ONE SUNNY AFTERNOON in the autumn of 1939, the proprietors of a Chevrolet agency in San Francisco were given a disheartening shock by an auditor from General Motors who was making a routine examination of the agency’s books. The auditor came out of the accounting department and informed them that ten thousand of the dollars the proprietors thought they had were, as a matter of fact, missing. Leaving the proprietors with their thoughts, the auditor went back into the accounting department and continued his studies. After several days, in the course of which he kept uttering sharp cries of amazement and awe, he came to the proprietors again, with his hands full of bank statements and canceled checks, and with garlands of adding-machine tape around his neck, and told them that their former secretary and Treasurer, a man known to them as James W. Ralston, had diverted the ten thousand dollars to his personal bank account and had hidden his defalcations so adroitly and with such originality that it had been a real pleasure to uncover them. The man known as Ralston had resigned several months before and had left the agency after shaking hands all around. He had made no secret of the fact that he was investing his savings in an automobile agency of his own, in the town of Colton, some five hundred miles south of San Francisco and not far from San Diego. He had said that he and his wife were going to settle down there in a little house he had bought. After their conversation with the auditor, the proprietors told an assistant district attorney that Ralston had seemed to them to be a very nice fellow—thirty-five years old, five and a half feet tall, a natty dresser with a gay manner and a sincere way of talking, wavy brown hair graying at the temples, blue eyes, fair complexion. He was picked up the next day in Colton, where he had already come to be regarded as a hard-working, respectable, up-and-coming automobile man. To the officers who took him back to San Francisco, he seemed in no way contrite, and, on the whole, cheerful. Sitting with them on the train, he kept slapping his knee and saying that he’d be damned if he could understand how the General Motors auditor had ever discovered his embezzlement. In jail, he talked shop with the auditor and questioned him closely about that. He paid a lawyer a thousand dollars to handle his case, gave back to his former employers fifteen hundred of the ten thousand dollars he had taken from them, and entered a plea of guilty.
As is customary in such cases, the probation officers tried to find out as much about the prisoner as they could, in order to give the court a report on him before he was sentenced. It turned out that his real name was Ralph Marshall Wilby, that he was a Canadian citizen, and that he had done some embezzling before, both in Canada and in the United States. In his early twenties he had humbugged a Toronto corporation in an unusual fashion while working for it as a bookkeeper. He was employed there under his real name and, using an alias, ingeniously put his other self down on the corporation’s books as one of its stockholders. For two years, the corporation faithfully paid him dividends that amounted to several thousand dollars in all. He was cagy enough not to attend stockholders’ meetings but, signing his other name, mailed his stock proxies to bona-fide stockholders who he knew belonged to a faction that was in favor of high dividends. After two years of this, Wilby resigned as bookkeeper. As stockholder, however, he continued to receive dividend checks for two more years. Then the corporation discovered what Wilby had been doing to it, and he was arrested, convicted of grand larceny, and sent to a reformatory for a short term. He gave back to the corporation a few hundred of the thousands he had taken from it, but he didn’t say he was sorry. He asked many questions about how the corporation had at last come across his defalcations. His behavior at the reformatory was excellent and he was out of it in a year. He then came to this country. Using his real name, he married an American girl, and she lived happily with him until, in 1935, he was caught in the middle of a rather picayune embezzlement in Norfolk, Virginia. The complaint against him there was dropped when the Virginia authorities were assured by the immigration officials that he would be deported to Canada at once. His wife lauded him publicly at the time for his fidelity, generosity, good habits, and sunny disposition. She regretfully obtained an annulment only after he had been sent back to Canada. Wilby then adopted the name Ralston and quickly slipped back over the border, finding a job almost immediately as a bookkeeper at the Chevrolet agency in San Francisco. He was soon made secretary and treasurer, and he then married another American girl. This wife was living happily with him when he was arrested in Colton in 1939. She followed him to San Francisco and, like the first wife, went out of her way to speak highly of him. She had not known he was an embezzler, and when the facts were explained to her, she said, “Well, he’s a very fine man except for that one quirk, or whatever it is.”
It was discovered while Wilby was awaiting trial in San Francisco that he had played fast and loose with a Buick agency in San Diego a week before his arrest in Colton. The General Motors auditor, who had been impressed by the delicacy of Wilby’s methods in San Francisco, was shocked when he found out about Wilby’s conduct in San Diego. Wilby had been crude down there. Under the influence of what he later described as a whim, rather than a quirk, Wilby had driven from Colton to San Diego one day and had there dropped into a Buick agency that he knew was occasionally visited by auditors from General Motors. He had introduced himself as Ralston, said he was an auditor from G.M., checked the books and the cash on hand, and simply stuffed eight hundred dollars of the cash on hand into his hip pocket. He had then driven back to his humdrum life in Colton. The two proprietors of the San Diego agency were looking at each other suspiciously when stories and photographs of the San Francisco embezzler came out in the newspapers. They then went arm in arm to the San Diego prosecutor’s office. Wilby was taken from San Francisco to San Diego, where he pleaded guilty without bothering to hire a lawyer. The fact that he hadn’t yet been sentenced for the more impressive embezzlement in San Francisco seems to have rattled the Southern California judiciary. The San Francisco case was merged with the one in San Diego, and when the case finally came up, early in 1940, the judge was lenient and perhaps naïve. On Wilby’s solemn promise never to return to the United States, the judge, instead of giving him a suspended sentence, put him on probation for ten years and turned him over to the immigration officers. He was shipped off to Canada, and his second wife regretfully applied for an annulment. Three months later, he was asking for a job as an accountant in the offices of a New York corporation that had an extraordinarily complex bookkeeping system and had frequently boasted in its brochures that its disbursements amounted to nearly forty million dollars a year. He got the job, and within a few weeks he had married still another American girl and she was living happily with him in Jackson Heights.
Wilby’s preparations for his invasion of the New York commercial field were characteristically bold and imaginative. As soon as the immigration officers set him down in Canada, he began to look around for a new name. What he lived on during this period is not known, but it is assumed by students of his career that he had providently deposited some capital in Canadian banks while he was working and embezzling in California. In any case, he was able to invest some cash in his search for a new name. This time he didn’t just want to make one up, as he had done when he chose “Ralston”; he wanted a name that meant something. He therefore placed an advertisement in a number of Canadian and American trade journals. It declared that there was a wonderful opportunity for a good certified public accountant in a big firm, not named, with inter -national connections. Applicants were invited to write, stating qualifications, etc., to Box No. So-and-So. Wilby received many applications. The one he liked best was from a C.P.A. named Alexander Douglas Hume. This Mr. Hume furnished impeccable references; he had worked for a number of New York corporations and he listed them all, giving in each instance the name of at least one executive whom he knew personally and who he was sure would be glad to give him a leg up. Hume was a Canadian citizen and was at that time working as a chartered accountant in Toronto. Wilby wrote to him and asked for more details. Hume supplied them. The two men corresponded for some weeks. Then it began to look as though there was an obstacle in the way of Hume’s taking the job that Wilby seemed to be dangling in front of him. Hume confessed to Wilby that he had begun to think seriously of offering his Services to the Empire. After all, he said, there was a war on and he was young and able-bodied. In their correspondence, which continued for a month after this letter, they discussed the progress of the war. Wilby said he certainly admired Hume’s patriotism, said he wished he were young and fit himself, and so on. Finally, Wilby received a hurried and somewhat emotional letter from Hume, in which he said he had just accepted a lieutenant’s commission in the Canadian Army and that he guessed Wilby would not be hearing from him again until the Axis powers had been put in their place. Wilby wrote back offering his congratulations and wishing Hume the best of luck.
It was then that Wilby came to New York. He went to an employment agency in downtown Manhattan that specializes in finding jobs for accountants. He filled out a form, giving his name as Alexander Douglas Hume and listing Hume’s New York references. When the head of the employment agency saw the form, he sent for him, because he had known Hume slightly when the latter had worked in New York five years earlier. “Glad to see you after all these years, Hume,” the agency man said when Wilby walked into his office. The agency man has recalled over and over since then that the man looked at him, grinned, cried, “Why, of course!” and shook hands cordially. “You’ve lost weight,” the agency man remarked, and Wilby explained that he had been on a diet and was in better shape than he had been in for years. Actually, there was no resemblance whatever between Wilby and Hume, but Wilby rose above that. Using his sincere way of talking, he went on to give the agency man some tips on how to avoid the temptation of potatoes and other starches. Then they settled down to the business on hand. The agency man got out a list of corporations that were looking for first-class accountants, and Wilby mulled it over, asking intelligent questions about the volume of business and the accounting methods of the different firms. He finally chose the William T. Knott Company, and the agency man telephoned that corporation. Wilby went to the Knott offices, on West Thirty-first Street, and was shown right in to the private office of the treasurer, a Mr. Casey. The two men talked for quite a while. Casey was impressed by the applicant’s knowledge of bookkeeping and also, as he has remembered again and again, by the man’s cheerful, modest, and businesslike manner. Casey picked up a telephone, muttering “Just routine, you know,” and called one of the corporations Hume had worked for. He spoke to the officer mentioned in Hume’s references and, sure enough, the officer said he remembered Hume well, that he was an excellent accountant and a first-class man all around. “Give him my regards,” the officer said, and Casey did. As Hume, Wilby was put to work the next day.
The William T. Knott Company is what is known as a management corporation, and is very busy. It manages sixteen department stores in this country and one in Canada for a parent corporation called Mercantile Stores. Among the many things it has to do is pay for the merchandise these stores buy from manufacturers and jobbers. The department stores check the invoices when the goods are delivered and then send the invoices along to the Knott Company, which pays the manufacturers and jobbers by check. Being a trustworthy and successful management corporation, it is careful about the way it disburses this money. It keeps a list of purchase orders, and these are checked against the invoices. A force of accountants, clerks, typists, and business machines then takes the approved invoices and runs them through a labyrinthine bookkeeping system. At the far end of the labyrinth, there emerge in due time a corresponding number of tastefully embossed bank checks, each one made out, in austere black and white, to such-and-such a manufacturer or jobber for a certain number of dollars and one-hundredths thereof. Once the checks have been signed they are clapped into window envelopes and whisked off to the waiting manufacturers and jobbers by United States mail. The human workers and the business machines all get along fine together in the accounting department of the Knott Company. The human workers are male and female, and the business machines are standard. The machines do many of the more tiresome chores. One machine even goes to the bother of signing the checks. This check-signing machine is exceedingly complicated and mechanically above reproach. Only a privileged few of the human workers are allowed to get anywhere near it, and even for them it won’t sign so much as small-fry jobbers’ checks unless certain secret perforations and hush-hush notches have been made by various other knowledgeable business machines around the office on certain unmentionable pieces of cardboard, one for each invoice that has been approved for payment. The check-signing machine takes these pieces of cardboard and, if the perforations and notches feel all right to it, signs the checks. When the machine isn’t working, some of its most important elements, such as one bearing an engraving of the signature of the treasurer of the corporation, are removed. These are locked up in one corner of the office, and the machine itself is locked up in another corner. The system is just about foolproof.
During 1940, Wilby, under his new name, worked for the Knott Company as a traveling auditor, going from one department store to another and checking up on their cashiers and bookkeepers. During 1941, he was an accountant in the New York office. All that time, the male and female workers and the standard business machines clicked and snuffled along with hardly a mistake and never a defalcation, and the corporation continued happily to disburse nearly forty million dollars a year by means of its complicated system. In 1942, Wilby was made chief accountant and put in charge of that system. His salary, though it had been increased several times, was only six thousand dollars a year. He nevertheless thought he was in a position to make a fortune, and he was right. During 1942, he took $110,936.81. The corporation didn’t miss the money, and the auditors found nothing wrong with the books. Wilby’s work seemed more than satisfactory to his employers. They not only thought a lot of his efficiency but were delighted at the way he got along with the people who worked under him. He was always cheerful and relaxed, even when working at top speed and under pressure. He was considerate of the human office force and, even in his high executive position, was not above taking a personal interest in the business machines. He always had time to listen to the probems of the accountants, clerks, and typists, and more than once dazzled a business-machine operator by stepping up to a recalcitrant machine and diagnosing its inner difficulties after a shrewd glance and some sympathetic fingering. The general feeling at the Knott Company was that the new chief accountant had a truly rare and wonderful personality. At the end of his first year in the job, the corporation gave him the title of assistant treasurer, to add to the title of chief accountant, and also gave him a bonus of five hundred dollars, over and above the six thousand dollars he had earned and the $110,936.81 he had stolen.
Wilby thought he was in a position to do even better in 1943 than he had done in 1942, and he was right again. In 1943, he took $275,984.48. At the end of that year, the Knott Company still was feeling no pain, and it showered another five-hundred-dollar bonus on Wilby. Thus, in the two years, Wilby had got twelve thousand dollars in salary, a thousand dollars in bonuses, and $386,921.29 in stolen funds. He saved some of what he earned and all of what he stole, and he had the money where he could get at it any time he wanted it. He had invested some of it in bonds that were readily negotiable, but most of it was in accounts in New York banks.
While he was accumulating this fortune, Wilby and his third wife lived in an apartment in Jackson Heights, for which he paid sixty-five dollars a month, unfurnished. It was fitted out with maple living-room, dining-room, and bedroom sets from Bloomingdale’s. Wilby’s wife, named Hazel, had been a salesgirl in the women’s-wear department at the Knott department store in Cincinnati. He met her and married her in 1940, while he was a traveling auditor for the Knott Company. A cashier in the Cincinnati store had been suspected of dipping into the till to the extent of several hundred dollars, and the management hadn’t been able to prove it. Wilby was sent out there to check up on the fellow. It was a whirlwind trip for Wilby. He trapped the cashier, turned him over to the management, met Hazel, and took her to a justice of the peace. She was just twenty-one, good-natured, extremely good-looking, and a few inches taller than the five-and-a-half-foot Wilby.
While Wilby and Hazel were living in Jackson Heights, she did not know that her husband had at his disposal any funds in addition to his salary and bonuses, and she thought his name was Alexander Douglas Hume. She called him Doug. She was his trusting partner in what their neighbors looked upon as a rather dull existence. For a few months after they were married, they went out fairly regularly to a movie, or to dinner in Manhattan, but after Wilby became chief accountant he seemed to be more closely tied to his work than most of the other husbands in Jackson Heights. He brought home a briefcase stuffed with office records and pored over them until late at night. He went on what he said was a business trip almost every week-end, sometimes rushing all the way to the Middle West and back between Friday night and Monday morning. Hazel never accompanied him. She whiled away the lonely week-ends in a house wifely manner. She had gone to Cincinnati from a small town in Oklahoma, was impressed by New York and thoroughly pleased with her husband, and soberly co-operated with him in his determination to live well within his salary and bonuses. They had a joint checking account in a Jackson Heights bank, and Wilby showed her how to keep it straight and how to detect the trouble if the bank ever made a mistake of a dollar or two in its monthly statement. She read Vogue and Harper’s Bazaar and, on the week-ends he was away, made clothes for herself, keeping track of the fashions of the day and cutting out and sewing up striking ensembles, for which she is still remembered by her former neighbors. Wilby was proud of her good looks and bragged to his friends at the office about how little money she spent on her clothes. On the rare evenings when the husband had no homework, the Humes would go out for a conservative fling at a neighborhood bar and grill, sometimes in the company of a couple who lived nearby and were their particular friends. These friends noted, to their subsequent amusement, how careful Wilby was with his money. He drank moderately, and when the four of them were together he would pay only for himself and Hazel, saying “Dutch, you know,” and leaving a dime for the bartender at the end of the evening. “He wasn’t stingy in a mean or unpleasant way, but he never threw any of that money around,” these neighbors frequently told other neighbors later on. They found Wilby always sociable and agreeable, and usually jolly and lighthearted. A photograph taken at the time shows him holding the neighbors’ baby and grinning, his hair slightly tousled and hanging over his forehead. From her greater height, the beautiful Hazel is looking down at him with an affectionate smile.
One Friday morning, toward the middle of January, 1944, when, in addition to whatever Wilby had saved out of his earnings, he had $386,921.29 at his fingertips, he stepped out of his private office at the Knott Company and dropped into the private office of Mr. Casey, the Treasurer. He told Casey that he was all tired out. The accounts for 1943 were balanced, everything was under control, and he wanted to know if he could have a short vacation. “Just a long week-end,” Wilby said. “I thought I’d run up to Canada for the skiing. Take Mrs. Hume along. I could get away tonight and be back by Tuesday.” Casey said, “By all means, Doug,” and wished him happy landings. Both men chuckled over the joke, and Wilby thanked Casey warmly. They shook hands. That night, Wilby left for Canada, taking along not only Hazel but also a briefcase, which, as she noted, and joshed him about, he kept under his arm or under his pillow the whole time. Hazel thought they really were going to go skiing in Canada.
On the Tuesday Hume was due back, Casey’s secretary brought him a telegram that caused a good deal of concern around the office. The telegram had been sent from a small town near Toronto, and it said, “Douglas has suffered broken leg skiing. Will be confined here several weeks. Letter will follow. Hazel Hume.” Casey was distressed. Hazel had not said exactly where her husband was confined, but Casey took steps to find out. He wired the manager of the Knott store in Hamilton, a town near Toronto, to check all hospitals, hotels, and nearby resorts to see if he could locate the company’s chief accountant and assistant treasurer, and then find out if poor Hume needed anything. The store manager wrote back in a day or two and said he hadn’t been able to find Hume, but that he would keep trying. A week went by and there was no further word either on or from the Humes. Then, one day, Casey began to experience a clutching sensation in the pit of his stomach. He sent somebody out to Jackson Heights to see if the Humes had returned. At the same time, he called in the auditors, told them about the skiing trip, and suggested that they get started right away on the annual audit for the year just ended. The man who went out to Jackson Heights found nobody at home in the Hume apartment. The auditors took the bales of Knott Company canceled checks for 1943, unfastened them, and added up the amounts of the checks on a squadron of adding machines. They compared this total with the total withdrawals from the Knott account, at the Fifth Avenue Branch of the National City Bank. The totals were nowhere near the same; the withdrawals were much higher. This could mean only one thing. Somebody had destroyed some canceled checks, and must have had a shady reason for doing so. The auditors rushed into Casey’s office with the bad news. After a little while, Casey telephoned the office of District Attorney Frank S. Hogan. Assistant District Attorney George G. Hunter, Jr., of the Frauds Bureau, was assigned to the case, and Hunter called in Joseph M. Gasarch, a lawyer and a C.P.A. who was then a member of the Bureau of Accounting— he is now its head—of the District Attorney’s Office. Hunter and Gasarch went over to the Knott Company and talked to the auditors. The facts the auditors had were very meager. There seemed to be a shortage of $275,984.48 in the 1943 accounts, and some canceled checks were missing. There was no legal evidence that the chief accountant and assistant Treasurer had taken the money, but it looked as if he probably had.
Gasarch, who is a chubby, bald, middle-aged man with a plodding manner and a great enthusiasm for his work, nestled down into what he recognized as a delightful situation and did not entirely emerge from it for over a year.
While the Knott Company’s auditors devoted themselves to a study of the accounts for 1943, and began to wonder whether the 1942 accounts were as nearly perfect as they had thought they were when they approved them the winter before, Gasarch noted the amounts of some of the missing canceled checks and went to the files of the Fifth Avenue Branch of the National City Bank. This is a careful branch of a cautious institution, and it makes a point of taking a photograph of the face of every check it pays before it cancels it and sends it back to the depositor. Gasarch got hold of the microfilm photograph of one of the missing canceled checks and found that it had been made out—and duly signed by the Knott check-signing machine—to a firm called Avon Mills, presumably a manufacturer whom the Knott Company had paid for goods purchased by one of its department stores. As the bank hadn’t made a photograph of the back of the check, Gasarch couldn’t tell who had endorsed this one, or even what city the firm did business in. A bookkeeping entry, however, showed that the check had come in for payment from the Trenton Banking Company, of Trenton, New Jersey. Gasarch went over to Trenton and found that the Avon Mills account had been closed some months before, but the bank officials remembered the man who had opened the account, back in March, 1943, and they had his signature on file. It was “A. D. Hume.” Nobody else in Trenton had ever heard of a company called Avon Mills. Deposits in the bank account had come to $67,857.90, which had been transferred to another bank. The Trenton bank had a record of that, too. The money had been transferred to the personal account of A. D. Hume in the National City Bank of New York.
Gasarch slid back over to New York and found that the National City Bank had carried an account for A. D. Hume, in the amount of $119,050.13, at the same time it was carrying the Knott Company account, and at the same branch. The Hume account had been closed shortly before the chief accountant and assistant treasurer left for Canada. All this was enough evidence on which to base a warrant for the embezzler’s arrest, and the police departments of various Canadian cities were, accordingly, asked to start looking for Alexander Douglas Hume. Assistant District Attorney Hunter instructed Gasarch to go ahead with his investigation and see what more he could find out. It was tough going, and Gasarch enjoyed every moment of it. Following the course of Wilby’s manipulations, he has said since, was like tracing the ins and outs of a zigzagging mountain brook that sometimes flows underground. For a while, there would be easy stretches of comprehensible book-juggling, and deep, clear pools at the bottom of which he could make out the dim trail of a Knott disbursement leaving the Knott check-signing machine and wriggling into one of Hume’s bank accounts. Then all trace of the embezzler and his defalcations would vanish, and there would be a subterranean interlude whose secrets could be explained only by the embezzler himself.
In a short time, Gasarch found that the man known as Hume had stolen the $275,984.48 between March 20th and July 8th of 1943. Exactly how the Knott Company’s machines had been maneuvered into writing and signing the checks couldn’t be determined, because the fake invoices and the secret pieces of cardboard the embezzler used had disappeared, along with the canceled checks. Gasarch did, however, discover that those checks had gone to Eastern Mills and York Mills (as well as Avon Mills), which were fictitious firms, operated in Trenton at desk space the embezzler had rented in a broker’s office. The operations of these firms consisted entirely of receiving and depositing Knott checks in four Trenton banks. Each of the fictitious firms had had deposits of from sixty-five thousand to seventy-five thousand dollars, and the total of the four accounts corresponded exactly with the shortage in the Knott bank account in New York. All the missing checks for 1943 were thus accounted for. In addition to the large sum deposited in the Fifth Avenue Branch of the National City Bank, the embezzler had put forty-five thousand dollars in another branch of the same bank, and had divided the rest of the money between branches of the Corn Exchange and the Chase National, all in the name of A. D. Hume.
When the embezzler had rented space in Trenton, he bought a beat-up second-hand desk. He did not forget this when, in September of 1943, he closed his mills and transferred to the New York banks the money the Knott Company had unwittingly disbursed. He sent the broker a check for the September rent and, with it, a letter saying he was sorry to have to inform him that he would be “vacating the desk space at the end of this month, as we have decided not to locate permanently in Trenton, at least not at present.” He had hired, on a part-time basis, a typist in the broker’s office, a Miss Wood, to do the small amount of clerical work he required, and he remembered to speak of her in a complimentary way and to refer, half humorously, half seriously, to his dilapidated desk. “Needless to say,” he wrote, “I hate to leave such good company and the excellent work of Miss Wood. And, by the way, if you should learn of anyone desiring the desk—that is, if one should call it that—I certainly would appreciate your arranging an immediate sale for it. Any price will be satisfactory, as it will, of course, be of no use in the future.” The broker sold the desk for twelve dollars, sent Wilby a check for that amount, and got another charming note from the man who signed himself A. D. Hume, acknowledging receipt of same.
It wasn’t long before the auditors at the Knott Company trooped into the treasurer’s office again and told him that the books for 1942 showed a shortage of $110,936.81. They were sure the shortage hadn’t been there when they went over the books before, they said. Some canceled checks were missing now, however. Casey told Gasarch about this, and Gasarch, with a nod and a grin, submerged himself in the 1942 situation. The embezzler had made it more difficult for himself, and for Gasarch, that year. He had scattered his fictitious firms all over New England, the Middle West, and the South, instead of establishing them in a convenient industrial center like Trenton, within commuting distance of New York, as he had got around to doing in 1943. In 1942, Wilby had manufacturers and jobbers with palms extended in Boston, Pittsburgh, Cincinnati, Buffalo, Toledo, and Jonesville, South Carolina. Gasarch discovered that the embezzler had rented desk space and had hired part-time secretaries in all those cities, but had not trusted them to do anything except receive his mail and hold it for him, unopened. The only time the embezzler could get around to his desk-space offices was on week-ends, and as Gasarch reconstructed some of those week-end trips during 1942, he was amazed that the man’s constitution hadn’t cracked under the strain.
The defalcations that year occurred between March 9th and November 13th, and during that time dozens of Knott checks went through the Knott check-signing machine and were mailed to such figments of the embezzler’s imagination as Bailey Fabrics, the Ed-stander Company, Emmons Brothers, Godshall Manufacturing Company, Frederick B. Hecht, the Package Delivery Service, the Qu’Appelle Company, and the Wayland Spread Company. When the embezzler knew that a batch of checks was in the mail, he would write or wire his part-time secretaries, telling them to hold his mail for him until noon on Saturday, and if he hadn’t picked it up by that time, to leave it with the doorman or the night elevator operator. Rushing out of New York the moment he could get away from the Knott Company on Friday afternoon, he would pick up the mail in one of the towns before Saturday noon and deposit the checks in the account of one of his various firms, and then move on. He would puff into another city in the late hours of Saturday night or on Sunday morning, pick up more checks from the elevator operators and doormen, deposit them in the banks’ overnight-deposit chutes, and then hurry back to New York in time to be at his desk at the Knott Company on Monday morning. Nobody there ever saw him looking any less fresh than a daisy.
At a bank in Toledo, the fictitious name George B. Towle had been used for an account into which had flowed some of the embezzled money. The Toledo bank wanted to be sure that this Mr. Towle was a proper man to do business with, and went to the trouble of checking his references. There is a notation on Towle’s application for an account with this bank that reads, “Expects to become a client of Wm. T. Knott Co. Gives Mr. Hume as reference.” Then, later: “Spoke with Mr. Hume of Wm. T. Knott Co., who stated he knew Mr. Towle for many years; knows Towle to be a legitimate businessman (advertising line) and that Towle expects to connect with Wm. T. Knott soon.”
To one of his part-time secretaries in the Middle West, the embezzler wrote at the height of the 1942 embezzlements that he couldn’t understand why she had not received the ten dollars he owed her for her previous month’s services. He had left a check for her in that amount with the night elevator operator, he said. “Kindly check your records again,” he wrote, “and if you have not received it, then I shall check with my bank and see if it has been cashed by the night elevator man in question.” What had happened, further correspondence shows, was that the elevator man had forgotten to give the check to the secretary, then remembered it a day or two after she got Wilby’s letter. “Delighted that your accounts are now in apple-pie order,” the embezzler wrote the secretary when he learned this.
Only one person, as far as Gasarch could determine, ever raised any question about what the chief accountant and assistant Treasurer of the Knott Company was doing during those two years. This was Dan True, who handled the accounting department of a Knott store in Butte, Montana. This Mr. True didn’t like the looks of certain freight charges that had been debited against his store by the Knott Company, and he wrote to the Treasurer of the corporation about it. The Treasurer turned the letter over to the chief accountant and assistant treasurer, and True was gently put in his place by a home-office memorandum reading as follows:
Subject: Errors in Control Accounting for Transportation.
To: Mr. Dan True.
Copy to: Mr. M. A. Casey—Treasurer, Knott Co.
From: A. D. Hume.
On the summary attached to your letter of Nov. 19, directed to Mr. Casey, I find one mistake which has apparently been overlooked, and very largely our fault, in New York. On your summary, there is no balance shown as of July 31. However, if you look at our Trial Balance run, you will find that there was a balance of $6,831.63 but this was not shown on the F-I as a separate figure but included with Merchandise-in-Transit.
This policy, for the one month of July, was followed with all stores. We had intended, of course, to follow through by actually transferring the freight balance by post-closing entry to Merchandise-in-Transit and then distributing this into purchases in the following month, thereby clearing the freight account at the end of every month, excepting for any distribution that had to be made during the following month, regardless of whether the account was debit or credit. By adding the July balance to your summary, you will find that the freight overdistributed figure does amount to a small balance in favor of the overdistribution, and that is the way your freight account now stands. With best regards,
A. D. HUME
What the embezzler was saying in that memorandum meant something more to Gasarch than it would to most people, and Gasarch grabbed hold of this relatively small example of what the embezzler had done to the Knott Company’s accounts after the money was stolen. It led Gasarch to one of the subterranean places he had hoped to get into. He traced the $6,831.63 mentioned by the good man True all the way through the Knott accounting system and was able to see how (or almost how) the embezzler had made the Knott books balance in spite of his defalcations. All the money that had been stolen had been charged to the department stores, and the charges had been so deftly distributed among the stores, in so many different ways, and with such shrewd knowledge of what accounts could stand being raised a bit here and there, that the stores hadn’t noticed it. Gasarch could now understand what had happened when the auditors went over the 1942 books. The embezzler had allowed the auditors to add all the bank statements and the canceled checks, including the ones he had himself endorsed, with the result, of course, that the withdrawals from the Knott bank account tallied with the total of the canceled checks. Then he had destroyed the canceled checks he had endorsed and had altered hundreds of entries in the books, so that, in effect, what the Knott Company had lost to him it got back from the stores, in the form of debits against the stores’ accounts, such as the freight account. Gasarch couldn’t understand, however, why the embezzler had become panicky in the middle of January, 1944, had run off to Canada, and had then disappeared so mysteriously that the Treasurer of the Knott Company had eventually got that queasy feeling in his stomach. If the embezzler had waited until the annual audit for that year was over, and had then destroyed the canceled checks, Gasarch believes the embezzlements would never have been discovered.
While Gasarch was rounding out, as best he could without the embezzler’s help, the picture of these two years of brilliant defalcation, the police of Montreal, Toronto, and Ottawa brought to a conclusion the search for Alexander Douglas Hume. They traced him to the European Theatre of Operations and found that, as a major, he was leading a battalion of Canadian troops. The Toronto police wired New York about this, adding, pointedly, that Hume had been in the Canadian Army since 1940. They also sent a photograph of Major Hume, who turned out to be a rather serious-looking chap with a face not at all like Wilby’s. Gasarch cheerfully went to work to see if he could find out who it was that had carried out the marvelous Knott Company embezzlements. He once more visited the Fifth Avenue Branch of the National City Bank. There, after days of searching through the bank’s records, he found that the man who had called himself Hume had, in May, 1943, made what to this date seems to have been the only patently careless mistake that can be scored against him in connection with the Knott Company embezzlements. He had asked the bank to buy him, with money from his personal account, a draft for fifteen thousand dollars in Canadian funds. In filling out the purchase order, he had directed that the Canadian draft be made out to “Ralph M. Wilby.” A bank clerk had written that name down in the blank space provided for the name of the payee and Wilby had then changed his mind and asked that the draft be made out to himself, i.e., to “A. D. Hume.” It was the sort of slip any man with more than one name might easily make.
Newspapers almost invariably refer to an embezzler as a man who was “a trusted employee” until he juggled his company’s funds. The hackneyed phrase is usually given a moralistic emphasis, evidently with the intention of suggesting that the behavior of the rascally bookkeeper should be regarded as particularly odious because the man’s employers had never dreamed that he might be unreliable. When the first news stories appeared in the New York papers about Ralph Marshall Wilby’s embezzlement of $386,921.29 from the Knott Company, he was described as “a trusted employee” over and over again. All the stories made a point of rubbing that in. In Wilby’s case, as in the cases of most embezzlers in these times, the cliché was inaccurate and its use indicates an old-fashioned and romantic idea of the relationship between bookkeepers and the people who employ them. The ugly truth is that the higher a bookkeeper climbs in the accounting department of a firm, the lower the estimate of his trustworthiness becomes in the minds and hearts of his employers. Although Wilby had worked for the Knott corporation for four years, had been given several increases in salary and two bonuses, and had reached the position of chief accountant and assistant treasurer before he put his stolen fortune in a briefcase, went to Canada, and disappeared, his employers, it turned out, hadn’t trusted him in the first place. One of Wilby’s best friends at the Knott corporation, and seemingly one of his greatest admirers, was the company’s treasurer, Mr. Casey. It was Casey who had encouraged and aided Wilby’s progress from the position of traveling auditor to that of chief accountant and assistant Treasurer. Yet this same Mr. Casey, acting for the corporation in what a romanticist would have to consider an abominably gelid manner, had bet the Travelers Insurance Company (which insures all kinds of people besides travelers) that Wilby would someday steal some of the corporation’s funds. The Travelers Insurance Company had bet that Wilby wouldn’t. This wager was represented by a bond of three hundred thousand dollars, the terms of which were that the Knott corporation would pay the Travelers Insurance Company an annual premium of a good many thousands of dollars as long as its chief accountant and assistant Treasurer didn’t steal any money from the corporation. If he did steal any money, the Travelers Insurance Company would reimburse the corporation for what he had stolen, up to the sum of three hundred thousand dollars.
The fact that Wilby’s employers had bet against him in this manner and that the Travelers Insurance Company stood to lose the three hundred thousand dollars unless Wilby could be hunted down and persuaded to return the larger part of the money he had embezzled from the Knott corporation was one of two circumstances that made his disappearance even briefer than it might have been. The second circumstance was that Wilby’s third wife, Hazel, was a very pretty girl. That was one reason Wilby had married her. A New York probation officer wrote of Wilby after he had been brought back to New York, “He is a man who could easily be lost in a crowd, having neither the physique nor the personality to give him distinction.” Hazel, on the other hand, had a physique, if not a personality, that gave her distinction. She attracted attention wherever she went, and was totally unable to get lost in a crowd.
The search for the man thought to be Alexander Douglas Hume was put into the hands of Fred Hains, a capable detective attached to the staff of District Attorney Frank S. Hogan. Hains, who has since become a lieutenant, has an easygoing manner, an active brain, and a worldly outlook. Before doing anything else, he wired the police departments of Montreal, Toronto, and Ottawa detailed descriptions of Hume and his pretty wife, and also gave them information about Hume’s life as it was summarized on his employment record. It didn’t look like much of a case to Hains. He is aware of, and rather entertained by, the fact that there is hardly any place in the world a crook can go now where somebody won’t recognize him, provided photographs of him are distributed with sufficient largess. He knew that in this embezzlement case the Travelers Insurance Company would be anxious to put up all the money needed for a wide distribution of photographs. The company, however, had not been able to find a photograph of Hume.
Hains went out to Jackson Heights and talked to the superintendent of the apartment house there in which the Humes had lived. He discovered that Hazel had returned to Jackson Heights on January 19, 1944, the day after Mr. Casey had received the telegram informing him that Hume had broken his leg skiing. She had told the superintendent that she and her husband were going to settle in Canada, and had paid the rent for the two months the lease of the apartment had to run. Then she had packed a couple of trunks and had the furniture crated and moved out. The superintendent said she had seemed to be in a hurry but hadn’t looked worried and certainly hadn’t acted furtive. Adding this information to what he had been told about the Humes by people at the Knott Company, Hains surmised (correctly) that she wasn’t aware that her husband had stolen a fortune. This meant that she probably would be moving around freely, wherever she was, and that her husband probably would be moving around with her. Hains talked to the Humes’s best friends, a couple in Jackson Heights. As he had hoped, they had taken a snapshot of the Humes. They found it and gave it to him. The superintendent remembered that the Railway Express had come for the trunks and the furniture. Hains learned from the express company that these had been shipped to Hazel’s parents, in Oklahoma. He took down their names and the name of the town in which they lived. He telephoned the sheriff of the town and asked him to arrange to have all mail addressed to Hazel’s parents closely watched by the post office.
After a few days, the Toronto police wired that they had a line on Hume. Then, a day or two later, the Toronto police dug up a photograph of the real Alexander Douglas Hume and sent it to Hains. Hains was able to see at a glance that this wasn’t the man who had stolen the money from the Knott corporation. Before he had time to let Toronto know about that, Toronto sent him the news that Alexander Douglas Hume had been in the Canadian Army since 1940. Hains laughed, and began to like the looks of the case. He knew now that he was after a man who had somehow been able to obtain the employment record of an honest certified public accountant, had posed as this C.P.A. in New York for four years, and had, in addition, stolen nearly four hundred thousand dollars while competently holding down the job of chief accountant and assistant Treasurer of a big corporation.
It was a week or so later that the embezzler’s actual name was discovered by Gasarch, and Hains then learned very quickly that Wilby had a record as an embezzler in California and in Ontario. The Travelers Insurance Company delightedly made thousands of copies of the snapshot of the Wilbys that Hains had found in Jackson Heights, and began mailing them to police departments, hotels, railroads, airports, and its branch offices all over the United States and Canada, along with the information that the man in the photograph was wanted for the Knott embezzlement.
Hains and a fellow-detective, George Salyka, then set out for Oklahoma. In the town where Hazel’s parents lived, they picked up from the sheriff a letter Hazel had written them after she closed up the apartment in Jackson Heights. It said that she was returning to Toronto immediately, that she and her husband were going to stay in Canada permanently, and that they were thinking of going out to British Columbia, where he had some relatives. She asked her parents to keep the furniture for a while, until she and her husband had decided where they were going to settle down. Her husband had inherited a small fortune from a great-aunt, she said, and he wanted to look around British Columbia for a good business in which to invest some of this money. Hains communicated the gist of this to Ottawa, Toronto, Montreal, and Vancouver, and was about to return to New York when his office there relayed to him a wire from the police chief of Victoria, the capital of British Columbia, that said his men had just missed Wilby at the Empress Hotel and expected to catch up with him in a day or two.
As Hazel later testified in court in New York, Wilby had by that time told her that his real name was Wilby but had not told her that he was an embezzler. When they reached Toronto, Wilby told her he had a confession to make. In his youth, he said, he had been deported from the United States because he had gone over the border without signing the proper papers. He had accordingly found it necessary to adopt an alias when he returned to the United States later. He had inherited a small fortune from a great-aunt who had died in England, and had increased it by playing the stock market, but had not paid any income tax on it. He was afraid to stay in the United States any longer, because he might be sent to jail for violating the income-tax law, and he had therefore brought his fortune with him in his briefcase, in cash and bonds. He asked Hazel to return to Jackson Heights, close up the apartment, store the furniture, and rejoin him in Toronto, after which they would go out to British Columbia, visit his relatives, find a business to invest in, and live comfortably for the rest of their lives. A trusting girl but not a dumb one, Hazel was afraid that her husband night be arrested and taken back to the United States. Wilby reassured her on this point in a characteristically businesslike manner. He took her to a solicitor in Toronto and asked the solicitor’s opinion as to whether he could be extradited for not paying an income tax. The solicitor told him he could not. Hazel asked the solicitor a great many questions and soon felt fine about the whole thing. A Canadian citizen, the solicitor told her, could be extradited only for a really serious offense, such as murder or grand larceny. Wilby paid the solicitor a small fee. Hazel came to New York, closed up the apartment, and went back to Toronto. The Wilbys then traveled, in easy stages, across the continent to Victoria. Wilby readopted his real name, and Hazel began to call him Ralph instead of Doug.
By the time the Wilbys reached Victoria, the photographs that were being mailed out by the Travelers Insurance Company had been circulated in eastern Canada, but they had not reached British Columbia. In the meantime, Hazel was noticed in a crowd in the lobby of the Empress Hotel by a photographer on the Victoria Times named Flash Strickland. He noticed her simply because she was beautiful. He uttered a low, British Columbian whistle and gaped at her. A girl in the society department of the same newspaper happened to come into the lobby at that instant, in search of news items. She asked the photographer what he was gaping at. He indicated Mrs. Wilby, who was getting into an elevator by then. The reporter went over to the desk, asked who the beautiful girl was, and copied down the name from the register—“Mrs. Ralph M. Wilby, Hamilton.” Hamilton, a city near Toronto, was Wilby’s home town. An item appeared next day in the Victoria Times to the effect that Ralph M. Wilby, of Hamilton, and his attractive young wife were at the Empress Hotel. A few days later, a Toronto paper picked up the item. A stenographer in the Toronto office of the Travelers Insurance Company saw it and recognized the name of the embezzler whose photograph had come in from New York. She told her boss, who told the Toronto police, who told the Victoria police. When the Victoria police got to the Empress Hotel, the Wilbys had checked out. They had gone to visit Wilby’s relatives, just outside town. When they returned to Victoria, a few days later, and checked into the Empress Hotel again, Wilby was arrested. That happened on the fifty-eighth day after he had left New York for the long week-end.
Hains received this news without surprise. The Travelers Insurance Company was happy, but only momentarily. The Victoria police wired the following day that when Wilby was searched he had only a few coins in his pockets, and that no money or bonds were found in the Wilbys’ baggage, and no bankbooks. Gasarch was glad Wilby had been caught, because he hoped that he would be able to have a talk with him and find out some of the things he wanted to know about the finer points of his embezzling methods. Assistant District Attorney Hunter had obtained an indictment against Wilby by this time for grand larceny, and he went to Victoria to start extradition proceedings. The Canadian law requires that before a prisoner can be extradited, sufficient evidence be presented to convince the presiding judge, for all practical purposes, of his guilt. Gasarch went along with Hunter, as an expert witness for the prosecution. Hains and Salyka went along, too, to bring Wilby back to New York.
It took four months and cost the State of New York at least ten thousand dollars to get Wilby out of Canada. He hired the best solicitors and barristers that money could buy. One of them was a former Attorney General of British Columbia. Wilby had buried some of the stolen money in tin cans in the back yard of a house he had bought on the outskirts of Vancouver, and he had buried some more of it along a highway near Victoria. Hazel later testified, in New York, that she had dug some of this money out of the ground with her own hands and given it to the Canadian attorneys. The Canadian attorneys, still later, asserted that they hadn’t dreamed it was stolen money, and nobody was ever able to persuade them to give any of it back, either to the Knott corporation or to the Travelers Insurance Company. Exactly how much they received has never been established. The extraordinary vigor with which they fought for Wilby indicates that they were being well paid or else that their devotion to him was a fine and touching thing. They appeared in court in Wilby’s behalf on twenty-three occasions, obtained three writs of habeas corpus for him, appealed when the courts refused to sustain the writs, and were preparing an additional appeal to the Privy Council in London, when Hains and Salyka, taking advantage of a momentary hiatus between writs of habeas corpus, at last managed to grab Wilby and bring him back to Seattle in a small fishing vessel. They had almost got him out of Canada between writs once before that, but Wilby had raised an outcry while he was under their custody in a hotel and had persuaded Canadian police to take him away from the New York detectives. By the time the Canadian police were persuaded that Wilby was not being kidnapped, his attorneys had obtained another writ. Hunter, along with a Canadian barrister the New York District Attorney’s office had retained, fought Wilby’s lawyers with determination, and even brilliance, but, as Hunter wrote, “such strange things have happened that we cannot count on anything.” Wilby conducted himself all this time with the self-righteous dignity of a man of consequence who is being unjustly persecuted. He did not deny having stolen the money, but he was convinced that he shouldn’t be extradited for that. He was standoffish with the New York detectives during the short periods they had him in custody between writs. Casey, the Knott treasurer, went to Victoria and talked to Wilby in jail, and Wilby was outraged when Casey asked him please to give up the battle, come back to New York, and straighten out the Knott books. “The books are in a mess, you know,” Casey said to Wilby mildly. Wilby told him indignantly that the books were not in a mess—that they were in perfect balance, since every penny he had stolen had been carefully charged off to the department stores. On the train back to New York from Seattle, Wilby relaxed somewhat with the detectives and played gin rummy with them for small stakes. “He’s a lot of fun to be with, in many ways,” Hains said later.
Locked up in the Tombs, Wilby refused for weeks to tell Gasarch what he wanted to know, and also refused to tell the Travelers Insurance Company whether he had any of the stolen money left and, if so, where he had hidden it. He hired an attorney with what the attorney says he hopes was not stolen money, and he finally persuaded Wilby to plead guilty. Before Wilby did so, however, he made a bargain with the Travelers Insurance Company that was as original as his methods of embezzlement. He offered to tell the company where it could find around three hundred thousand dollars of the stolen money if it would give him ten thousand dollars for himself. The company took this up with various surety companies, representing various banks, all of which might have had to assume responsibility for Wilby’s fraudulent checks and therefore stood to gain if Wilby returned three hundred thousand dollars of the stolen money. Wilby’s argument was that he had had ten thousand dollars of his own money when he went to Canada, in addition to the stolen money. He had, of course, stolen $386,921.29, but, he said, he had given about eighty thousand dollars of it to his Canadian barristers and solicitors. Nobody could find out whether this was true or not, but Wilby was in a strong position to bargain, because he was offering three hundred thousand dollars for ten thousand dollars. The Travelers Insurance Company and the surety companies, all of which were to reduce their losses on a complicated percentage basis through any of the stolen money that was returned, mulled over Wilby’s proposition for several weeks and finally accepted it. After Wilby had been given a certified check for ten thousand dollars, he told an attorney for the Travelers Insurance Company where what remained of the stolen money was, and the attorney went to Canada and dug it up. It came to three hundred and three thousand dollars.
IN A CO-OPERATIVE mood now, Wilby not only talked to Gasarch and gave Casey and other Knott people useful tips on how the tangled books of the corporation could be straightened out but also wrote, while in the Tombs awaiting sentence, a ten-thousand-word document that discussed, with the cool detachment of Napoleon’s review of the battle of Waterloo, the ups and downs of his two years of embezzling from Knott. The first third of this statement of Wilby’s was a masterly explanation of what the Knott accounting system was and how it worked. It told how the department stores managed by Knott sent in their invoices for goods purchased—these invoices are “aprons” in accountancy terminology—and how these aprons were put through the human workers and the business machines so that, at the other end of the system, checks for the manufacturers and jobbers emerged from the Knott check-signing machine. Wilby mentioned by name the various Knott employees who were in charge of sub-departments of the accounting department, and told what their duties were and how well they performed them. Then he quietly started a new paragraph, to explain how he did what he did to the Knott corporation, like this:
As to my defalcations, no fixed course was followed throughout excepting in the year 1943, when they followed a more or less similar routine. During 1942, the methods differed largely from those used in 1943.
In 1943, the course was, to a large extent, as follows: At some time before or after a batch of original aprons had been received from the department stores and distributed by Miss Catala, I would insert a further apron or aprons payable to “my” companies and would correct the accompanying listing by either running a new adding machine tape or making penciled corrections on the original listing that the store had prepared. On other occasions, I took an apron that was payable to some vendor from the originals sent out by the stores and assuming, for example, that this apron was for $235, and payable to John Doe Co., I would add a “6” in front of this amount, thus making the corrected amount “6235” and would erase the name of the original vendor and insert the name of “my own” company. This made changing the store’s listing comparatively easy. Then, of course, I would make a further apron just exactly as the store had originally made it and either add it to that day’s aprons and listing, or else to a following day’s.
So there were several methods by which the aprons payable to “my” companies were supplemented into the various stores’ original aprons and listings, but it all adds up to the same thing, that they were included without any difficulties.
As I mentioned before, sometimes they were added before Miss Catala received the mail, which was no trouble, as it was merely a matter of taking an envelope from her desk before her arrival in the morning, or getting it from the mailing department before the distribution was made to Miss Catala’s desk on the pretense that I was anxious to get some store’s reports. As original aprons were coming in from every store on each day, one just couldn’t avoid getting an envelope with some of these original aprons in them. On other occasions I waited until the original aprons were in the course of being mailed before the addition of aprons to “my” companies.
If this act was after the control clerk had noted the original total, I would merely change her figures upon my apron insertion. If my step was taken after the coding, I would have to correct the control figures and would code the apron myself. As I could handle practically the functions of every accounting employee, whatever method followed presented no great difficulties. As soon as the apron was added to a store’s listing, “my” apron thereafter followed a normal course, which I naturally permitted, up to a certain point.
The number of settlement checks issued and mailed by Knott averages between 600 and 700 daily. Many more settlement checks, as a rule, are outgoing on Fridays from Knott’s than on other days. I had learned from experience that checks mailed by Knott on Friday evenings did not reach “my” offices or post-office boxes by early Saturday mornings, when I went to make bank deposits for “my” companies. But Saturday mornings were practically the only occasions on which I could arrange to be in Trenton, or the other cities, during banking hours, and unless I could actually gain possession of “my” checks on Friday at the Knott office, it meant a delay of one week in “my” deposits. This was contrary to my policy of getting the deposits in the banks just as soon as possible and to withdraw the funds as soon as it appeared to be safe, without arousing suspicion and, of course, always allowing sufficient time for their complete clearance.
Therefore, always on Fridays, and generally on every other day also, I would arrange to get those checks payable to “my” companies just before the final functions were completed by the Knott office staff, and would complete these functions myself and then pocket the checks so that I could take them with me for the earliest possible Saturday deposit. There were two or three other reasons why I invariably tried to follow this plan of completing “my” checks myself and gaining possession of them before they left the Knott office.
One of the other reasons was that during the year of 1942, I allowed several of “my” checks to be completely handled by the Knott staff and thereafter my earliest chance to pocket these checks was after they had reached the mailing room. I took these from the mailing room, but they were missed, as their count and the number as per the scratch pad notation was not in agreement. This discrepancy was reported to the audit department head, Miss Murphy, and she, in turn, criticized her clerk, who had inserted the checks in the envelopes and had counted and taken them to the mailing room. Miss Murphy had believed that this clerk was careless and even considered removing her from that capacity. Thereafter, I never resorted to such practice again, because I hated to see the clerk get in trouble through no fault of her own.
There was one method which would have been the easiest course of all—this being to have a notation made on the check, at some point of its preparation, that it was to be given to Mr.
Hume upon its completion. But I considered such policy much too risky, just in case some question might be asked or raised about the check during its preparation, and consistently being a sizable amount, this was quite possible, so I did not wish to have my name associated with any of “my” checks whatsoever so far as the Knott office was concerned.
Another reason for my favoring and arranging to complete the functions of “my” checks, and then pocketing them, was that, one time early in 1943, I had allowed one or two checks to be completed in all functions by the accounting staff and to be mailed out by the company, as was the normal course for all other checks. But one of these letters bearing a check to “my”
Avon Mills never reached Trenton until one or two Saturdays following the week it should have been there in the ordinary course of events. I was literally sick with worrying—naturally imagining everything. This envelope finally arrived, bearing the notation that it had been sent to Chicago, Ill., in error by the post-office department, though it had been correctly addressed.
The mistake troubled me sufficiently that I did not allow any more checks to be completed and mailed by the office and the mailing staff of Knott’s, though I did mail such checks myself.
Wilby proved to everybody’s satisfaction, in his written statement and in conversations with Gasarch and with people from the Knott Company, that he had worked entirely without confederates. None of the human workers in the Knott accounting department were blamed because Wilby had done what he had done. Some of the business machines were criticized, however, and were later taken apart and put together again, after certain newly devised safeguards, which Wilby’s methods seemed to make advisable, had been added. But it was felt by people who know and work with such machines that if the machines had been able to talk, as well as think, they would have spoken to somebody about Wilby long before his disappearance caused the corporation to suspect that he had not been honest with it.
Wilby, it turned out, might have gone on stealing from the Knott corporation in 1944, and for years afterward, as he had done in 1943 and 1942, if it had not been for the Federal Bureau of Investigation. The connection of the F.B.I. with the Wilby case has not been mentioned in the published chronicles of J. Edgar Hoover and his G-men, but it was the F.B.I. that caused Wilby to leave the Knott corporation when he did. Wilby had covered up his defalcations with such impeccable technique that he would probably never have been suspected of wrongdoing if he had stayed around to steal some more in 1944, or if he had at least waited until the annual audit of the corporation’s books was completed, in the winter of 1944, and had then just resigned after shaking hands all around. Instead, he left in a hurry. As he explained in the document he wrote in the Tombs, he had outwitted everybody but he had not been able to foresee the interest of the F.B.I. in his operations. The F.B.I. had no suspicion that he was an embezzler. It thought it was on the trail of a Nazi Fifth Columnist, and had done everything but alert Walter Winchell for a scoop. Wilby had taken no precautions against that kind of thinking. Something of a philosopher, he has possibly reflected, in the years since all these things happened, that the three circumstances that led to his downfall make a crazy pattern, sort of like life. In Hazel’s beauty there was truth; the fact that the Knott corporation had mistrusted him all along had about it a flavor of irony; and the F.B.I. contributed a comic ingredient.
In 1942, Wilby related in his confession, he had some Knott checks sent to a fictitious jobber in St. Louis, to whom he had given the name Frederick B. Hecht. It never occurred to him that the fact that it was a German name was going to get him into trouble with anybody. That’s what happened, however. In those days, the F.B.I. checked up on all sorts of bank accounts all over the country, and especially those in German names. An F.B.I. man going over the records of Wilby’s St. Louis bank came across the Hecht account and asked the bank who Hecht was. The bank knew only that a number of Knott Company checks had been deposited in the account. It sent a man to New York to inquire of the Knott Company about Hecht. He was referred to Wilby, who requested time to look into the matter. “I busied myself towards being able to present the proper invoices for Hecht at my next meeting with the bank’s representative,” Wilby explained later in the statement. He drew up some new fake invoices, having destroyed the old fake invoices, and thought he had convinced the bank that Hecht was a legitimate jobber who was not engaged in un-American activities, but eighteen months later the F.B.I. still had the Hecht account on its mind. One evening in December, 1943, an earnest young F.B.I. man came out to Jackson Heights to see the Knott corporation’s chief accountant and assistant Treasurer about it. The F.B.I. man told Wilby frankly that he hadn’t been able to find Hecht anywhere. He was positive that Hecht was a Nazi Fifth Columnist, he said, and he asked Wilby if he couldn’t think of some clues that might lead to the discovery of Hecht. “I gave some false clues to the F.B.I. man about Hecht,” Wilby wrote. “In the next two or three weeks, the F.B.I. man called on me at the Knott office on two further occasions to obtain further information about Hecht. I continued to furnish misleading advice, though I realized that the time for a showdown was rapidly approaching.” Wilby did not wait for the showdown.
There was an extended hearing before Judge John A. Mullen, in the Court of General Sessions, when Wilby appeared for sentence, on February 1, 1945. Wilby’s New York attorney argued persuasively for leniency, pointing out that the amount of money Wilby had restored represented something of a record. Judge Mullen, however, pointed out that this had been made possible only by the fact that the amount of money Wilby had stolen also represented something of a record.
Hazel testified at length and convinced Judge Mullen, as she convinced everybody else, that until Wilby was arrested she had not known he was an embezzler. “When I married my husband,” Hazel said, “I didn’t know how much money he had. The reason for that, I asked him one time and very politely he refused to answer my question. I thought perhaps I was being a little too inquisitive, and, therefore, I never asked him again. I knew nothing about his financial affairs.”
“I know,” Judge Mullen put in. “My probation report indicates that she did not have any reason to believe that her husband had ever taken any money, because it was not spent on her and it wasn’t spent on anybody else.”
Hazel was asked when it was that her husband had told her he had come into a substantial sum of money, and she said it was on the train going to Canada.
“How did the subject come up on that occasion—do you remember?” the Judge asked.
“Yes, I do,” Hazel said. “He was carrying a little brown brief case and out of just one of those questions I said, rather jokingly, ‘What have you got in there?’ And at the time I don’t remember exactly what he said, but, as I recall, he said, ‘Well, that consists of our worldly wealth’ or some little remark like that.”
“And what did you say—anything?”
“Well, I said, ‘Don’t leave it lying around. You’d better take good care of it.’”
Later on in the hearing, Wilby’s attorney made a rambling speech about Wilby’s earlier embezzlements and emphasized the fact that Wilby had always lived economically and was highly regarded by all three of his wives. “I am trying at least to indicate what went through Wilby’s mind,” he concluded.
“That, I am afraid, we will never know,” Judge Mullen said.
The Judge had weighed the facts in the case with a good deal of care before this hearing, and he weighed them some more before he pronounced sentence. The facts were not easy to weigh. Wilby’s attitude toward embezzlement seems to have been the only flaw in an otherwise perfectly sterling character. He had never been charged with breaking any statutes except those having to do with embezzlement. Embezzlement is a statutory felony both in the United States and in England these days, but Judge Mullen was aware that before the sixteenth century it was not a crime in English law, because it was not regarded as an offense against the people. In those days, it was thought to be laughable rather than criminal and was not to be judged the same way theft was, because the embezzler merely takes money that he has been hired to handle. The only recourse the owner of embezzled funds had, under English law, was to sue the absconding bookkeeper in the civil courts. King Henry VIII, who had himself been humbugged by embezzlers, promulgated the first anti-embezzlement statute in 1592. New York revised its anti-embezzlement statutes as late as 1942 to plug up some loopholes that had offered advantages to certain types of embezzlers. Judge Mullen was also aware that embezzlement is still not generally regarded as a crime against the people, and that courts often give embezzlers suspended sentences or very short prison terms if they make restitution of the funds they have stolen. He was aware that the Knott corporation had lost nothing, because Wilby had restored three hundred and three thousand dollars of the stolen money and the Travelers Insurance Company bond had easily covered the additional $83,921.29. The Travelers Insurance Company had lost something, but, on the other hand, its premium rates allow for just such losses, and it had not suffered any more that year than in any other year, and had shown a handsome profit in spite of Wilby. The same was true of the surety companies and the banks. Wilby, however, had cost the people of the State of New York at least ten thousand dollars just to get him out of Canada, and the fact that firms like the Knott Company must pay for large bonds for employees like Wilby means that this additional expense is passed along to the consumer. Judge Mullen is a jurist who does not believe in punishment except when it can serve as a deterrent. He couldn’t help feeling that if Wilby, with the ten thousand dollars in his pocket that he had got from the Travelers Insurance Company, was given a suspended sentence, or even an especially light sentence, he would be a foolish man if he didn’t go right on embezzling for the rest of his life. Judge Mullen therefore sentenced him to from five to seven years in Sing Sing. Wilby’s behavior there has been good and he will be out soon. Like her two predecessors, Hazel applied for an annulment and got it. She became a model for a while, married again, and is living happily in New York. When Wilby leaves Sing Sing, the immigration officers intend to ship him back to Canada at once.