Wednesday, October 6, 2010

Dordo and the Defalcator, Part Two

On April 29, 1933 Westchester County Deputy Treasurer Leonard Teed and his superior, County Treasurer Charles M. Miller, had "words" over something in Teed's accounts and his resignation was demanded. Teed quit the following day and left White Plains with his wife Helen for a vacation. Teed's primary responsibility in the County Treasurer's office was the management and disbursement of estate funds. When a county resident died his or her liquid assets were held by the county until all applicable estate taxes could be paid to the county and the state. After Teed left, his accounts were taken over by an acting Deputy Treasurer, who immediately discovered a total mess. A quick audit was done, the result of which revealed total funds in the amount of $248,000 missing from the County bank accounts. Needless to say, this was serious money, especially in the teeth of the Great Depression. When it was learned that Teed had left town, all hell broke loose.

Ten days later a grand jury handed down an indictment for grand larceny, specifying only one of the nearly eighty estates that were missing funds. The Teeds were supposedly out west somewhere but had obtained the services of a local attorney, who appeared at the hearing and promised to arrange Teed's surrender later that day. He told the court that his client was flying in that morning from an undisclosed location in a western state and would be staying at an unnamed New York City hotel, where he would be fetched and brought back to White Plains.

According to the District Attorney, Teed had been pilfering the accounts of decedents' estates for twelve years, ever since private estates began being administered by the Surrogate Court. Teed had somehow managed to negotiate checks made payable to the county and convert them to cashier's checks made payable to himself, which he would then cash at various banks around town. It was presumed that he had at least one accomplice at one of the banks, but that seems to have never been proven. What the money was used for was unknown at the time of the indictment, but the DA promised to find out. The means of carrying out his defalcation was made possible by an incredibly sloppy system of checks and balances that were never enforced, to the point that in his 35 years of service as Deputy Treasurer his accounts had never once been audited. He robbed one account, then replaced the stolen loot with the funds of a different estate. People were always dying, and in Westchester County they died with heavy estates, so there was always new money coming in to replace the old. Teed must have known that his theft would be discovered the minute a new set of eyes looked at his accounts, which is probably why he headed west.

Or did he?

In fact, the couple had really been hiding out for the past week at the Hotel White on Lexington Avenue in New York City, registered under the name Stevens. They spent the week going to movies and eating out at restaurants and, according to one newspaper account, "making no effort to avoid his pursuers." Someone had tipped reporters about his whereabouts on the day of his return and they flooded the hotel lobby waiting for him and his wife to come down the elevator. Teed was made aware of this and snuck out a service elevator. He and his wife stood out on the sidewalk behind the hotel for over an hour awaiting the arrival of Teed's lawyer to pick him them, chatting occasionally with a local policeman.

He arrived at the courthouse in White Plains to a mob scene. In addition to the dozens of reporters standing outside, scores of county emplo
yees who had known and worked with him for years had left their posts to run over the the courthouse and witness the spectacle. The presiding judge was an old friend, as was the DA and several members of the grand jury. Teed hid his face underneath his derby and "appeared near collapse" as he entered the courthouse. There the indictment was officially delivered and a bail hearing was set for the following day. He was immediately taken to the county jail, where he stayed until his eventual trial. The bail hearing would prove meaningless, as Teed was broke and had no way to meet any sort of bail that might have been set.

When the initial hearing was held and the charges for one of the estate defalcations were made, Teed pleaded not guilty. As May passed into June, more charges were brought as the audits uncovered more and more estates affected by Teed's theft. On June 7 he was brought back to court to plead on an additional seven counts, but his attorney managed to get an adjournment until the following day. A newspaper described the 57-year old Teed as "crestfallen and aged" as he witnessed the pleading of another colleague who was indicted on a similar charge. Teed's long stay in the county jail was having an effect on him and he began hallucinating, becoming convinced that his jailors were attempting to kill him by poisoning his food. He began a hunger strike and managed to get the court to agree to allow Teed's wife Helen to bring him a glass of orange juice from home each morning. The newspapers surmised that he was preparing an insanity defense.

Meanwhile, the pressure from estate beneficiaries became enormous. At one point over 150 lawyers representing nearly eighty plaintives were suing the county in an attempt to recover stolen estate assets. The County Treasurer, 69-year old Charles M. Miller, was serving his third term in the office after having just won his third election to the post and was, under the law, civilly responsible for the losses caused by his deputy. The fact that he was personally bonded did little to relieve his own fears that he would somehow be tainted by the crimes. That fear was made more real on June 8, when the adjourned hearing took place and Teed's attorney promised "...there will be highly sensational disclosures on the trial. I can not say any more right now." It was widely assumed that Teed had accomplices, but their identities were unknown. Anyone who worked in the county government had reason to fear that they might be dragged into the proceedings, much as the dozen or so bank tellers who had cashed Teed's checks had, testifying at the initial indictment hearing.

Teed pleaded not guilty to all charges, and a trial was scheduled for June 14.

The trial never took place. One day before that scheduled date, Teed and his attorney appeared before the court and Teed admitted guilt to all of the charges against him. It is impossible to know if the fears of bringing additional county employees into the mess caused certain people in power to come to some kind of backroom agreement, but as we shall see, Teed's punishment did not exactly fit the crime. On July 5 Teed was sentenced for only two of the eight incitements brought against him, and given the maximum sentence of five-to-ten years for each count, to be served consecutively. His lawyer assured the court that no other county officials would be dragged into any subsequent defense of his client. Teed's destination was Sing Sing Prison in Ossining. If he were to receive parole on both counts he could conceivably serve a mere eight years for stealing a quarter of a million dollars, taken literally from widows and orphans. The additional six indictments were dropped and, while his expected pension was stopped, he was not required to repay any of the funds he had stolen.

Which was probably good, for there was nothing left to return. Although it was never specified in any of the newspaper reports of the scandal, it was hinted that most of the money was stolen to invest in the stock market. The lure of a steadily rising market in the 1920's probably convinced Teed that he could easily "borrow" funds from an estate, make a quick gain, then return the money before anyone discovered what he had done. This may have worked fine until October 1929 when the market crashed and fortunes larger than Teed's were wiped out. At that point it became a never-ending process of robbing Peter to pay Paul in an attempt to keep from being discovered. His sudden departure from his post in the Treasurer's office after a verbal altercation with his boss was the tipping point from which he could not return. He probably knew what was in store for him and took what little money he had left to treat his wife to a week on the town in New York City.

With Teed off to prison, it was left to his former boss Charles Miller to fight a rear guard action in an attempt to keep himself out of trouble. On July 11 he appeared in Surrogate Court to defend himself against any possible personal liability. He was allowed to obtain application to submit new accounting for eight of the estates that had been robbed, with a promise to submit seven more when they could be sorted out. Miller's personal liability in all of the cases was covered by bonds, and "practically all" of the companies that had issued these indemnity bonds were thought to be in good condition. Recall that this scandal took place in what is widely believed by historians to be the worst year of the Great Depression, and many, many insurance and indemnity companies had gone under, leaving their policy holders naked to liability. That concern, in addition to the total weight of this whole affair took its toll on Miller. On August 20, after having dinner at his summer home in Winstead, Connecticut, he suffered a massive heart attack and died instantly. The New York Times account of Miller's death dryly mentioned that the Teed affair was "believed to be a contributing factor" in his death.

The very next day, after serving a total of 46 days in Sing Sing, Leonard Teed was transferred to a minimum security prison in Wallkill, New York. Known as The Wallkill Institution, the facility was originally intended to serve as a "place of rehabilitation" for young prisoners and contained no walls or bars anywhere. The New York Times contemptuously referred to the place as "a prison country club." (And I thought that term originated with Watergate!) The newspaper also noted Miller's death the previous day, as well as the fact that Teed was the third Republican officeholder convicted of stealing public funds who later transferred to Wallkill.

To be continued...

No comments:

Post a Comment