Haunted By Spirits

Ratliff's testimony eventually led to James and Eugene Hensley's conviction on federal conspiracy charges "with the intent and design to hide and conceal from the United States of America, the names and addresses of the person or persons to whom the said distilled spirits were sent, and the prices obtained from the sale thereof."

A federal jury in U.S. District Court of Arizona in March 1948 convicted James Hensley on seven counts of filing false liquor records in addition to the conspiracy charge. Eugene was convicted on 23 counts of filing false statements and the conspiracy count. Eugene was sentenced to one year in prison, and James to six months. Neither brother testified during the trial, relying instead on their lawyers, who included Louis B. Whitney, a prominent attorney who served as mayor of Phoenix from 1923 through 1925.

After a two-week stint in the Maricopa County jail, the men were released on bond on May 17, 1948, pending an appeal to the U.S. 9th Circuit. The appeals court affirmed the conviction on February 8, 1949.

Two weeks later, a judge sentenced Eugene to one year in a federal prison camp near Tucson, but suspended James' sentence, placing him on probation instead. Both men were fined $2,000. United Sales and United Distributors were also convicted and fined $2,000.

The criminal convictions had little immediate impact on the brothers' fortunes.

James Hensley profited handsomely from his association with liquor magnate Kemper Marley, a man police suspect ordered the 1976 murder of Arizona Republic reporter Don Bolles, who had written about Marley's business and political dealings. The man convicted of placing a bomb beneath Bolles' car testified that Marley also wanted former Arizona governor and then-attorney general Bruce Babbitt murdered because Babbitt had filed an antitrust lawsuit against the liquor industry in 1975. (Marley, who died in 1990, was never charged in the Bolles case. Babbitt is now U.S. Secretary of the Interior.)

By 1955, James Hensley had launched a Budweiser distributorship in Phoenix, a franchise reportedly bestowed upon him by Marley, who was never indicted in the 1948 federal liquor-law-violation case -- or a subsequent one -- despite his controlling financial role in the liquor distribution businesses.

James Hensley's conviction didn't deter the State of Arizona from granting him a wholesale liquor license in the mid-1950s. The Arizona Department of Liquor Licenses and Control turned a blind eye to repeated liquor-law violations at the company. State liquor regulators did nothing when James Hensley failed to disclose his federal felony conviction on a sworn 1988 disclosure statement to the department and the City of Phoenix.

Today, Phoenix-based Hensley & Company is the nation's fifth-largest beer wholesaler -- a privately held business that 80-year-old James Hensley still controls. He built the Budweiser distributorship into at least a $200 million-a-year business, with annual sales of more than 20 million cases of beer.

James Hensley owns nearly all of the voting stock, and most of the rest of the closely held securities are in trusts for his grandchildren or owned by his daughter, 45-year-old Cindy Hensley McCain -- wife of U.S. Senator and presidential hopeful John McCain.

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By now, many Americans know John McCain's family story. His best-selling memoir, Faith of My Fathers, chronicles the lives of the senator's father and grandfather, distinguished admirals. The book takes readers up through John McCain's own military service, including his five and a half years as a prisoner of war in Vietnam. But Faith of My Fathers ends there, a few years short of John McCain's marriage to Cindy Hensley and the advent of his political career.

That's only half the family story.

The rest could be called "Cash of My Father-in-Law," a tale of how beer baron James W. Hensley's money and influence provided a complement to McCain's charisma and compelling personal story and launched him to a seat in Congress -- and perhaps to the White House.

Although Hensley wealth has helped propel McCain's political career, the senator will never get his hands directly on the Hensley fortune because of an antenuptial agreement he signed before his 1980 marriage.

A centerpiece in McCain's remarkable and sudden rise to national prominence is his promise of campaign-finance reform.

Yet McCain has relied heavily on the financial contributions from big corporate donors -- with the liquor and beer industry near the top of the list. McCain won -- one could say bought -- his first election to the House of Representatives in 1982 with lavish sums of Hensley beer money.

In a rare 1988 interview, James Hensley gave a glimpse of his political savvy.

"The neo-prohibitionists are real active about trying to dry us up all the time," he told the Phoenix Business Journal. "They're a constant battle. They're going after us in different ways now than they did in those days, trying to ban advertising, things like that.... We're legislatively involved very heavily.... It's a way of life to protect our industry."

Since 1982, Hensley & Company employees have donated almost $200,000 to federal political candidates and campaigns. Since 1996, they've given Arizona state-level candidates more than $18,755.

McCain himself has received more than $60,000 from James Hensley and his employees -- and tens of thousands more from other beer-related interests.

John McCain benefits from James Hensley's money.

James Hensley benefits from John McCain's political power.

While McCain blasts his colleagues for falling prey to the influences of campaign contributions, the senator's record reveals his quiet support for the business that launched and has helped maintain his career. McCain declined to be interviewed for this story.

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Liquor spirited from the Hensley brothers' warehouses helped fuel a lively nightlife at some of the Valley's most exclusive clubs in the mid-1940s. The Green Gables, the Silver Spur and the Cowman's Club were recipients of black-market shipments, according to testimony presented at the 1948 federal trial of the Hensleys and their two companies, United Sales Company in Phoenix and United Distributors in Tucson.