of the important men in Chinatown. He stated that he was able to buy
opium at $27.50. The smugglers insisted on $30. After much haggling 20
cans were sold at $28.50. Here was a profit of $470.
But Doctor Yen was to be counseled on a much more important matter. He
was to be told of the proposal to purchase a boat for the opium traffic.
He was to be asked to guarantee the purchase of large amounts of opium.
The old Chinaman became greatly excited. He ran to his safe and came
back with $10,000 in currency. He was willing to put up this money for
its value in opium at $27.50 a can as soon as delivered. When that was
gone there would be other money. He alone would make the owners of the
boat rich.
In Boston was the actual headquarters of Peterson and Flavot. A Jew by
the name of Ferren was their financial backer. It was Ferren who had
put them into the business. When Ferren was told of the proposed
enterprise he would not at first listen to it. He would have to be shown
that this Mr. Gard was on the level. There were too many eyes watching
for opium.
Peterson told of the credentials, and finally succeeded in convincing
him that Gard was what he purported to be and, gaining confidence as the
plan developed, the Jew finally became enthusiastic. In the end he vied
with Doctor Yen in his anxiety to purchase unlimited opium.
Gradually Gard granted that he was convinced of the feasibility of the
scheme, if he were shown the possibility of getting the schooner into
the States. It was at this point that he was introduced to one Captain
Bailey, who had, some years before, figured in a very sensational
attempt at the introduction of Chinamen from Canada and their landing at
New Haven. Bailey had been caught, had served a term in prison, and,
since his liberation, was running a fish stand in Boston market.
But Bailey knew all the coves in the Atlantic and the gulf into which a
boat might put. He knew every dock where she might tie up, and the time
that must pass thereafter before it would be safe to put his men
ashore. Operating from Jamaica there was none of the danger into which
he had run in bringing Orientals from Canada.
Eventually the papers were drawn, setting forth conditions under which
all these men entered into a partnership in this smuggling venture.
Gard, Ferren, Peterson, Flavot and Bailey had all signed, and Gard had
gone to New York to get the signature of Doctor Yen. The district
attorney's office in Boston was prepared for the arrests when the papers
should finally be signed. When Doctor Yen affixed his signature Gard
signaled an associate across the narrow street in Chinatown. He sent the
flash to Boston and the trap was sprung.
[Illustration: "WHEN DOCTOR YEN AFFIXED HIS SIGNATURE GARD
SIGNALLED"--_Page 135_]
So were all the inside facts of this most aggravating system of
smuggling revealed. With these facts in hand, the Government had little
difficulty in breaking up a system that had been causing a lot of
trouble for a decade.
So, also, was one of the most complete and successful cases of "roping"
that any of the Government agents had ever attempted carried to a
successful termination.
VII
A BANK CASE FROM THE OUTSIDE
"It is astonishing," said Gard, the bookkeeper, "how few people know
anything about their own business. Take bank accounts, for instance.
Many people have money in the bank which lies there inactive. There is
not one man in five, having such an account, who can tell the amount of
it."
This statement was launched during the evening meal at Mrs. Hudson's
very respectable boarding-house in the prosperous little town of New
Beaufort, which slumbers in one of the valleys of central New York.
"I must take issue with you there," ventured the elderly rector of the
Episcopal church who, being a widower, boarded with Mrs. Hudson. "I, for
instance, have managed to save a little money for old age and I can tell
the amount of it to a penny."
"And I know just how much I have on deposit," insisted Miss Dolan, the
school-teacher.
"And I am quite sure of mine," asserted a buxom widow who had collected
life insurance.
"As a test of my contention," said Gard, "I am willing to pledge a box
of candy to each of the ladies and cigars to the gentlemen who will set
down the exact amounts of their inactive accounts in the First National
bank and then prove their figures correct by application to the
cashier."
This proposal appealed to those who had been drawn into the incipient
controversy. Next day they asked for the figures, and each had won his
reward. Gard seemed chagrined that his theory should have thus gone to
the winds, but he cheerfully stood treat.
For he had established a fact very important to him. The inactive
accounts of the First National bank of New Beaufort were intact.
This was one of the first steps in an investigation of a financial
institution which, while seemingly in the best of condition, was
suspected of having been looted for hundreds of thousands of dollars.
Special agents of the Department of Justice knew that an official of
the bank had been trading heavily in Wall Street and that he had lost.
Gard, a member of this new detective force of the Federal Government,
had been sent to investigate. Representing himself as a bookkeeper he
had secured a position with the leading grocer and had come to board
with Mrs. Hudson.
He stayed three months. At the end of that time he reported the
shortage, fixed the blame upon the man responsible for it, showed the
methods used, cited the accounts from which the money had been stolen,
told what accounts were still intact. Yet he had never been inside the
bank, had seen none of its books, had consulted with nobody familiar
with them, had received no confessions. The manner in which he
accomplished these seemingly impossible ends illustrates most
excellently the methods used by this new detective agency of the
Government.
It was a strange conspiracy of circumstances that brought to New
Beaufort detectives from three different services on the night, two
months later, that Conrad Compton, the enterprising citizen and banker,
was giving his big party.
There was McCord, a plain-clothes man from New York. McCord would not
have been in New Beaufort but for the ramifications of the New York
police department in keeping track of these middle class criminals who
live through the trade of burglary--a calling that is sometimes refined
to art. And the police department would not have come into possession of
a certain tip if "Speck" Thompson had not done his bit up the river and
returned to his old haunts so broken that he chose to become a stool
pigeon because he was no longer up to second story work.
Speck had found that "Dutch" Shroder had arranged to crack a safe and
that the scene of the cracking was New Beaufort. He had tipped the
matter off to the police, and hence McCord's presence in a community
that was far from metropolitan. He represented the first of the
detective services.
The second such service was represented by Ogram Newton, a bank examiner
in the service of the treasury department. His district was central New
York. For three years he had been taking an occasional look into the
books of the various national banks of his district, checking up assets
and liabilities, inquiring into the value of the paper held by the
banks. Two weeks before Conrad Compton gave his party Newton had been in
New Beaufort and had gone thoroughly into the affairs of the bank. Its
books were models of efficiency and there was no flaw to be found in any
of its securities or loans. Newton had given the institution his O. K.
and had passed on to other towns.
But there was a feeling of unrest that haunted the young examiner. It
seemed that his subconscious mind was aware of an oversight that had
been made by his working faculties. He was not able to sleep well of
nights, and in his sleep the various accounts of the New Beaufort bank
insisted on visualizing themselves. Finally the recurring accounts
eliminated themselves with the exception of one which persisted. The
loans and discounts account kept thrusting itself into his
consciousness.
"By Jove!" he exclaimed suddenly to himself. "The entries in that
account, the amounts of money that have been run through it, are out of
all proportion to the other business of the institution. Something is
wrong with loans and discounts."
So Newton hurried back to New Beaufort and was that night a guest at
the party given by Conrad Compton, with whom he had built up a
friendship through years of association in the line of his work. He was
to take a further look at the loans and discounts on the morrow.
The Department of Justice is the prosecutor in cases of violations of
the national banking law. Its work is entirely apart from that of the
bank examiners of the treasury department. The New York office of this
service, as a matter of daily routine, received the information that
David Lorance, assistant cashier of the First National bank of New
Beaufort, was regularly placing heavy buying and selling orders with a
certain broker in Wall Street.
For this reason, Agent Gard got the assignment to come to New Beaufort,
and was thus the representative of the third detective service. His
windows at the grocery store looked out upon the side door of the bank
opposite. He was bland and inconspicuous, but he was an expert
accountant, had taken a degree in the law and worked three nights a week
in the gymnasium in New York when he was in town.
The Compton home stood on a hill just back of the town. It was known as
Stone Crest and was the most ambitious establishment thereabouts, being
always pointed out with pride to visitors. The banker was a widower, but
given to entertainment and to charity. The members of the board of
aldermen often met at Stone Crest to discuss those matters that had to
do with the well-being of the town. Teas were given there whenever its
charitable women were inaugurating some new venture. The party to-night
was a semipublic affair, for it was in commemoration of a centennial
anniversary of that occasion when the first settlers had fought off
attacking Indians from their stockade through a day and night.
Conrad Compton was a tall, graceful, nervous man, with a high forehead
and a mass of wavy hair. His features were of a perfect regularity and
the whole face was so small as to give it somewhat the appearance of
that of a woman, an impression that was heightened by its absolute
pallor.
Ogram Newton, the bank examiner, watched his host narrowly as he
received his guests, as he directed their entertainment by a party of
professionals who had been brought up from New York for the occasion, as
the ices were served. He thought the banker was a bit paler than usual
and his natural nervousness seemed somewhat accentuated. Once during the
evening he had drifted into the library which happened to be empty of
guests, and had found the host peering out of a window that commanded a
view of the town.
"I trust you will pardon my preoccupation," said the banker, turning
again to his guests, "I seem to have a way of feeling lonesomest when I
have most company."
McCord, the plain-clothes man, had vacillated between his hotel, the
railway station, and those streets that gave views of the alleys leading
past the back ends of establishments that might contain safes worth
raffling. Occasionally his eye fell upon the lights in the house of the
banker on the hill, and wandered to the chief financial establishment of
the town. Yet all was so serene in this eddy of the world that the hour
of solitude that followed eleven o'clock seemed such an age that it
drove him to bed.
As the time drew on toward twelve there was no sign of life in the
village. The lights in the drug stores, the restaurants, the
delicatessens where ice cream is served to the small town lovers, had
one by one winked themselves out. The owl car of the trolley line that
ran through the village had deposited its last late revelers at
eleven-thirty. The swinging arc lights at the street intersections
occasionally sputtered fitfully and glared again. A dynamo whirred
distantly at the electric light plant.
Gard, the special agent of the Department of Justice, was one of the few
men in the town who was awake except those who had been guests of the
banker and who had lingered to an hour which was almost unprecedented in
New Beaufort. They would have gone home at eleven, but the banker
insisted that they remain for further entertainment on the part of his
New York musicians. One song called forth another and the quality of the
music proved so much more pleasing than that of their customary local
talent that they forgot the passing of time. The special agent sat on a
hill near the Compton home and smoked a pipe.
It was twelve o'clock before the party finally broke up. Those of the
townspeople who had come in their automobiles were being tucked into the
tonneaus, and those who had walked up the gray macadam drive were just
setting out on foot when the clatter as of a bunch of giant fire
crackers called their attention to the village below. From the bank
building was seen suddenly to burst a cloud of smoke while, a moment
later, a skylight was broken and a tongue of flame leaped forth.
"Fire! Fire!" came the shout from a dozen voices.
Gard had seen more than had the guests of the banker. As he smoked his
pipe and watched the village below, the lights in the windows of Stone
Crest, and the silent cottage of Lorance, the assistant cashier, he had
seen an automobile, with no lamp showing, creep through the quiet back
street, purr stealthily into the alley back of the bank and stop behind
a small building that shut off his view. Half an hour passed and the
darkened machine reappeared from behind the intervening building,
turning into the thoroughfare leading to the southeast and disappeared
in the distance at an ever increasing rate of speed.
When the exploding cartridges in the cashier's drawer at the bank gave
the first warning of the fire, the clamor of the alarm followed and
pandemonium broke out in the village. Of the dispersing group on the
hill, every one ran for a nearer view of the fire. The musicians, the
servants, the master of the house himself, all hurried into the village
to make part of the excitement that prevailed. Stone Crest, the lights
of its entertainment still glowing, was left deserted.
Gard, the special agent, again acted differently from his fellows by
failing to do the thing which others did. He crossed over from the hill
on which he had smoked and hastily entered the banker's house. Arriving,
he seemed to know exactly what he wanted. He hurried through the rooms
of the house, snapping on still more lights until he found that
apartment which seemed to be the personal retreat of the owner.
Here he evidently had business. Standing in the middle of the floor he
looked about. Thrown carelessly into a window seat he saw two heavy
books of the appearance of ledgers. These he secured and placed on a
table in the middle of the room without even examining them. Next he
began further exploration. When he found the banker's bedroom he seemed
satisfied. On the back of a chair was a coat, evidently that which
Compton had worn until he dressed for the evening. Gard thrust his hand
into the inside pocket of his coat and pulled out a batch of letters
through which he ran rapidly. He selected two or three, thrust them into
his pocket, returned for the ledgers, tucked these under his arm and
left the house.
On the way to his lodgings he filed a telegram to the department at
Washington which read as follows:
Compton, cashier in First National bank case, guilty. Lorance
probably not implicated. Bank burned to-night by accomplices of
Compton. Case complete.
GARD.
The manner in which these conclusions were reached are but typical of
the methods of the sleuths of the Department of Justice. Gard had come
to New Beaufort with but a suspicion that Lorance, the assistant
cashier, was playing the market on the funds of the bank. Lorance was
known to be placing orders with a Wall Street broker.
At the boarding house Gard learned that Lorance lived modestly in a
cottage with his wife and babies, had not been seen to make any display
of money, was of sturdy farmer stock. On the other hand the investigator
immediately picked up the facts that the cashier, Compton, maintained an
expensive establishment, entertained lavishly, was often absent from
town, was nervous, highstrung, in bad health.
All these facts led him to watch the cashier rather than his assistant.
They led him, also, to some experimental testing of the condition of the
bank's accounts. He knew that a dishonest employee of a bank, in
appropriating money, had to charge it to some account to make the books
balance. The large, inactive accounts offer a most tempting opportunity
of this sort; but these were found to be intact by his ruse of inducing
the depositors to call for their balances.
It was to get a better line on the business of the community, and
particularly upon the accounts of Compton, that the special agent
secured a position of bookkeeper in Joy's grocery store. Here he found,
in the first place, that the buying of the Compton home was profligate
and evidently wasteful. He found, further, that the bills were always
paid without question and by check. Knowing of an old trick that has
brought many a cashier to ruin, Gard sought a way to test these personal
checks to determine whether or not they actually found their way to the
personal account of the cashier.
The cashier of a bank is usually the individual who opens the mail, and
many of these have been known to cash personal checks and destroy them
when they came in for collection, charging the amount to some account
where it might temporarily be hidden. To determine whether or not these
personal checks were being juggled by the cashier Gard, as the grocer's
bookkeeper, found a pretext to send to the bank for a record of some
personal checks of Compton's which he had handled a few days earlier.
The call was made while Compton was out to lunch, and the checks could
not be found. Through another dealer Gard succeeded in getting a second
similar request made with the same results. He concluded that Compton
was at least juggling his personal account and charging the amount of
his personal checks to some other account, probably loans and discounts.
In various ways the special agent found opportunities, even without
seeing the books of the bank, of demonstrating to his satisfaction that
the accounts were being juggled. This was particularly true of new
deposits. When a cashier is particularly hard pressed he may resort to a
manipulation of the accounts of current depositors. The system is the
simplest in the world. When a depositor hands in his money, the cashier
enters the amount in the pass book of that individual as a receipt.
Then, instead of entering the money to the depositor's credit, the
cashier puts it into his pocket. Thus there is nothing to show for the
transaction but the entry in the pass book, and that may not be
presented for a long time. The cashier chooses for spoliation the
accounts about which inquiries are least likely to be made. As far as
the books of the bank are concerned they are as though the deposit had
never been made, and the bank examiner, therefore, has no way of
discovering the shortage.
Gard, through the store for which he worked, made several deposits, and,
upon one pretext and another, sent to the assistant cashier of the bank
for the record of them in the absence of Compton. They did not show on
the account of the grocery store and the matter was passed over as a
misunderstanding. But a second avenue of misappropriation thus was
discovered.
In this way the special agent was able from the outside to get very good
leads into the condition of the bank and to determine the manner of its
looting when the facts might not have been obtainable by an expert
working from the inside.
Gard's case was about completed and the Department was ready to act when
the dramatic denouement came. Arson, suicide and flight are the three
events most to be expected when the funds of a bank have been
misappropriated. The young special agent was watching for any of these
at the time of the anniversary party given by the banker. It was in
preparation for any of them that he watched so late on that occasion.
On the afternoon which preceded the entertainment Gard was working over
his books at the store and at the same time keeping an eye on the bank.
An hour after closing time at the bank he saw Compton come out of the
side door with two books of the institution under his arm. He could make
out that one was loans and discounts. He surmised that they might be
records that were to be destroyed--probably the books that showed his
guilt.
When from the hillside Gard that night saw the silent car stop back of
the bank and the flames subsequently break out, he knew what had
happened. These were accomplices of the cashier who had probably looted
the bank of any remaining funds and, according to agreement, had set it
on fire that the incriminating records of the cashier might be
destroyed. The wily cashier, however, had made sure that the books that
showed his guilt would not be found, in case the plan was not an entire
success. He had removed them himself, but had not as yet destroyed them
for he saw no probability of coming under immediate suspicion. Likewise
had he neglected to destroy certain correspondence that later connected
him with the parties found to have committed the arson.
The books taken from the banker's house were found to be the personal
ledger wherein should have been entered deposits, and the loans and
discounts ledger in which account Compton had entered the amounts
representing all his personal checks. This latter was the account that
had dwelt in the mind of Newton, the bank examiner. The letters that
Gard had found in the banker's pockets, though unsigned and mysteriously
phrased, were later traced to the Dutch Shroder gang. They proved a
great aid to McCord, the plain-clothes man, who had slept peacefully
through all the clamor incident to the burning of the bank, but who,
through them, was able to trace the burglars.
Compton went to pieces when confronted with the proof that his
derelictions had been found out. When his townspeople came to know the
facts on the following day, they stormed the jail and threatened to
lynch him. So determined was their onslaught that the sheriff spirited
the prisoner away. In desperation he confessed his crimes and exonerated
Lorance, the assistant cashier, who in playing the market had only
executed the orders of his superior. Compton lived but six months after
his conviction and sentence to ten years in the penitentiary at Atlanta.
VIII
BEHIND CUSTOMS SCREENS
The effrontery of this special agent, you would quite naturally
conclude, was ridiculous. You approve of the sort of courage that makes
a man willing to tackle almost any big task, but you also recognize the
limitations of the individual. David with his slingshot had an obvious
chance of success. If he could make a scratch shot and land on the coco
of Mr. Goliath he would win. But Special Agent Billy Gard sallied forth
nonchalantly against the whole army of Philistines, apparently without
even a slingshot.
The Philistines in this case were typified by the customs crowd of the
port of New York. That crowd was a ring within the administration of the
affairs of that greatest of gateways that had built up a system for
diverting a million of dollars a year from the pocket of Uncle Sam and
appropriating the money to itself. For twenty-five years the men of this
inner circle had steadily strengthened their positions, their hold upon
those in authority, their power to shake down importers. There is a
great influence to be wielded by a million dollars a year in the hands
of willing spenders.