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Chapter 25 A Thumb on the Scales of Justice Book: The Indomitable Tin Goose Subtitle: The True Story of Preston Tucker and His Car Author: Charles T. Pearson Publisher: Abelard-Schuman Year: 1960 |
25 A THUMB ON THE SCALES OF JUSTICE
EARLY IN JANUARY of 1949 Tucker had written Thomas B. Hart, SEC Regional Administrator, protesting newspaper stories which he charged originated with SEC. Hart's reply said that “at no time has this Commission ever furnished or made available any information to any newspaper or any other unauthorized sources.”
Hart further assured Tucker that the Commission's investigation “has at all times been conducted in a fair and impartial manner and in the strictest of confidence.” Less than two months after Hart's letter was received, the biggest and most sensational automotive story of the year broke in the Detroit News.
“GIGANTIC TUCKER FRAUD CHARGED IN SEC REPORT” said the streamer on the front page of the Sunday paper March 13.
A subhead said “Car is Called a Monstrosity,” and below it that conspiracy indictments were urged for Tucker and twelve of his associates. The story was under the by-line of Martin S. Hayden, Washington correspondent for the News, and carried a Washington dateline. Nowhere was the SEC report referred to as “secret” or said to be considered confidential by SEC or the Justice Department.
In the story Hayden listed and elaborated charges in the report: that Tucker got $750,000 of corporation funds, that claims for the car “were grossly misleading and false,” that all the cars were “hand built.” Much of the story, it seemed obvious, came from interviews with early Tucker employees, because references were almost entirely to the first experimental model, the Tin Goose.
Timing couldn't have been better. Detroit readers were following the grand jury in Chicago, worrying that Tucker might become competition and threaten their security. And news was scarce that day.
Editors of the News couldn't have been stupid enough not to realize that the story would damage Tucker, perhaps irreparably, and no one could doubt it would influence the grand jury. A grand jury isn't held incommunicado like a trial jury, herded back and forth to hotel rooms by a bailiff. Members go home at night and come back in the morning, and it is only reasonable to expect that they read newspapers, listen to radio, watch television like other people, and talk about things that are going on. The chief occupation of jury members was the investigation of Tucker, and the Detroit News story—re-printed and rewritten in countless other papers—would have first claim on their attention. Tucker couldn't have countered the News' blast if he had had his own printing presses.
Outside the courtroom opinion grew stronger that the automotive industry was behind Tucker's opposition, and that Senator Ferguson and SEC Commissioner Harry McDonald, another Detroiter, were among those pulling the strings behind the scenes.
The industry may have guffawed publicly, as reported by Tom McCahill, when Tucker was mentioned, but privately they knew that the Tucker performed. They knew from disinterested reports by men whose judgment was unquestioned, and from their own sources inside Tucker's organization. Spies are as inherent a part of the industry as in international diplomacy, and tales of their exploits have become legend.
There was the testimony of men like McCahill and Purdy, and Detroit's own automotive writers, who a year earlier told their readers what they thought of Tucker's new automatic transmission. One comment most widely heard was that if Tucker ever got into production, it would cost the industry millions for new models that could match the Tucker for horsepower and performance.
When queried about the release of the SEC report, U. S. Attorney Otto Kerner, Jr., expressed amazement and shock and said he had telephoned Alexander M. Campbell, head of the Criminal Division of the Justice Department, and urged him to make an immediate investigation. Kerner said he wanted to learn who was responsible for disclosure of what he said was a “confidential” report. Edmund M. Hanrahan, SEC chairman, told the Chicago Sun-Times by telephone, from his home in New York, that he was returning to Washington immediately “to check up on this leak.” Hanrahan promised a full investigation to learn how the report became public.
It looked for a time as if the government might ease up on Tucker long enough to check on some of its own officials. If the investigations were made, the answers should have been known to Kerner and Hanrahan within days, or even hours.
Up to the News story it was by no means certain that the grand jury would decide Tucker was a criminal and guilty of conspiracy to defraud, and there was a possibility that the jury wouldn't even return an indictment. Tucker and his associates were charged with waste, extravagance and mismanagement, but these would not stand up as criminal offenses.
Moreover, some testimony was favorable to Tucker. Offutt and others told the jury how the cars performed at Indianapolis, and other witnesses refuted accusations that no engineering had gone into the Tucker car. There was sworn testimony that Senator Ferguson was out to “get Tucker,” and that McDonald had told associates in a Detroit golf club that the heat against Tucker was terrific, and that automobile officials had followed him into the men's toilet to talk to him about Tucker.
But by piling up witnesses and exhibits, Kerner and his force were convincing the grand jury that the Tucker 48 did not have all the features which were publicized before and after Tucker sold his stock. The mill was grinding inexorably, aided by the flood of adverse publicity following the News story.
While the grand jury was still in session Tucker had been lined up for a new blast, even stronger than the first, and like the first it could have been expected to influence the grand jury's decision. Neither Kerner nor SEC could have known how long the grand jury would deliberate.
The new blast was a story in the June 25, 1949, issue of Collier's magazine, with the heading both on the cover and inside: “The Fantastic Story of the Tucker Car.” It was similar to the one in the News but longer, more detailed, and written by one Lester Velie.
Tucker was convinced that the leak to the Detroit News, and later to Collier's, was deliberate and from the government itself. So he waited impatiently after both SEC and Kerner promised investigations, believing that if he were right and the information was made public, it would end the grand jury hearing.
If the grand jury returned an indictment and the disclosure wasn't made until after the trial started, his attorneys felt sure the trial would end with a motion to dismiss, because both the grand jury and the trial would be a farce if it were proved that the prosecution had its thumb on the scales.
But neither SEC nor the Justice Department ever made the result of their investigations public, if the investigations were made as promised.
Indictment of Tucker and seven of his associates was announced by Kerner June 10, and newspapers across the country carried headlines “INDICT TUCKER ON 31 COUNTS”—“TUCKER, 7 AIDES INDICTED.” Of the thirty-one counts in the indictment, twenty-five charged mail fraud, five were on violations of SEC regulations and one on conspiracy to defraud. Rumor was that it might be a year before the defendants were brought to trial, because of a crowded Federal Court docket.
Those indicted along with Tucker were listed as Harold A. Karsten, 58, who had helped promote the deal originally and was squeezed out; Floyd D. Cerf, 60, the broker who handled the stock issue; Robert Pierce, 63, who served most of the time as a consultant without salary; Fred Rockelman, 63, former vice president of Ford and president of Plymouth; Mitchell W. Dulian. 55, one of Tucker's personal friends and sales manager; Otis Radford, 45, who served briefly as comptroller, and Cliff Knoble, 50, advertising manager. Bond was set at $25,000 for Tucker, Cerf, Pierce and Karsten, and at $10,000 each for the rest. If convicted, each of the defendants faced possible penalties totaling 155 years in prison and $60,000 fines.
Tucker branded the charges “silly and ridiculous,” and hit back at SEC saying:
“A secret investigation like the one conducted by the Securities and Exchange Commission is likely to upset any company, strong or weak, old or new, and is worse than an indictment.”
Tucker was yet to learn that an indictment can be as bad as a conviction, and accomplish essentially the same results. Time alone would finish off Tucker's corporation and his car. Manufacturers were steadily increasing production to meet rising remand, and the government wouldn't hold Tucker's plant idle for a year waiting to find out whether a jury would find him guilty or innocent.
During the hearing Tucker received scores of letters with money and checks enclosed, urging him to keep fighting. One letter from Sidney, Ohio, was written with a pen and addressed
“Preston T. Tucker, Chicago, Illinois.” The letter said:
Dear Mr. Tucker:
I was just getting ready to buy one of your new cars when the big boys squeezed you out. I wouldn't give up so easy. Why not ask every one in the country to send you a buck? With approximately 160 mil lion in this country you should get $50 million. Here's the first one.Good Luck
It was signed T. A. L., or the last letter could have been “T.”
On the advice of his attorneys Tucker returned letters with checks and money to senders, when the letters had return addresses. The lawyers said they had enough problems already without getting the Post Office Department on their necks too, and probably Internal Revenue besides.
Tucker kept the one letter from Ohio with the dollar bill still attached. It was letters like this which helped him to keep on working long after most of his associates had given up, and strengthened his conviction that the people still believed in him and his car.