Almost overnight the Medderses had people lining up to extend them credit. The couple initially borrowed $20,000 (for a down payment on their Muenster home) from the Catholic monks at Subiaco Abbey in Arkansas. A spokesman for the monks told Fort Worth Weekly that, in their case, Ernest and Margaret repaid the loan promptly.
According to her later courtroom testimony, Margaret told the nuns with whom she worked that she and Ernest needed money to pursue the riches through the legal system. Margaret testified that Ernest promised that, if the sisters financed the legal fight, he would give their order $10 million of his newly spied inheritance.
After that, the nuns began funneling money to the Medderses on a regular basis. It was on the advice of the Sisters that the family pulled up stakes and moved to Muenster, a town dominated by Catholicism. Before that, according to one Muenster businessman, the couple hadn’t even been Catholics.
“The Medders were originally Baptists, so they needed to impress these nuns,” said Rufus Henscheid. “They converted to Catholicism and started looking for a good Catholic town. So where’s a good Catholic town? Well, at the time Muenster was about 90 percent Catholic.” In Muenster, the couple, like almost everyone else in town, attended Sacred Heart Catholic Church.
According to a 1967 story in the Gainesville Register, Margaret testified in a bankruptcy court hearing in Sherman that she and her husband had received a series of loans from the Catholic order in the form of checks “in the neighborhood of $50,000 to $75,000 per month” between 1962 through 1966.
Where did that money come from? And what — other than dollar signs in their eyes — could have possessed the nuns to make such loans, underwriting what was clearly an outlandish lifestyle as well as a legal fight?
Neither they nor anyone else in the Catholic Church has ever commented on their reasoning, other than to say that the nuns thought the Medderses were sincere in believing the oil money would come. The whole Medders scandal seems to have been expunged from the records — and even, apparently, the memories — of the Catholic church in Indiana.
In Muenster, the nuns’ money was floating more boats than Ernest and Margaret’s. Some folks liked the couple; others just liked their money and resented their flamboyant and high-handed ways. At least one town resident knew that it was the Sisters’ money rather than oil proceeds that, in the short term, was underwriting the Medders phenomenon.
It wasn’t resentment over who was invited or not invited to their soirees that led to the Medderses’ downfall, however. It was one man’s irritation with their Democratic politics.
John Pagel’s desk is up half a flight of stairs at the rear of Community Lumber’s main building on Highway 82, in the center of Muenster. The smell of freshly cut wood fills the air, just as it must have when his father Jerome ran the company and, for a few years in the 60s, built buildings for and a friendship with the Medderses.
A medium-sized, slender, sun-tanned man of 68, his dark hair going gray, John Pagel at first said he didn’t know much about Muenster’s most infamous former residents. But once he started talking, the memories and laughter rolled out.
John was just 17 when that particular circus hit town. And if Jerome Pagel wasn’t the first local that the Medderses got to know, he may have gotten to know them the best.
“When they came to town, we [helped them get] everything they wanted,” John Pagel said. “They wanted a water well; we built them a water well. … The next thing was that they needed a place to live. We got them a place to live. The next thing was, ‘build us a house.’ ”
So Jerome built their house, one that John figures would cost $1 million today. After that, Ernest and Margaret started filling it with possessions and party guests.
For the first event, the couple invited the entire community. “They wanted to have an open house and have the community introduced to them,” Pagel said. “And they decked the whole house out with new furniture. Booked a champagne brunch and champagne bar, My brother Dick and I and one of our friends were the bartenders. They had these big old magnums of champagne, serving it in these crystal glasses.”
He and his friends smuggled some of the bubbly out to a car, but as it turned out they didn’t need to.
“She had made us dress up in coats and ties, and that wasn’t our thing,” Pagel recalled. “So, five o’clock came along, and the housewarming had come to an end. Mrs. Medders hugged us, had her arms around us like we were her little chicks. And she said, ‘Now, boys, don’t you tell your dad, but why don’t you take three or four magnums of this champagne?’ So when we got out to the car, we had more champagne than we knew what to do with.”
Jerome Pagel also built horse and cattle barns for them, including the one that doubled as a party palace. “It made a hell of a dance floor,” his son recalled. “It was a dirt floor, but they had a portable wood floor [brought in] for dances and dinners.” He remembers LBJ’s helicopter landing out at Colonial Acres.