A Small Town with a Short Memory
St. Louis is a Small town with a Short memory.
This is a story about another serial defrauder, Marvin Cotlar who was working for General American Life insurance company in the late 60’s at a mid-level position. He was caught embezzling $130k which would be a lot more today. He was sentenced to eight years in Club Fed and released after 22 months. It always amazes me that large companies can be defrauded by insiders-especially those at his level. (In the next few weeks, I will report on the number of such local embezzlements in the past year.)
Flash forward about another 15 years and Cotlar forms Hanley Worldwide-an advertising agency which serves Anheuser Busch. Hanley shuts it doors two days before Christmas 1983 when its bank cut off funds and shut it down. The following February unsecured creditors put it into involuntary bankruptcy and local legend Gerald Rimmel was appointed trustee.
Rimmel hired Atec Liquidators to handle what would seem to be a routine case. (ATEC was then owned by my uncle in Law Paul “Buddy” Lerman) When ATEC started reviewing what was left of the paperwork (after Cotlar and his friends had shredded much of it) he noticed that Hanley had purchased Porsches and Rolex watches. Cash was missing. The the missing cash and luxury items turned out to be bribes to obtain business from Anheuser-Busch.
Five Brewery executives were fired and two went to prison. Cotlar himself was sentenced to two years for defrauding the IRS and fined a paltry $10k. The judge presiding was William Hungate in one of his first criminal cases, Hungate had served on the House Nixon Impeachment Committee. Hungate was from Mark Twain’s hometown of Hannibal Missouri and was famous for saying during the hearings that “… if an Elephant walked into the hearing room Republicans (who kept complaining that the Democrats were drawing inferences) would say “That could be a mouse with a glandular condition”
Mr. Cotlar seems to have relocated to New York although someone with a similar name seems to have spent 7 years in Zimbabwe. His current occupation is “chief cook and bottle washer at Ruth’s kitchen.”
General American, the company that Cotlar first defrauded, went receivership in 2000 when it made poor investments and was acquired by MetLife . Its board of directors eventually settled a suit by the liquidators for $35m.
The board included August Busch III, William Cornelius, retired chairman of what is now Ameren Corp. Bernard Edison, retired president of the former Edison Brothers Stores Inc. Craig Schnuck, chairman of Schnuck Markets Inc.; William Stiritz, chairman of Ralcorp Holdings and Energizer Holdings; as well as Andrew Taylor, chairman and chief executive of Enterprise Rent-A-Car.
With all those heavyweights on General American’s board one might have thought that they would have kept a better watch on its investments. On the other hand, it let a serial defrauder steal $130k of its money and Mr. Busch’s brewery got swindled by that third rate huckster..