Business: Ledger B

Otto Van Derck was getting $15.50 per week as a clerk in Chicago’s Amalgamated Trust & Savings Bank. A dark-haired, personable youth of 23 whose duties included handling the check entries in the A, B and C ledgers, he planned to marry on Thanksgiving Day. But last week Otto Van Derck spent what was to have been his wedding day in jail. He had confessed to aiding and abetting two of his B customers in a $54,000 swindle. His confession cracked in time’s nick a dazzling plot to gut a life insurance company with $70,000,000 of policies in force.

Sad Otto Van Derck was taken in by two notable persons. Dave Barry was the notorious long-count referee of the second Dempsey-Tunney fight in 1927. Lately he has been running a saloon on Chicago’s West Madison Street three blocks from Clerk Van Derck’s bank. At Amalgamated Dave Barry kept a joint account with Joseph Baiata, a onetime barber who is supposed to have taught Charles Ponzi all that swindler knew. Joe Baiata served five years in jail for helping himself to $200,000 in a Massachusetts bank, and be fore that he helped wreck a big Buffalo insurance company. In his earlier days his favorite method was first to found a bank, then loot it.

Messrs. Barry & Baiata often overdrew their joint account at Van Derck’s bank but always they made good — until last April. Then one day Baiata invited Van Derck to drop by the Barry saloon for a friendly beer. Barry & Baiata explained that the saloon had just been redecorated and $172 was due the contractor. Would Van Derck honor a check for that amount until the brewery, as was customary, reimbursed them for the redecorating? Van Derck, to oblige, doctored Ledger B.

Instead of covering the shortage, Barry & Baiata soon approached Van Derck with a proposition for “financing” in the same manner a “Barry Special” train to the Carnera-Baer fight in Manhattan. That, they said, would net sufficient profits to pay off the $172 shortage, leave something extra for all. The “Barry Special” was a flop, and Clerk Van Derck, now into the bank for $1,100, was asked to finance two concessions at the Chicago Fair — a Chinese Show in The Bowery and the Hall of Champions where a stable of broken-down fisticuffers pummeled each other nightly. Both were miserable failures and the Van Derek deficit climbed to $25,000.

Late in the summer Swindler Baiata began to glance wistfully at Abraham Lincoln Life Insurance Co., which had $13,000,000 of perfectly good assets. Working control could be bought for $400,000. Gathering about him a crew of sharpers, Mr. Baiata arranged to buy the company for $25,000 down, the balance in instalments. Clerk Van Derck provided the down payment from Ledger B.

Neither Baiata nor his lawyer, one Abraham Karatz who had been a barker all summer at the Hall of Champions, took office. For president of Lincoln Life they dug up a bald, scrubby-mustached man named Gustav Lindquist who had once been Minnesota’s insurance director. Installed as treasurer was a young gentle man who ran the dice game at Michelob’s Tavern on State Street.

Apparently the scheme was to substitute “hot” (stolen) bonds, which could be purchased for 10¢ or 15¢ on the dollar, for the securities in Lincoln Life’s vaults. For this mulcting process the sharpers needed a no-questions-asked bank to act as 1) a depository where loans could be made on the outflowing Lincoln securities, and 2) a reputable vendor of the inflowing “hot” bonds, so that the state insurance department would not be suspicious. With out much trouble, Baiata & friends found a bank for sale in Indianapolis. The dice-playing treasurer swept up an armful of securities from the Lincoln vaults, wrapped them up in a newspaper and hurried to Indianapolis to show the bank’s officials he meant business.

Meantime Baiata was having trouble with the second $25,000 instalment. A onetime broker’s clerk who was in desperate need of a new set of lower false teeth was outfitted from Boston Dentists and set up as W. W. Ehlers & Co., Investment Brokers. It was his job, through a miraculous system of checks and drafts, to use funds from the Lincoln treasury to pay for the Lincoln company. But the ring-around-the-rosy scheme went askew in St. Paul, where a bank refused to honor Ehlers’ signature. President Lindquist scurried up to St. Paul to see his wife and children, and pick up the unhonored draft. By no means embarrassed, Baiata calmly called on Otto Van Derck for another $25,000 piece of “financing.” That was too much for the young bank clerk. Prompted by his 22-year-old fiancee, he told all to the police, who dubbed him the “world’s biggest sucker.” All he had received from the $54,000 actually swindled was $200 and a few beers.

Baiata and his cronies were on the point of sealing the deal with the Indianapolis bank—the signal for the looting to start—when they were rounded up and Lincoln Life remained unravished. Last week it was quietly sold to rock-sound Illinois Bankers Life Assurance.

President Lindquist promptly fled. His lawyer gravely observed that he might have died by his own hand.

When the Baiata gang stepped into Lincoln Life the biggest stockholder was Harmey B (for nothing) Hill, who stayed on as board chairman. Supposedly ignorant of the plot, he was nevertheless ousted by the authorities along with the Baiata regime. Last week newshawks found him still at his office, a quid in his cheek, a book on his desk called Why Worry? What did he have to say? “I’ll have plenty to say—when the time comes.”

That time never came for Harmey B Hill. Next day at dusk his body was found in his sedan on a roadside three miles from his home town. In his head was one bullet, in his hand a gun with one shot fired. But through the car’s windows were also five bullet holes.