Agency: FBI
Originator: FBI
From: WALTERS, VERNON G.
To: DIRECTOR, FBI
Document date: 11/15/1962
Document type: PAPER, TEXTUAL DOCUMENT

## Page 1

JFK Assassination System

Identification Form

Agency Information

Date:

4/21/201

AGENCY: FBI

RECORD NUMBER:

124-10287-10335

RECORD SERIES: HQ

AGENCY FILE NUMBER :

29-31889-27, 28

Released under the John

F. Kennedy

Assassination Records

Collection

Aet of 1992

144 USC 2107 Notel.

Case#:NIT 45712 Date:

11-16-2017

Document Information

ORIGINATOR:

FBI

FROM:

WALTERS, VERNON G.

TO :

DIRECTOR, FBI

TITLE :

DATE: 11/15/1962

PAGES:

178

SUBJECTS :

DEB, SENTENCED, ASSOC, MEETING, FINANCES, TRA, INTV

DOCUMENT TYPE :

PAPER, TEXTUAL DOCUMENT

CLASSIFICATION: Unclassified

RESTRICTIONS: Consulted; 3; 10(a)2; 11(a)

CURRENT STATUS: Redact

DATE OF LAST REVIEW: 09/23/1998

OPENING CRITERIA: INDEFINITE, APPROVAL OF IRS, FDIC

COMMENTS:

REFERRED TO FDIC, RPT, TABLE OF CONTENTS PAGES 2, 2a, INC A/T

y9.1

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DETAILS:

The following investigation

was conducted concerning

alleged irregularities, disclosed by a Federal Deposit Insurance

Corporation (FDIC) examination, of Public Bank, Detroit, in

regard to certain loans to the

Alvin Naiman Corporation ($50,000.00

on October 16, 1959, $240,000.00 on October 24, 1959, and $45, 000.00

on April 7, 1960); to Nagare

($240,000.00 on October 24, 1959, and

crusted stone lumberstone? ta.

$75,000.00 on April

1960);and

to Vendorama of 0h10,

Inc., ($50,000.00 on October 3, 1960):

At the request of Department Attorney WILLIAM FRENCH,

this investigation has been concentrated upon the alleged

irregularities. in regard to the above-mentioned loans; and

other alleged

sideration after instant investigation has developed the facts as

to a possible conspiracy in regard to these loans and the involve-

ment of the various subjects.

alleged irregularities reported by FDIC would be made the subject

23333S

of separate cases but he does not desire that these cases be

opened at this time and will advise at a later date when he

considers it

appropriate that these matters

be discussed with

the United States Attorney:

During the period of this report there were frequent

contacts with Mr. FRENCH, who advised as to additional information

received by the department of Justice and who was informed of the

current results of this investigation.

On September 12, 1962, a detailed discussion was had

with Mr. FRENCH regarding the information developed to date.

Emphasis was placed by Mr. FRENCH on the need for determining

what information was avallable at Public Bank regarding the

financial condition of the Alvin Naiman Corporation, Nagara

Crushed Stone (Humberstone), Ltd. and Vendorama of Ohio at the

time loans were made to those companies by public Bank in 1959

and 1960.

Such information is considered essential by Mr. FRENCH

In determining whether the granting of these loans constituted

misapplications of bank funds in violation of Section 656, Title

18, United states Code. Mr. FRENCH desired that this phase of

the investigation be given early attention together with inter-

Viewing PAUL PO

YODER, Jr., as to his knowledge concerning

financial data

made available to public Bank preliminary to

granting these

loans. Mr. FRENCH indicated that upon completion

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of the above inquiries and review of material accumulated from

various sources, he expected to have a lurther detailed discussion

as to the other

phases of investigation which he desires to be

gone

into.

(Beginning in October, 1962,

and continuing to the

present time, Mr. FRENCH has been

engaged in the preparation

and

trial of

another involved matter in United States District

Court, Detroit.)

On August 29, 1962, MT. FRENCH advised that the Department

of Justice had received information indicating that HErBERT Li.

GROSBERG of Detroit probably was in Chicago,

Illinois, on June

14, 15 and 16, 1959, and stayed at the shoreland Hotel, Chicago.

On september 17, 1962, Mr.

FRENCH. was advised that

investigation at Chicago had disclosed that

on June 14 and 16, 1959,

telephone calls

were reportedly made from the Shoreland Hotel, by

GROSBERG to the following numbers 1n

the Detroit

area:

WO 5-4900

WO 5-8329

LI. 7-7237

MI. FRENCH advised that he had received information

that LI 7- 7237 was GROSBERG'& home telephone number In 1959,

that wo 5-4900 was his office telephone number in Detroit and

that wo 58329 was the telephone number of his

broker, Manley

Bennett and Company, Detroit

On September 20, 1962, Mr. FRENCH requested that

contact be made with Department

Attorney JAMES CANAVAN Or

FRANK KIERNAN IN Care of the United States Attorney's Office in

Chicago in regard to obtaining access to a voluminous tabulation

of toll calls of the International Brotherhood of Teamsters,

Washington, D.C. According to Mr. FRENCH, this tabulation

was

in the possession of the Department of Justice staff members in

Chicago;She requested that it be reviewed regarding toll calls

to or from individuals and telephone numbers known to be of

possible interest in this investigation, Ior the period April

1, 1959, to July 31, 1961.

Ille mich.

On October 3, 1962, Mr. FRENCH advised that the Depart-

ment of Justice had received

a trio was made to Chicago by HERBERI L

REGRET OSE 0 Detrat

which may relate to a telephone eati reporteal made to Public

be about the

the Teamsters

=.4=

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GROSBERG reportedly stayed at the palmer House, Chicago,

the night of July

20, 1959, and was charged ninety line

cents

for a long-distance

telephone call.

On October 3,

1962, Mr. FRENCH requested

that contact

be made with CHARLES Z.

SMITH,

speciad

of Justice, Chicago, to

minutes of the

Teamsters Central States Southeast-Southwest Areas Pension

Fund for any references to an application for a loan in 1959 in

approximate amount of $300,000.00, which may have been in the

name of ALVIN A. NAIMAN, ALVin

Naiman Corporation, Niagara

Crushed Stone (Humberstone), Ltd., Akros Dynamics Corporation

or DOMINICK E, BARTONE. He advised that possibly this loan

application was considered on the same date as the loan for

the Ogelthorpe Hotel, Savannah, Georgia.

He also requested that

at be ascertained whether CHARLES

Z. SMITH has records in his possession concerning conference

calls made by attorney STANFORD CLINTON concerning votes on

loans being considered by the

Pension Tund and also whether

he has records of the real Estate Research Corporation of Chicago

in his possession.

Mr. FRENCH requested if such records were

in the possession of Mr. SMiTH that they be reviewed for any

available information concerning the above -mentioned

application.

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WILLIAM P. FRENCH, Department Attorney, Detroit,

made available for review a copy of a report of

examinat ion

of Public Bank (PB), Detroit, as of the close of business

December 26,

1961, by Federal Deposit Insurance corporation

(FDIC) examiners,

with WILLIAM D. ALLEN as examiner-in-charge.

ALLEN was in charge of previous FDIC examinations of

May 8, 1961

and January 11, 1958; other FDIC exaninations

were conducted May 2, 1959

and March 7, 1960

Following is

a summary of pertinent information from the report of the

December 26, 1961 examination:

PB is located in FDIC District 7 and has Certificate

#17848.

The president, executive vice president, senior

vice president, and all senior lending officers are quartered

at PB's Michigan-Shelby Office, 201 Michigan Avenue,

Detroit,

which is a branch office established January 19, 1958.

Al1

loan activity of PB funnels through this branch, at which

are kept industrial and commercial loan notes, along with

their supporting data and security, as well as commercial

deposit ledgers for all offices. Branch operations of all

PB branches on the west side of Detroit were supervised by

Assistant Vice President ROBERT E. MC CARTHY,

operations of the Michigan-Shelby Office were supervised by

Senior Vice President JEROME J. ZIELINSKI.

Under the heading of "Ioan Policies" it was reported

that as a matter of practice President JOSEPH F. VERHELLE

exercised unlimited authority in the granting of credit,

although the larger applications were generally presented to

the Board of Directors or the Executive Committee for

consideration before the loans were granted. In other cases

it appeared that larger loans were granted and later approved

by the Executive Committee or Board of Directors. Other

senior loan officers exercised limited loaning responsibility

under the supervision of VERHELLE.

Other than demand loans,

past-due loans in excess of $2,500.00 were reviewed by the

Executive Committee weekly; demand

I loans were considered to

have monthly interest due,

unpaid as such they were

past due; no review was made of

important maturing 1oans

except by the officer handling the

account

The Collateral

Department appraised marketable collateral periodically,

and nonnegotiable collateral was reviewed at the inception

of the loans and at renewal dates.

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It was reported that credit information for many

of the large lines and concentrations of credit was lacking

or too old.

Balance sheets and operating statements for full

accounting periods were deficient, and supporting credit data

for collateralized lines

were very inadequate.

PB did not

as

a practice advance maturity of cotes upon payment of

interest without requiring a formal renewal note or extension

agreement; but demand notes were regarded as being renewed

by the payment of interest monthly.

PB had a general policy

of requiring amortization on real estate and term loans, but

there were many lines of credit of large amounts which have

no visible terms of repayment and the servicing of the

credits would indicate

that there is no program.

With regard

to loans secured by real estate and chattels, collateral

real estate and chattel mortgage security was

deficient

as to supporting papers in numerous instances.

At each FDIC examination following the entrance

examination of January 11, 1958, liquidity Of PB was found

to be disproportionately low and total loans excessively

high. The failure of management to respond to recommendations

to improve liquidity and curtail loan totals to more satis-

factory levels was considered a serious indictment of

management's desire and intent to operate PB in an accepted

sound and conservative manner.

VERHELLE was considered

responsible for this recalcitrance.

PB's loan portfolio at December 26, 1961 equaled

79.9% of total deposits as compared with 66.7% at

May 8,

1961.

The consolidated loan-deposit ratio of all insured

commercial banks in Michigan as of December 30, 1961, was

49.6%•

Overdue loans totaled 12.3% of the loan

account

at PB as of December 26, 1961; and unfavorable delinquency

conditions included the inability or lack of desire of the

borrower to meet his commitment, and weaknesses and in

effectiveness in the loan administration of PB, particularly

in its collection procedures.

The credit quality of the loan

account, as measured by adverse classifications, has declined

FDIC examination since PB was organized.

percentage of total loans which vere adversely cladditiod

was 2.7% at May 2, 1959; 6.9% at March 7, 1960; 12:7% at

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May 8, 1961; and 27.7% at December

26, 1961.

The consistent

and progressive deterioration of the credit quality of the

loan portfolio had reached such extremely serious proportions

that corrective

action

was considered imperative and essential

to the future of PB.

Ex-president VERHELEs

who completely dominated

both loan policy and loan

administration and personally

directed the administration of the larger and more important

of credit, was reportedly responsible for the unsatis-

factory condition

of the loan account and for the lack of

remedial

action.

The FDIC report recomnended that management give

early attention to the adoption of a comprehensive, formal

loaning policy in writing which would provide adequate control

and supervision by the Board of Directors; establish the

loaning authority and responsibility of all loan officers;

permit adequate analysis and understanding of applications

for loans by appropriate elements of management, including

directors; and reguire systematic review and analysis of

total obligations of individual borrowers by the directors,

loan committees, and active management. It was also

recommended that total loans be curtailed to satisfactory

proportions; and that the Credit, Collateral and loan

Discount Departments be revamped

to provide

adequate

support

to loan administration,

analytical Information, and

suitable controls of borrower relationships and internal

operations

Present credit data were very much deficient on

a number of borrowers; and there was need for credit files

to contain complete

and current data, including financial

statements and earnings data for full fiscal years, adequate

appraisals of security taken, and all needed supporting

papers.

Existing record and

control of collateral were

considered very inadequate, and there was need

1 to audit and

control interest received

on loans.

It was

also reported that debit and credit tickets

for general ledger entries lack adeguate detall and explana-

tion,

and should be cross referenced to show corresponding

credit or debit

Numerous general ledger

•debit

and credit

tickets bore little or no description of the transactions

which they represent.

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and

It was reported that the

operations of PB had been

still

were inefficient, stemming principally

from poor

internal operating organization.

Many of PB's staff were not

being utilized to obtain maximun benefits from the qualifi

cations for which they

were being paid.

Ex-president

VERHELLE

so centered and concentrated bank

administration in his

personal hands that even

most minor operating procedures

were decided and dominated by him.

The responsibilities he

reserved unto himself were so extensive: that he could not

give them all due

attention and consideration.

PB's operating

procedures and staff grew in a

topsy-turvy fashion without

proper guidance and direction.

The FDIC report as of December 26, 196Lj under

the heading "Overdue Loans" contained & schedule

of loans

of which any portion was subject to a

substandard, doubtful

or

loss classification,

as well as all overdue loans

This

schedule includes two notes totaling

Colborne Quarries, We 6224,341108 88 0,000:00 Crom Port

notes was classified as substandard and $400,000.00 was

classified as

doubtful Both notes

Cone in the

amount of

$100,000.00 and one in the amount of $700, 000. 00) were dated

October 19, 1961, and were placed

on PB books o. Novemberg,

1961.

The larger note

is secured by a real estate mortgage

covering the stone quarry property on which PB had hold mort

gage liens in

connection with loans to Nagara Gushed Stone

(Eumberstone), Lid.

No written appraisal of the quarry

property was found at this or at prior examinations, although

it was previously reported that an appraisal had been made

but could not be located.

The

FDIC report also contained the

following data regarding the quarry:

On May 8, 1962,

the bank obtained a written

appraisal of the quarry land

showing the 1161 acres of land

not quarried being valued at $116, 500.00

and the 25

acres

already quarried or being quarried being valued at $250.00

per acre or $6,250.00 making a total

apprised

value of

$122,750.00

Appraisal is the

market

value of the land and

is not as a going business venture.

Appraiser is

S. 0.

Mason Agency with Mr. D.

R.

MASON doing the appraising.

Firm is considered competent rel estate appradeer nich

basis of the appraisel is the bighest market

the land will bring if sold on the open market and

such

value is for quarrying purposes

only since the land otherwise

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has no market value.

Approximately

41 acres of the land

cost $41,500.00 in April, 1956, and the 100

acres was

acquired for $75,000.00 in 1959. It is stated the sellers

had full knowledge of the

stone reserve and the purpose of

the buyers to develop the quarry. Also appraiser stated

that there is considerable additional land of this type in

the immediate vicinity and thus the value of quarry land is

not enhanced by its

short supply.

operation when on October 24, 1959, & loan of $240,000.00

was granted to Niagara Crushed Stone (Humberstone), litd.,

and a companion loan of $240,000.00 was made to The Alvin

Naiman Corporation (later Niagara Crushed Stone Sales of

Ohio, Inc.). These obligations were secured by the quarry

real estate, chattels, assignment of accounts receivable,

stocks of the two borrowers, guaranties of several of the

principals, subordination agreements, etc.

On April 7, 1960,

additional loans of $75,000.00 each were granted to the

concerns on the same basis,

and participations in the lines

were sold to Bantam

Industries, Ine., of

$150, 000.00.

Balances had been reduced to $205,698.40 each on

the portions of the lines owned by PB and to $40,698,36 each

on the participations sold Bantan Industries, Inc., at the

time Niagara Crushed Stone (Humberstone), Itd., was delivered

to the trustee in

bankruptcy.

In the intervening time,

however, PB had incurred considerable out-of-pocket expense

in servicing the lines, including an apparent operation of

the business immediately prior to the bankruptcy action.

Also during this period, PB disbursed the proceeds of a

substantial amount

(believed to be

approximately $232,000.00

or more of the proceeds of loans given to PB by ELIOT

JANEWAY, his associates and their interests.

While the

circumstances of this

arrangement are clouded, it appears

that the JANEWAY group borrowed money from PB

to be fed into

the operations stream of Niagara-Naiman concerns and that

bank disbursed these funds to the Niagara-Naiman concerns.

Evidence in files of PB indicates that the JANEWAY group

expected PB to serve in a trustee capacity to see that the

proceeds of the borrowings of the JANEWAY group were properly

expended and accounted for.

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At the time

Port Colborne Quarries, Lta, purchased

the quarry lands and the chattels needed to overate the

quarry business from Niagara Crushed Stone (Humberstone),

Ltd. s

bankrupt

estate

the trustee in bankruptcy received a

release of the claims of PB and

other secured creditors

against

the bankrupt estate and $50,000.00 in case from

Port Colborne Quarries,

Itd. PB then obtained the two

notes for $700,000.00 and $100,000.00 from Port Colborne

quarries, Ltd., because of the bank's

claim against the

bankrupt estate.

It is belleved that the bank's supple-

mental claim filed with the trustee in bankruptcy included

the advances of the funds of the JANEwAY group and interest

thereon and that bank thus has accountability to this

group for the

proceeds received in the settlement of claims

Although the appraised value of the only security

to line is $122, 750.00, such appraisal gives no consideration

to increment in values as a going business.

Such going

value, however, is based upon the ability of the business

to produce satisfactory profits from its operations and

such

has yet to be established.

Only

President VERHELLE possesses an accurate and

composite understanding of the ramifications

and intricacies

of the Port Colborne Quarries, Ltd., line and the predecessor

lines of Niagara Crushed Stone (Humberstone), Ltd., and The

Alvin Naiman Corporation (Niagara Crushed Stone Sales of

Ohio, Inc.). Also only he has first hard knowledge of the

relationships between and among these borrowers and ELIOT

JANEWAY and his associated group of borrowers at PB.

President VERHELLE, however, successfully avoided any

discussion of those interlaced lines until he no longer

was president of PB. Accurate analysis and classification

of the lines and in

particular the line to Port Colborne

Quarries,

Itd., were of necessity made without the benefit

of information

customarily obtained from active management

and the loan officer servicing.

Credit dats are lacking

in essentials and classifications have been made on the basis

of information available to examiners.

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A review of exhibits

compiled during the FDIC

examination of Public Bank

close of

business

December. 20, 1961, disclosed

that various

labor unions

had deposit

accounts

at Public Bank, with

total balances

December

26, 1961, as follows:

Commercial accounts

Savings accounts and time certificates.

of deposit

353, 482.91

5

, 657, 243.76

Total

$6, 010,726.67

Included in the above totals were the balances of

various accounts of Teansters Union organizations, as shown

below:

Commercial accounts

Savings accounts

and time cortificates

of deposit

Total

127:, 914.65

1, 660, 192.68

$1,788

, 107 • 33

Following is

chronological listing of deposits

of $20,000.00 more

which were made to the above mentioned

accounts of Teamsters

organizations fron February

26, 1958

through July 23, 1961:

Amount of

Date

Account

Deposit

2/26/58

Food and Beverage

and Helpers,

$50,000.00

10/31/58

12/3/58

Savings

account #377,

DrIvers, Warehousemen

LOCaL #337

Savings account #264k,

of Teamsters

Michigan Conference

30, 000.00

Teamsters, Chauffeurs,

Warehousemen

Helpers, Local #247,

Savings account

and

#2702

50, 000. 00

12

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2

, Date

3/16/59

5/7/59

8/12/59

9/9/59

9/16/59

10/3/59

10/16/59

11/12/59

6/27/60

2/23/61

5/12/61

6/20/61

Account

Food and Beverage Drivers,

Warchousemen

and Helpers, Local

#337,

Savings account

#377

Savings account #2383, Michigan Conference

of Teamsters = Welfare

Teamsters Truck Drivers Local #299,

Savings account #55001

Teamsters, Chauffeurs,

Warehousemen and

Helpers,

Local #247

Savings sccount #55190

Commercial

account

Teamsters Truck Drivers,

Local #299,

Savings account

#55001

Teamsters

Truck Drivers Local #299,

Savings account

#55001

Food and Beverage

Drivers,

Warehousemen

and Helpers, Local #337, Savings account

#37'7

Teansters,

Chauffeurs,

Warehousemen

and

Helpers,

Local #240.

Savings account #55190

Teamsters Truck Drivers,

Local #299,

Savings account #55001

Central States Southeast

and southwest

Areas Pension Fund #7000 - Time Certilicate

of Deposit #37.

Food and Beverage Drivers, Warehousemen

and Helpers, Local #337, Savings account

#56900

Savings account #55190, Teamsters,

Chauffeurs, Warehousemen and Helpers,

LOCal #247

= 13 =

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Amount of

Deposit

$20,000.00

50, 000.00

525, 000.00**

70,404.53*

100,000.00

140, 156.32

37, 547.89

20, 000.00

59,457.43

400, 000.00**

500, 000.00

50, 000.00

65, 814.92

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DE 29-1432

3

081

Date

6/21/61

7/23/61

Account

Commercial account, Teamsters,

Chauffeurs

Warehousemen and Helpers, Local #247

Michigan Conference of Teamsters - Welfare

Savings

account #2383

Amount of

Deposit

$65, 000.00

100, 000.00

It is noted that all of the above-mentioned Teamsters

Union locals were located

at 2741 Trumbull, Detroit (where

JAMES RIDDLE HOFFA'S Detroit Office also was locatedl; and

the

Michigan Conference of Teamsters welfare lund was located at

2801 Trumbull, adjacent to the building at 2741 Trumbull.

*The above-listed deposit of $70, 404.53 on September

9, 1959, to savings account #55190 of Local 247 included

$50,876.88 transferred from savings account #2702 of Local 247

at Public Bank, and $19,527.65 in the form of a cashier's check

drawn on the Bank of the Commonwealth; Detroit.

**In regard to the above-listed $525, 000:00 deposit on

August 12, 1959, to savings account #55001 of Local 299, 1t

consisted o1 a $125,000:00 check dated August 11, 1959, drawn on

Fidelity Bank and Trust Company of Indianapolis, Indians; and

$400,000.00 check #2, dated August 11, 1959, Of Truck Drivers

Local Union No. 299/ drawn on The Florida National Bank at

Orlando, Florida, The latter check was payable to Public Bank;

was signed FRAN COLLINS, Secretary Treasurer;

and was counter

HoFFAThis check sent by Public Bnk for collection

from The Florida National Bank three times in August, 1959,

was returned unpaid each time for the reasons

thạt

the signature

JAMES R. HOFFA was a mechanical or facsimile signature and that

"withdrawal these funds not in

accord with agreement at time

funds deposited." As of August 28, 1959, there was

recorded

withdrawal of $400,000.00 from savings account #55001,

representing a

"charge back" to the account for the $400, 000.00

check drawn on The Florida National Bank at Orlando, deposited

with Public Bank August 12, 1959, and later returned unpaid.

The

deposit on June 27, 1960, Of $400,000.00 to savings account

#55001 represented the proceeds of collection item OG #1606

(Public Bank), $400,000.00 check on The Florida National Bank

at orlando, apparently paid through wire transfer to Hanover

Bank, New York, New York, and City National Bank and Trust

Company of Chicago, Illinois.

5140

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