A barhopping good ole boy
By day, W. Darrell Wiggins, 48, was every inch a button-down banker. From 9 a.m. to 4 p.m., the senior vice president of Houston's Allied Bank of Texas (1980 assets: $1.3 billion) presided soberly and quietly over the bank's 15-man international division. But by night, the portly and bearded Wiggins moved onto a faster track, barhopping along Houston's nightclub circuit, where he showed affection to his favorite topless dancers with $100 tips.
On weekends, Wiggins immersed himself in an even more extravagant pursuit as a multimillionaire cattle breeder. He rode high in the saddle as owner of a six-state ranching empire that included the U.S.'s largest herd of Limousin beef cattle, a prizewinning French breed.
Though Houstonians had always assumed that Wiggins had a silent partner for his far-flung ventures, it now turns out, according to bank lawyers, that his unwitting sugar daddy was none other than Allied itself. By using a paper shuffle involving financial notes called bankers' acceptances, Wiggins, starting in the early 1970s, helped himself to $16.7 million from Allied's international department, say the lawyers. Says Barbara Hecker, 39, a former girlfriend: "I used to ask him why he stayed on at the bank when it seemed he could make so much more money raising and selling cattle. Now I know why."
Allied Bank thus joins a growing list of U.S. banks that have been victimized by unscrupulous employees. Earlier this year, California's Wells Fargo Bank was bilked out of some $21 million in a scam involving bogus transfers between branch offices, and last week reports surfaced of a $20 million loan fraud scheme at Chase Manhattan Bank in New York City.
As Bank Attorney Joseph H. Peck Jr. reluctantly confirmed, Wiggins' ploy was to sell bogus bankers' acceptances to unwitting buyers in New York. He was able to do this undetected because, in his capacity as head of international operations at Allied, he had authority to sell acceptances on behalf of the bank itself.
Bankers' acceptances are widely used in foreign trade transactions. If an exporter sells a shipment of goods to a foreign customer, three months or more can go by before the exporter gets paid. Meanwhile, he must carry the cost of the goods he has already sold and shipped. To get his money earlier, an exporter often negotiates a short-term bank loan. The bank then stamps the note ACCEPTED, which guarantees repayment even if the borrower reneges, and sells the document at a discount on New York's short-term money market. Many millions of dollars in such-notes are sold daily in New York, and last week they yielded interest rates as high as 19%. As confirmed by Peck, Wiggins apparently operated a disarmingly straightforward scheme. First, he dreamed up a borrower and drew up the appropriate document in that name. Next he stamped the note ACCEPTED, and then offered it for sale in New York. Finally, the money from the sale was deposited in a private checking account that Wig gins had set up under a phony name.
When he needed money for bar tips, cattle or a new pair of ostrich cowboy boots, Wiggins could simply draw out funds against the account.