Violation of the intent and purpose of the Veterans' Land Program through fraud and bribery was first brought to light in November 1954 by Roland Kenneth Towery, managing editor for the Cuero Record. On looking into a report that two Cuero businessmen were entertaining black men after hours at the country club, Towery found that the two had paid the black caretaker at the club ten dollars for every veteran he could persuade to sign an application for purchase of land under the Veterans' Land Act. This act had been voted into law by the people of Texas in November 1946 after proposal by the legislature. The plan was to issue $25 million in bonds, the proceeds of which were to be used by the state to buy land and to resell it to veterans at 3 percent interest on forty-year loans. In February 1951 another $75 million was voted to be made available for such purchases. The only stipulations on the purchase were that the loan could not be for more than $7,500 and the tracts could not be less than twenty acres. A 5 percent down payment in cash was required, and the land had to be held for three years before resale. The law covering the program specifically provided for the permissibility of "block sales," which allowed two or more veterans to join together to buy land or let the state buy the land for them and resell it to them at twenty or more acres each. The reason for allowing such grouping was the realization that it would be difficult for veterans to buy twenty acres or more for as little as $7,500. It was this block sale of land that led directly to the intervention of promoters and the scandal that followed. The administration of the Veterans' Land Program was delegated by law to a Veterans' Land Board made up of the governor, attorney general, and commissioner of the General Land Office. The commissioner of the land office was designated as the chairman of the board.
On investigating the report concerning the activities of the two Cuero men, Towery found that the veterans who were signing applications to buy land were not aware that they were doing so, having been told by unscrupulous land promoters that they were getting the land free or that they were applying for soldiers' cash bonuses. Amounts varying from ten to three hundred dollars were paid to veterans for their signatures. Many of those who signed were barely literate. Towery took what he had learned to DeWitt County Attorney Wiley Cheatham, who revealed that he had been investigating reported irregularities in the land program since August 1953, rumors having reached him that local veterans were receiving bills from the state for payments on land they did not know they had bought. Cheatham pledged Towery to secrecy until he could go to Austin and check with state officials on the matter. On his return to Cuero on November 5, 1954, he authorized Towery to print whatever he chose, saying that he had received no help or encouragement from officials in the General Land Office in Austin. Towery decided to check on the matter himself. He obtained an appointment with Bascom Giles, commissioner of the General Land Office and chairman of the board of the Veterans' Land Board. Giles at once denied any irregularities in the program in DeWitt County, attributing such reports to "politics" and the machinations of a former appraiser for the land office who had been fired. Towery, struck by the fact that Giles was defending himself against charges of which he had not been accused, wrote the story for the Cuero Record on November 14, 1954. The story and those which followed won a Pulitzer Prize for Towery in 1955 for distinguished reporting of local affairs. It also set off intensive statewide media reporting and accelerated an investigation begun in October by the office of the attorney general under John Ben Shepperd (who was a member of the Veterans' Land Board at the time of the investigation), the Texas Department of Public Safety under Homer Garrison, the state auditor's office, and the Senate General Investigating Committee. Governor Allan Shivers, as a member of the Veterans' Land Board, was also actively involved in the investigation.
Irregularities in the program were found to exist in DeWitt, Lavaca, Victoria, Dimmit, Uvalde, Zavala, and Bexar counties. Once investigations were begun, numerous charges were filed against various people accused of taking part in the improper use of state monies and violating veterans' personal rights. Twenty people were indicted in nine counties, and prison terms were ultimately assessed against Bascom Giles (often referred to as "the father of the Veterans' Land Bill"), who was indicted first in Austin on March 5, 1955, and charged with conspiracy to commit theft of $83,500 in state money in Veterans' Land Board deals. He was finally sentenced to serve six years in the Texas State Penitentiary at Huntsville, having received thirteen sentences totaling seventy-five years, which were to be served concurrently. He entered prison in January 1956 and was released in December 1958. He was also heavily fined, and he paid back more than $80,000 in judgments in civil suits which were filed against him. He was the first elected state official to enter prison for a crime committed while in office (though not in office at the time he was sentenced, since he declined to accept a ninth term as land commissioner, to which he had recently been reelected). Only two other persons, B. R. Sheffield of Brady and T. J. McLarty of Cuero, served prison sentences as a result of the crimes committed. Civil suits forced the promoters to buy back the land and keep up the payments, and the state subsequently recovered most of the money. In order to prevent similar illegal proceedings in the future, steps were taken by the legislature to tighten loopholes in the land program.