Fraud charges
In the late 1950s, the United States Department of Agriculture began controlling the price of cotton, specifying quotas to farmers. The limited production hurt Estes' businesses. He responded by expanding into cotton production himself. Over the next few years he developed a massive fraud, claiming to grow and store cotton that never existed, then using the cotton as collateral for bank loans. During this same period he became involved in Texas Democratic state politics and made political contributions to U.S. Senator and later Vice President of the United States Lyndon Johnson.

On June 3, 1961, Estes' local contact at the Agricultural Stabilization and Conservation Service, Henry Marshall, was found dead in his car with five gunshot wounds on a remote part of his own ranch. County Sheriff Lee Farmer attributed Marshall's death to carbon monoxide poisoning brought about from a hose attached to the exhaust pipe of his car. The body was buried without an autopsy. The suicide verdict was later overturned.

On April 4, 1962, Estes' accountant, George Krutilek, was found dead from carbon monoxide poisoning. Krutilek had been questioned by the FBI about Estes the day before.

Meanwhile, Lubbock attorney Warlick Carr, brother of future Attorney General Waggoner Carr, filed some thirty civil suits against Estes to reclaim damages.

As a result of these deaths and an investigation into his business practices, on April 5, 1962, Estes and several business associates were indicted by a federal grand jury on fifty-seven counts of fraud. Estes was accused of swindling investors, banks and the federal government of at least $24 million through false agricultural subsidy claims on cotton production and the use of non-existent supplies of anhydrous ammonia fertilizer as collateral for loans. He was eventually found guilty of additional federal charges and sentenced to fifteen years in prison.

Two of Estes' associates, Harold Orr and Coleman Wade, were also indicted but died of carbon monoxide poisoning (apparent suicides) before they went to trial. Estes was found guilty of fraud and sentenced to eight years in prison. Howard Pratt, manager of a Chicago fertilizer supply company, was also found dead in his car from an apparent carbon monoxide poisoning. There was also a half bottle of liquor in his car; however, after testing, no alcohol was present in Howard's body.

The high-profile case generated extensive national press coverage and was the first topic of President John F. Kennedy's press conference on May 17, 1962. As a result of the financial and political scandal, Kennedy apparently began to consider dropping Johnson as his running mate in the 1964 election. The political fallout extended to the election of Ed Foreman as a Republican to the United States House of Representatives from west Texas in 1962. At the time, he and Bruce Alger of Dallas were the only Texas Republican congressmen. There were twenty-two Democrats in the national delegation. Democratic incumbent J. T. Rutherford's ties to Estes were the main cause of his defeat. Foreman, however, was defeated two years later in the Johnson-Humphrey landslide.

Although Estes went to prison, his conviction was later overturned by the United States Supreme Court (Estes v. Texas, 381 U.S. 532 (1965)). His appeal hinged upon television cameras and broadcast journalists having been allowed in the courtroom, depriving him of a fair trial. He prevailed by a narrow 5-4 vote.

Allegations and conspiracy theories
After his release from jail and LBJ's death, Estes began making allegations regarding Johnson. According to the authors of The Men Who Killed Kennedy, Estes claimed to have funneled millions of dollars into Johnson's pockets from the cotton allotment scam. Although some contributions are a matter of record, Johnson denied the bribery charges.

The Estes case also figures prominently in the best-selling book A Texan Looks at Lyndon: A Study in Illegitimate Power by the Texas historian J. Evetts Haley.

Estes later claimed Johnson was involved in a conspiracy to murder witnesses in the Estes trial as part of a wider conspiracy related to the Kennedy assassination. In 1984, Estes' lawyer, Douglas Caddy, wrote to the Department of Justice claiming that Estes, Lyndon B. Johnson, Malcolm "Mac" Wallace, and Cliff Carter had been involved in the murders of Henry Marshall, George Krutilek, Harold Orr, Ike Rogers and his secretary, Coleman Wade, the president's sister Josefa Johnson, John Kinser and John F. Kennedy. Caddy added, "Mr. Estes is willing to testify that LBJ ordered these killings, and that he transmitted his orders through Cliff Carter to Mac Wallace, who executed the murders."

Estes agreed to provide supporting proof to the FBI, which proffered immunity in exchange but Estes ultimately refused to produce any evidence.

Critics suggest Estes' claims of his involvement in a wide conspiracy involving mass murder and political assassination were motivated by the desire of a convicted felon to deflect responsibility for his own criminal behavior and later as a means of generating publicity for the purpose of selling a book he had written.

Folklore
Folk-protest singer Phil Ochs wrote a song about the incident called "The Ballad of Billie Sol." Allan Sherman performed a parody folksong (co-written with Lou Busch): "Oh, Look What You've Done, Billie Sol, Billie Sol," as did Jesse Lee Turner: mp3. The Chad Mitchell Trio performed "The Ides of Texas" about him as well. More recently, Houston-based singer/songwriter David Brake wrote the song "Swindler" about Estes and performed it with That Damn Band.