Assistant U. S. Attorney for the Southern District of New York is hustling young William Maloney. He went to Fordham University and his middle name is Power. Last week William Power Maloney obtained a $4,500,000 mail fraud indictment against three young Yalemen, 49 other individuals and 20 corporations—biggest mail fraud indictment in U. S. history. Smartest of the three Yalemen was Wallace G. Garland, Class of 1925 (Sheffield). Member of a solid Pittsburgh family, he was not a conspicuous undergraduate except as a brilliant student. Even Professor Irving Fisher liked his original notions on business and economics. But Yaleman Garland’s notions were far more original than Professor Fisher ever suspected. While still an undergraduate, Yaleman Garland heard about a signal device invented by a “Sheff” engineering professor named Henry A. Haugh. Now widely used, the device automatically changed the traffic lights at highway intersections when cars approached. Two years after graduation Garland organized Automatic Signal Corp., his old friend Professor Fisher putting up a “considerable sum” and becoming board chairman. For the patent the Garland company paid $500 in stock. It was taken into the balance sheet at $7,500. Meantime Yaleman Garland acquired a crony named Arnold C. Mason, Class of 1928 (Sheffield) and a member of a solid St. Louis family. Later a third named David Saylor II joined them, though he never achieved the corporate importance of Messrs. Garland & Mason.
Before Automatic Signal had sold a single light, Yaleman Garland decided to give his heretical business theories a thorough workout. At a pen’s stroke he wrote up the value of the patent to a flat $1,000,000. Then he transferred the patent to a new concern of his own, granting the original operating company a manufacturing license, carried on their books at $3,250,000. Affiliates, dummies, acceptance companies, holding companies, securities companies began to sprout like weeds. And the patent was given another boost, this time to $32,500,000.
That was too heretical for even old Professor Fisher, who is a stanch advocate of the commodity (“rubber”) dollar. To please his patron, Yaleman Garland revalued the patent at $5,000,000. Automatic Signal prospered modestly, is still a going concern. Still board chairman is spare, white-goateed Professor Irving Fisher. Yaleman Garland withdrew into the mysteries of his 30 new corporations.
What tangible assets these companies had were constantly and dexterously shuffled for the purpose, according to last week’s indictment, of lining Yaleman Garland’s well-tailored pockets. Directors were young college graduates who were delighted to get $20 each time they went through the motions of a board meeting. The directors were probably quite ignorant of the fact that the Garland collection of corporations was capped by a holding company, named Public Service Holding Corp. for no apparent reason except that it sounded like big Public Service Corp. of New Jersey. Stock in this Garland company was peddled among unwary investors.
Distribution was handled by “boiler-shop” operators and fly-by-night stock jobbers. One salesman was a handsome, prepossessing swindler with nearly a dozen aliases, most authentic of which seems to be Walter M. Barr. The Barr method was to cotton up to rich middle-aged ladies. Another salesman was Dave (“The Duke”) Dubrin, who despite numerous fraud convictions sported white spats, a Japanese chauffeur and a Cadillac V16. When the duped ladies complained that their company paid no dividends, did not even have an office, they were directed to a firm with a Wall Street address called George Henriquer & Co. There in luxurious offices they were received by William C. Toomey. Onetime secretary to the late James J. (“Empire Builder”) Hill, Mr. Toomey is a stout, ruddy, white-crested man with a benevolent expression and the reputation of being willing to steal a red-hot stove. Mr. Toomey would pull out his black-ribboned pince-nez, soothe the ladies’ fears, incidentally find out if they had any more cash. One lady who refused to be soothed had the salesman arrested for mulcting her of $25,000. That caught the eye of postal inspectors, who started to investigate. Though Yaleman Garland was amazingly successful in keeping his name out of his business affairs, postal authorities finally grounded him on clues picked up from selling literature mailed into the U. S. from Montreal. They found him living with his fellow Yaleman Mason in a twelve-room duplex apartment on Manhattan’s Central Park West, where, with extensive gambling equipment, a big bar and eight-piece orchestras the two promoters entertained criminals, socialites and Broadway talent in parties of hundreds. On one of the Garland cars was a license numbered Y 25. Not a whit fazed by his arrest, Yaleman Garland indignantly declared: “If the mere mention that securities have been sold is to bring a connotation to people’s minds of fraudulent practices, then all new initiative and enterprise must die out of our economic system, and responsible and honest men will not undertake any new ventures where public capital is to be required. I have spent my life in building up these companies. I am certain that I have acted honestly and properly, and I feel certain that my position will be vindicated.”
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