The Press: Hodge-Podge

Basil Walters, ruddy, snow-topped executive editor of the Knight newspaper chain, was chomping his cigar in his Chicago Daily News office one morning last May when a visiting politician handed him a king-size story to bite on. The politician’s tip: Illinois State Auditor Orville E. (for Enoch) Hodge’s office was in deep financial trouble. The tip was surprising, since Hodge, often mentioned as a Republican candidate for Illinois’ governor in 1960, is a popular official who has created the impression that he has a private fortune to support his expensive tastes, e.g., monogrammed silk sheets, two private planes.

“Stuffy” Walters, an oldtime reporter himself, passed the tip along to the Daily News’s top expose expert, Capital Correspondent George Thiem (pronounced theme), told him to start digging. As Thiem, 59, began to turn up pay dirt, most other Chicago papers ignored his story. But by last week Thiem’s digging had unearthed the biggest state scandal in years, spread it across Page One in Illinois papers from Waukegan to Cairo. Fearful that the scandal could rock Republican chances at the polls in November, Governor William Stratton last week ordered Auditor Hodge to 1) withdraw as a candidate for reelection, 2) double his surety bond (to $100,000) within 20 days or be fired.

Unaudited Auditor. Reporter Thiem, a 1949 Pulitzer Prizewinner (with the St. Louis Post-Dispatch’s Reporter Roy Harris) for his series exposing state payoffs to 51 downstate editors during Governor Dwight Green’s administration (TIME, May 9, 1949), started out by delving into Auditor Hodge’s payroll. Right off he found that the list was padded with a Hodge-podge of political bosses, cronies and relatives of the auditor, even included Hodge’s personal airplane pilot as a $525-a-month “clerk.” Asked why Saline County’s Democratic Chairman Harry Erton was on the auditor’s payroll at $600 a month, Republican Orville Hodge blandly explained: “I’m interested in getting votes, too.”

Newsman Thiem soon discovered that the cost of running the auditor’s office was so high that in May 1955 Hodge had been forced to ask the legislature for an emergency appropriation. Of $1,450,000 in six key accounts that was supposed to last two years, only $33,000 remained; in one account, a two-year budget of $197,832 was down to $8.33. Thiem also found that the auditor’s office, which is required by law to check the books of all Illinois state departments, had not turned in an audit on its own books since Hodge took office in 1953.

“Unsuspicious Circumstances.” Thiem reported that Hodge had charged the state $5,267 for his suite in Springfield’s St. Nicholas Hotel, used state funds to pay for maintenance of his own Beechcraft Bonanza and twin-engined monoplane. Hodge angrily barred newsmen from his records. But Thiem had foresightedly jotted down the numbers of some checks he had spotted in Hodge’s office. From microfilmed copies of the checks in the state treasurer’s office, Thiem was able to track down the recipients. He reported that one $9,000 check had been made out to Chicago Attorney Thomas H. Fitzgerald, though Fitzgerald protested that he had never seen the check, was owed no money by the state. Of 15 persons to whom Thiem traced checks totaling $180,000, seven denied cashing the checks.

Most of the suspicious checks carried Hodge’s facsimile signature; many had apparently been cashed fraudulently; e.g., Springfield Businessman Clarence J. Reuter pointed out that a $10,385 auditor’s check supposedly signed by him was incorrectly endorsed “J. C. Reuter.” Moreover, said George P. Coutrakon, state’s attorney for Sangamon County (county seat: Springfield), many of the checks in question had been cashed in “suspicious circumstances” at Chicago’s Southmoor Bank & Trust Co., which, as a state bank, was under Auditor Hodge’s jurisdiction.

Interior Decorators. The Southmoor Bank, Reporter Thiem disclosed, held a $24,000, low-interest (35%) mortgage on Hodge’s $25,000 lakefront Springfield home. The News also reported that some $450,000 in checks from Hodge’s office had been paid in two years to Fabric-Craft Sales Corp., a one-room Chicago interior decorating service headed by Mystery Man William Lydon, a policeman who was once indicted (and later acquitted) in the murder of a Chicago madam. Fabric-Craft and two other companies headed by Lydon listed two Hodge aides as officers: Chief Personnel Officer Lloyd Lane and Administrative Assistant Edward A. Epping. Epping, half owner of an accounting firm retained by the auditor’s office, was accused by a Southmoor Bank attorney of cashing $240,000 worth of suspicious checks.

Last week the FBI, T-men and state budgetary commission agents were all investigating Hodge’s office. At week’s end Edward A. Hintz, who was ordered to appear this week before grand juries in Chicago and Springfield, resigned as president of the Southmoor Bank. Altogether, said authorities, the phony checks may cost the state as much as $1,000,000.