The Waterbury Democrat., 1938-12-16

and RObb1nS ManufacCurmg COm- pany, drugs firm almost 100 years good standing. It had been eStab- lished in 1883 by John McKesson and Daniel c. Robbins. McKesson's grandsons, Irving and Donald Mo- Kesson, were then in dispute with other stockholders and it had been decided to split the firm.
 The McKessons took the chemical manufacturing business and allied lines, and the other stockholders took the medicinal departments and the company name. It was the latter branch in which Coster was inter- eSted.
 Thompson again looked over Cos ter's affairs and found them in good shape. He induced Connecticut in- terests to lend Coster the 1000, ,000.
 Coster then merged his two bus inesses and prospered for two years. In 1928 he returned to Thompson with another scheme. He wanted to buy a number of wholesale drugs houses to form a nationwide chain. The boom days were approaching. Thompson saw that Coster'S bus mess had profted $600,000 in the previous year. He recommended Coster highly to Wall Street. The result was, Wall Street raised $20,- 100000 for Coster to buy up IT wholesale houses and incorporate all his interests into McKesson and Robbins, Inc.
 Wall Street Helped Him
 Two years alter, at the bottom of the depression Coster asked for help and Wall Street hoated $l6,- 100000 worth of bonds for this growing and prosperous corporation. Coster took Thompson into the firm as treasurer, to handle all finances except for one departmentlthe crude drugs department which was autonomous and under CoSter's di- rect supervision, with all details in charge of George s. Dietrich, who had been associated with CoSter since the hair tonic business.
 Thompson wondered for years about the crude drugs department, he testified at the attorney generals hearing. It was showing 8 profit on the books year after year, but was returning no money to the company. All the profits supposedly went back into more supplies, which were stored in Canadian warehouses.
 According to all records Thomp- son could find. the firm of w. w, Smith and Company of Liverpool, England, handled purchases and sales for the crude drugs depart ment, and the firm of Manning and Company of Montreal, Quebec, handled the funds, collections, dis bursements. The only thing to arouse suspicion was that the Smith Company worked on commission basis, and McKesson-R Robbins was paying out about $150,O00 a year in commissions to it, hence despite its apparent profits, the crude drugs department was costing money.
 DenOuncement at Last
 The Announcement came when Thompson asked Dun and Brad street to make him private report on the warehouses and the Smith and Manning Companies. Thomp- son was in effect going over his boss head in doing this, since he was not supposed to be concerned with the crude drugs branch. Dun and Bradstreet informed Thompson that Smith and Manning Com panies were nothing but mailing ad- dresses, the former with only two known employees and the latter op- erated by one woman secretary, and that there were no warehouses.
 The company was at that time preparing to float another $3,000,- 900 bond issue. Thompson had a showdown with Coster, who was de- liant. So Thompson exposed the de- bacle.
 Charged with Coster and Diet rich in the case is George Vernard, of the Brooklyn Of11ce" of w. W. Smith and Company.
 Full Story Is Untold
 The full story of what has hap pened and what is to come of Mo- son-Robbins, corporation with 66 branches in 35 states, employing 700 salesmen and serving 55, ,O0O re- tail drug stores in the United States remains to be told.
 It is evident that there is little or nothing in existence of the crude drug departments $18,0OO,OOO listed assetS-$10, ,00O, 900 in stocks and $8,- 100000 in credits from firms all over the world that were supposed to owe for goods delivered. An amazing feature was the fact that these fictitious dealings of the crude drugs department were carried on McKesson-R Robbins books and the company paid federal income taxes on the departments supposed pro- fits. Trustees were discussing today whether to file a claim with the government for a tax refund.