National Affairs: Scandal in San Francisco

Last August, when John B. Dunlap took over as U.S. Commissioner of Internal Revenue, he let it be known that the bureau was in for a well-deserved house cleaning. In Boston and New York, grand juries were already investigating the bureau’s offices. In St. Louis, a collector had resigned under fire. One of Dunlap’s acts was to send a team of special investigators to San Francisco.

Dunlap’s men last month uncovered “certain manipulations” of the books and got a confession from Edwin M. Furtado, chief of the accounts section. He had been predating receipts to help taxpayers avoid penalties.

When the news got to Washington, Furtado’s boss, Collector James G. Smyth, was promptly suspended by the President. Less than an hour later, Dunlap held a press conference and announced the removal of six more San Francisco tax officials. Smyth and his lieutenants, explained the grim commissioner, were being removed for “incompetence.” They should have known what Furtado was doing and stopped it.

Before Dunlap’s conference was over, he was handed a telegram from San Francisco. After a hasty reading, he slammed his fist on his desk. “Here’s another,” he announced in angry exasperation. Dorothy C. Frisbee, a 14-year veteran of the bureau, had admitted to embezzling $5,000 from the employees’ credit union. Dunlap signed her suspension order on the spot. In San Francisco, Smyth insisted that he and his men were taking a “bum rap,” yet Smyth seemed to have an extraordinarily relaxed attitude toward his job. According to the Kefauver Committee, Smyth was two years late in collecting some of his own income tax. “Hell, I hadn’t done anything crooked,” he explained. “I didn’t pay the tax because I didn’t have the dough.”