CRIME: Old Man Comes Home

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Samuel Insull twice for having permitted it. The details of these charges are known for they had to be explained in order to extradite Brother Martin from Canada. One typical accusation: Washington Flexner had a private brokerage account through which he performed various trades for his business associate Martin Insull. In October 1931 the brokers objected to the use of Insull Utility Investments & Corporation Securities stock as collateral behind Martin Insull's transactions. Flexner went to Martin Insull, who had Middle West Utilities Co., of which he was president, give Flexner checks for $344,000 to buy the collateral. Thus Martin Insull's brokerage account was cleared and Middle West Utilities was left holding stock now worthless.

Meantime the Federal Government got busy, put 14 Government auditors on the books and records of the Insull companies hunting for crime, had photostatic copies made of numberless letters, envelops and documents. In February 1933, after five months' work, the U. S. got an indictment against Samuel Insull et al. The "al." included Sam Jr., Martin and 16 of their associates and friends. The charge was using the mails to defraud; that is, selling the securities of Corporation Securities Co. through the mails as "a good safe and sound investment," whereas they knew the securities were not as represented. The indictment is in general terms, the Government screening its detailed evidence until trial.

Later, since using the mails to defraud is not an extraditable offense in most countries, the Federal Government got another indictment under the Bankruptcy Act. The three Insulls and others were accused of knowing that Corporation Securities was insolvent six months before it failed and therefore of having acted "feloniously and fraudulently" in declaring preferred dividends and putting up additional collateral on bank loans.

Martin Insull was extradited from Canada on the State indictments for embezzlement. He can only be tried on one of three indictments and part of another because those were the only ones on which Canada agreed to his extradition. He cannot be tried on any of the Federal indictments unless he is released, sent back to Canada and re-extradited, an unlikely procedure.

If Samuel Insull had been extradited by the Federal Government from Greece, he could have been tried only on the fraudulent bankruptcy charge. Instead he was deported from Turkey as an undesirable alien. As his deportation was stringless, he can be tried on any and all of the indictments. This delights the Government attorneys because they intend to try him first for using the mails to defraud. If he is acquitted on that charge, he will be tried under the bankruptcy law. If that also fails he will be turned over to Illinois to see what that State can do with him in the way of punishment for empire wrecking.