell spent thousands on rare items and once hired a museum curator to keep track of his purchases.
McConnell’s secrecy about his past led many to become curious about his background. He sometimes told people he was from Kentucky, but as he gained notoriety his origins became more clouded.
Born John Richard McConnell in Springfield, Ill., McConnell was reared in south Florida. He had worked in Houston in the early 1970s as a traveling real estate analyst for a major company, a former associate said.
McConnell returned to Houston in 1978 eager to forget a recent felony conviction for securities violations resulting from a failed land deal in south Florida.
In the deal, McConnell’s mortgage company had collected more than $500,000 from small investors to develop a subdivision in southern Florida that collapsed before it was built. The only entrance to the land was from a dirt road and utilities were never built, according to Florida investigators.
McConnell and a partner had sold $6,000 notes to investors promising high interest rates and backed by one-acre lots in the subdivision near Gainesville. The problem was that the lots were one-fifth an acre, and were simply not worth $6,000, the investigators said.
McConnell said he voluntarily turned all the records of the business over to state investigators.
McConnell came to Houston with little more than a few dollars and a charismatic flair for sales. Yet, in eight years, he was to orchestrate the rise and witness the fall of one of the largest personal real estate empires in Houston.
For the fast-talking and audacious real estate investor, then 31, Houston was hog heaven. The city was just warming up to a ferocious real estate boom, and McConnell had sharpened his skills at buying real estate considerably by the time the business began to take off in the early 1980s.
The fast lane to riches led McConnell into Galveston high society and brought him increased clout with bankers. He gained notoriety as one of the busiest renovators of Galveston historical property. By any measure,
he had become one of the largest investors in town, yet kept his office telephone number unlisted. His secretary answered the telephone by repeating the telephone number. His business card simply read J.R. McConnell, in boldface. He shunned publicity, but gradually hungered for the recognition enjoyed by Galveston tycoons George Mitchell, Shearn Moody and others.
As part of a 1986 festival along Galveston’s Strand, 7 elaborate decorative arches were commissioned by famous architects. McConnell and Mitchell split the cost, at $25,000 per arch. Later, one of them adorned a shopping center McConnell built on Seawall Boulevard.
The farm boy whose family had moved to south Florida yearned for acceptance, said one former employee. “J.R. has a massive inferiority complex and a huge ego.”
Visitors to McConnell’s office in 1984 were likely to get an autographed copy of a book about architect Michael Graves. As McConnell was quick to point out to visitors, the most famous architect of the post-modernist movement had agreed to design McConnell’s Galveston resort. “This man is brilliant, brilliant,” McConnell would say.
McConnell had an uncanny knack for persuasion that was made more powerful by a personal magnetism, former employees said. Said one former McConnell associate while pointing to a reporter’s brown leather jacket, “If he told you that coat was blue, you would believe that it was blue.”
He was a study in contrasts, both personally and in his business methods. McConnell often oozed the glowing charm of the super salesman, but his temper tantrums were famous.
“Nobody dared to get on his bad side,” said one former employee. He could lash out at an employee one moment, then be his best chum the next.
A relentlessly optimistic salesman, McConnell clinched deals with dizzying speed, building a stunningly complex web of real estate deals. He has said he was involved in at least 90 limited partnerships and owned property in California, Florida, Tennessee and Arkansas.
By 1986, McConnell was toting an unaudited, telephone-book sized financial statement that showed $33 million in the bank.
The business was largely a one-man show, employees said. McConnell called the shots and discouraged his assistants from talking about their roles in the business.
McConnell treated those who were loyal to him well, former employees said. He rewarded staffers with good pay and leased luxury cars.
Early on, McConnell learned the secret of wooing bankers. He courted savings and loan executives and discovered that making large bank deposits could open doors for borrowing.
With the unwavering enthusiasm of the true real estate promoter, McConnell remains upbeat in the face of financial collapse and an FBI investigation into his allegedly fraudulent dealings. First Federal Savings said it plans to foreclose on McConnell’s large Memorial area home at the July 7 sheriff ’s sale and McConnell has been seen talking business at a pay telephone on Woodway.
Only weeks before the collapse of his empire and subsequent bankruptcy filings, McConnell downplayed his troubles in a telephone interview, preferring to talk instead about his elaborate plans for the Galveston resort that had become his dream. East Beach, which he had renamed Grand Beach, would feature six theme swimming pools, he said.
“There’s never been any project done like this,” he said.