The sun. [volume] (New York [N.Y.]) 1833-1916, 1906-11-18
Arms Of expert aocountants were re-

C~ransacuons INTO groups and discusses eacn
one undo the heads aexorbitant salaries
"nepotism legal expenses, general legal
expenses as charged on the books OF the
company the activities OF Andrew L.
s1elds,' campaign contributions false
statements to the Insurance Department
ompan to subsidiary companies law
yers' Mortgage Insurance Company mat
ter and Syndicate transactions"
lt was only necessary in taking up the
salaries question, Mr.. Jerome says, to con-
slider the salary paid to President Nc
Curdy, which jumped ron $50 900 in 1877
to $50 900 in 1901. Salaries OF all the officers
were fixed in the same way, the bylaws
giving the finance committee the power
10 az salaries.
SALARIES WITHIN THE LAW.
About twenty years g the finance
committee appointed a subcommittee
known as the committee on salaries, with
the power to fix the compensation OF the
executive officers. Mr.. Jerome concludes
that President McCurdy's salary was
grossly exorbitant,' but declares that
no statute makes the conduct OF the MEM
there being no provision in the Insurance
law or any other statute 10 meet the situa-
ton. Says the report:
Whether or not such payments under the
circumstance amounted 20 the crime OF
larceny has been carefully considered. and
j believe that under all the circumstances
no sound contention can be made that in
law these payments amounted TO the crime
OF larceny. although the moral elements in
volved differ very little from those involved
In that crime.
It must be remembered that the Super
intendent OF Insurance knew, or had the
power under the insurance law OF learning
at any time. the salaries paid TO all officers
OF the company. and II In his opinion these
--I--I- - ~ -
other method OF controlling them-it was
his duty under the insurance law to recon-
mend to the LIE legislature such legislation as
would have effectually prevented Q repeti-
ton or continuation Of the abuse.
b-NKPorIsM.'
Under the head OF -Nepotism" Mr.. Je-
rome deals with the McCurdy family and
It's dealings with the company. He takes
as an example the case OF son-in-law Louis
A. Thebaud, who was connected with Ray
mond 4 Co., saying that III the most fla
grant instance OF f&voritism does not in
volve h commission OF a crime others
of less importance do not
The only crimes which might by any
possibility rave been committed were lar
ceny and conspiracy. The first possibility
he dismisses at once; Of the second he says:
As to the crime OF conspiracy. lnasmuch
as the conspiracy. II any existed, was con-
summated by the commission of the offence.
the crime Of conspiracy would be merged in
the offence committed. The only offence
which it Is conceivable a conspiracy could
have been formed to commit would have been
one to commit the crime OF larceny.
However little, therefore. one may be in
clined to believe the statement OF the presi-
dent of the Mutual Life Insurance Company
In view OF all the circumstances that he knew
nothing Of the terms Of the contracts between
Raymond h Co. and the Mutual Life. and
however irreslstibly the mind is driven to the
conclusion that the contracts between Ray
mond 4 Co. and the Mutual Life we're the re-
suit Of the presidents son-in-law being a
member Of the firm OF Raymond & Co., there
does not seem to be any legal evidence OF the
commission OF q criminal offence. And here
II might be proper to state that while IL is
dinicult to believe-and to most minds inn
possible to believe-that the president OF the
company had no knowledge Of the terms Of
the contract between Raymond 4 Co. and the
Mutual Life. and therefore was committing
perjury when he testified before the joint
committee TO that effect. yet ] have not been
able as yet 10 obtain any legal evidence, other
than the inherent improbability OF his testi-
mony, which would tend to show that the
president was committing perjury before the
Joint committee. The inherent improba-
bilities of his testimony alone are not suf1-
cient evidence Of the commission Of perjury to
warrant proceedings against the president
for that offence.
LEGAL EXPENSES
Mr.. jerome goes into a history OF the
legal expense account. There had been a
sundry expense account and the expendi-
lures charged to it went as high as $500 900
in a year, but it was reclassified in 1903 by
Emory McClintock. After that the sundry
expense account dropped to $4,000 a year,
while the charges against legal expenses
went as high as 1894 ,254 in 1904.
In 1899 the chairman OF the committee on
EXPENDITURES opened an account in the
Morristown Trust Company and from time
to time sums of SIS 900 were deposited.
Prior to the reolassification OF accounts
they were charged to sundry expenses,
but after hat to legal expenses. Mr..
Jerome says:
II the charging Of these items to legal ex-
penses was a false entry and was wilfully
made or caused TO be made with intent to
defraud then the crime of forgery was com
mitted.
/ have made careful inquiry from experts,
and while those whom / have consulted have
condemned the method Of bookkeeping prac-
ti.ed by the Mutual Life Insurance Company.
I am vet informed that to charge to the ac-
count Of legal expenses moneys employed
in promoting or opposing legislation is not
40 inappropriate as to enable it to be said by
those skilled in such matters that the entry
Il false one. . " If such entries are not
false entries no evil intent in the minds OF the
persons causing them to be so entered is
sufficient to constitute the entry a forgery.
or the SIS. 900 deposits in the Morristown
Trust Company Mr.. Jerome says hat the
most searching inquiry failed to reveal
what was lone with the money.
In 1908 Mr.. Herrick, who was chairman
of the expenditures committee, died. Rob
ert Olyphant succeeded him Mr.. Oily
phant, according to Mr., jerome, was ap-
Darently unable to explain for what pur-
pose the large sums OF money passing
through his hands from this fund were
used. In several instances it was possible
to show that the money obtained on the
checks was delivered to Mr.. Olyphant,
but all he could explain was that in each
instance he had previously been asked by
some officers of the company, usually Mr..
Gillette, to get the money.
The nature Of the disbursements DR..
Gillette could not describe. In substance
DIR. Gillette said that the Mutual found il
necessary to oppose hostile legislation and
in some instances to bring about legisla-
ton to protect the interest Of the policy
holders. Where the money was ~disbursed,
who got il and the specific purpose for
which IL was used DIR, Gillette couldn't tell,