(Pay-roll sheet of Don Lake, 1940, S. S. Account No. 284-03-5712, was received in evidence, marked "Exhibit No. 28" and is printed in the appendix of this volume.) Mr. TOLAND. I show you what purports to be a photostatic reproduction of your pay-roll record for 1941 of Jack & Heintz, Inc., and ask you if that purports to reflect your pay-roll record of that company? Mr. LAKE. That is right. Mr. TOLAND. I offer that in evidence. (Pay-roll sheet of D. W. Lake, 1941, S. S. No. 284-03-5712, was received in evidence, marked "Exhibit No. 29" and is printed in the appendix of this volume.) The CHAIRMAN. How much is that a month? Mr. TOLAND. The total that appears on here is salary and bonuses of $25,153.32 for the period covered. The CHAIRMAN. What was the salary with Jack & Heintz, Inc.? Mr. TOLAND. The salary was what, $7,500? Mr. LAKE. That is what I am making now. Mr. TOLAND. What were you making then? Mr. LAKE. I was raised to $7,500 on the 15th of December, and prior to that I was making $5,000. Mr. TOLAND. You started at what? Mr. LAKE. Two and a quarter. Mr. LAKE. That is right. Mr. TOLAND. And when was the next raise in salary you got? Mr. LAKE. I believe it was the 15th of November, I'm not surethe 30th of November. Mr. TOLAND. Weren't you receiving $3,600 a year April 15, 1941? Mr. LAKE. That is right. You didn't give me a chance to tell you when the next raise came through. That was January 1, I was raised to $3,600 and on May 1 I was raised to $5,000. Mr. JOHNSON. What was the total for $1941? Mr. TOLAND. $25,153.32. I show you an original check in the amount of $10,000, dated December 20, 1941, and ask you if that is your signature on the back, and if you received it and deposited it or transferred it to your wife? Mr. LAKE. I received that check and deposited it in my wife's name. Mr. TOLAND. I offer that in evidence. (Check of Jack & Heintz, Inc., No. 23758, dated December 20, 1941, was received in evidence, marked "Exhibit No. 30" and is printed in the appendix of this volume.) Mr. TOLAND. I show you check dated December 20, 1941, in the amount of $600 and ask you if that bears your signature on the back? Mr. LAKE. That is my signature. Mr. TOLAND. I offer that in evidence. (Check of Jack & Heintz, Inc. No. 23003, dated December 20, 1941, was received in evidence, marked "Exhibit No. 31" and is printed in the appendix of this volume.) Mr. TOLAND. I show you four checks, one dated October 31, 1941, in the amount of $3,500; one dated December 9, 1941, in the amount of $3,500; one dated October 21, 1941, in the amount of $2,000 and one dated September 25, 1941, in the amount of $1,500 and ask you if that is your signature that appears thereon and if you received and deposited that money to your account or to your wife's account? Mr. LAKE. I received these checks and deposited them to my wife's account. One of them, I think, went to mine. Mr. TOLAND. I ask you to tell the committee the distinction between the four checks that I have just showed you and you have identified, and the photostatic check that I show of $600, dated December 20, as to form. I offer them in evidence. Mr. LAKE. As to form? (Four checks of Jack & Heintz, Inc., No. 3391, dated October 21, 1941; No. 3685, dated October 31, 1941; No. 2895, dated September 25, 1941; No. 4571, dated December 9, 1941, were received in evidence, marked as one "Exhibit No. 32" and are printed in the appendix of this volume.) Mr. TOLAND. What do the four checks represent? Mr. LAKE. These checks here were an advance that was made to me and later considered as additional compensation for the year 1940 or 1941. This check of $600 represents the Christmas bonus that was paid on the same basis as all the employees received for the length of service with the company. Mr. TOLAND. Are these voucher checks? Mr. LAKE. Yes, sir. Mr. TOLAND. And this is the regular pay-roll check? Mr. TOLAND. Will you identify those four checks on there, on your pay roll. They all appear on the pay roll, don't they? Mr. LAKE. That is right. Right down here is the total of these three here. Mr. TOLAND. Every one of the four checks known as the voucher checks that you have identified appear on your pay-roll sheet? Mr. LAKE. That is right. Mr. TOLAND. In 1942, what bonuses, if any, have you received? Mr. LAKE. I have received the regular monthly bonus that the rest of the employees receive, the incentive bonus we get for long hours and getting out production. Mr. TOLAND. And how much is that? Mr. LAKE. I believe that amounts to $37.50 a month. Mr. TOLAND. What bonus did you receive in the month of March 1942? Mr. LAKE. $7,000. Mr. TOLAND. I show you what purports to be your pay-roll record for the year 1942 and ask you if that correctly reflects the moneys paid to you by this company? Mr. LAKE. Yes, sir. Mr. TOLAND. I offer that in evidence. (Pay-roll record of D. W. Lake, S. S. No. 284-03-5712, for 1942, was received in evidence, marked "Exhibit No. 33" and is printed in the appendix of this volume.) Mr. TOLAND. The record shows on the 5th day of March, 1942, the witness received a $7,000 bonus. I show you what purports to be a photostatic reproduction of your bank account and Mrs. Lake's, and ask you if that is a true and correct copy of your account? Mr. LAKE. That is right. Mr. TOLAND. I offer that in evidence, Mr. Chairman, (Bank statement of D. W. Lake and Renata E. Lake in the Union Bank of Commerce Co., Cleveland, Ohio, was received in evidence, marked "Exhibit No. 34" and is filed with the committee.) Mr. TOLAND. Can you give the committee any valid reason as to why you should have received all of this compensation that you have received in the years 1941 up to and including to date? Mr. LAKE. Well, I believe the nature of my work, the long hours that I put in-I am a key man in the organization, considered as such-in comparison with the amount of salary that is paid to other comptrollers of different companies, it is nothing. Mr. TOLAND. Notwithstanding the fact that your compensation in August 1940 was $2,400 per annum? Mr. LAKE. That is right. Mr. TOLAND. That is all. Mr. MAAS. I want to ask several questions. Your Christmas bonus was $600 and you said that is based on length of service and so on. How long had you been with the company at last Christmas? Mr. LAKE. Last Christmas I had been with the company about 15 months-141⁄2 to be exact. Mr. MAAS. Your assistant comptroller had been with them about 6 weeks and he got $1,100. How does that happen, the shorter your time with them, the greater the bonus? Mr. LAKE. It could be. Mr. MAAS. How could it be if you say the length of service? Mr. LAKE. You musn't forget the fact that the thousand dollars was a little additional bonus, the same as the rest of us got. Mr. MAAS. How much was your Christmas bonus in addition? Mr. MAAS. I am not talking about his December 29 $10,000. He got $1,100 as a Christmas bonus. You said you got $600? Mr. LAKE. That is right, I got $10,000 before that. Mr. MAAS. You got $10,000? Mr. LAKE. Sure; why not? Mr. MAAS. Why not? Mr. LAKE. Why shouldn't I take it? Mr. TOLAND. That is the position you want to take here? Mr. TOLAND. What is your position with regard to this money? Mr. MAAS. That may be a matter of opinion. I want to ask you what was the nature of these advances that were made to you which later were credited in your bookkeeping as bonuses? They originally show up in the records of the company as advances. What were those advances for? Mr. LAKE. The first advance, the total advance I will say-I wanted to buy a home for myself, and I was willing to give a mortgage on the home, and conditions were such that Mr. Jack said, "Well, that is O.K. Whatever it costs, we will advance you the money.' So, that is the circumstance. Mr. MAAS. There were a number in a short period, a number of separate checks given to you, carried in your books as advances and you credited them to your wife's account. Was the home purchased in your wife's name? Mr. LAKE. No; it is in both our names. Mr. MAAS. How come the checks were deposited in your wife's name? Mr. LAKE. Just as a matter of procedure. Mr. MAAS. With no other thought in mind? Mr. LAKE. No. Mr. MAAS. Just accidental? Mr. LAKE. That is right. Mr. MAAS. I still am not satisfied with the reason that these were carried as advances. Did you apply for them as a loan from the company? Mr. LAKE. That is right. Mr. Maas. The understanding at that time was that you were to pay them back? Mr. LAKE. That is right. Mr. MAAS. When it was decided to change these from loans to gifts? Mr. LAKE. Well, it was never decided to change them from loans to gifts, as I recall it. Mr. MAAS. A bonus is a gift. Mr. LAKE. Not necessarily. Mr. MAAS. It is unless it is-it was in this case, certainly. Mr. LAKE. I don't know whether it was or not. Mr. MAAS. At the time that you made the request for the advance and it was granted to you as a loan, it wasn't considered as part of your compensation, was it? Mr. LAKE. Not at that time. Mr. MAAS. And later they decided to forgive the note, or whatever basis it was, and give it to you as a gift, so it wasn't earned at the time it was received. The decision to call it earned was arrived at sometime later. When was that decision arrived at? Mr. LAKE. Definitely, I don't know. Mr. MAAS. When did you find out? Mr. LAKE. The decision was never arrived at to call it a gift. Mr. MAAS. Call it a bonus if you prefer that title. When did you become aware of the fact that that was going to be treated as a bonus and part of your compensation and not to be repaid? Mr. LAKE. In December. Mr. MAAS. When in December? Mr. LAKE. Along about, so far as I know, the 20th of Decemberbetween the 20th and the 25th. Mr. MAAS. And when you were advised that this would be considered part of your bonus, was there any arrangement that you were to return any part of it to Mr. Jack or to anyone else? Mr. LAKE. No, sir.. Mr. MAAS. Not at any time? Mr. LAKE. No, sir. Mr. MAAS. Have you ever returned any money to Mr. Jack or anybody in the company? Mr. LAKE. No, sir. The CHAIRMAN. In 1942, in March of this year, you received a bonus of how much? Mr. LAKE. $7,000. The CHAIRMAN. Is that your only bonus that you received in 1942? 70533-42 Mr. LAKE. Well, the regular incentive bonus that is paid monthly of $37.50. The CHAIRMAN. Are those the only bonuses of 1942? Mr. LAKE. That is right. The CHAIRMAN. What bonus did you receive in 1941? How many bonuses did you get in '41? Mr. LAKE. Two of them, plus the monthly bonus. Mr. LAKE. The first was the $10,500. The CHAIRMAN. When was that? Mr. LAKE. That was in these four payments here. The CHAIRMAN. In the four payments that you tried to just explain? Mr. LAKE. That is right. The CHAIRMAN. The second one was on December 20? That was how much? Mr. LAKE. That was $10,000. The CHAIRMAN. The first was how much in dollars and cents? The CHAIRMAN. Ten thousand five hundred dollars in bonus in 1941 was the first one. The second one was for how much? Mr. LAKE. That was $10,000. The CHAIRMAN. In 1941. So you received a bonus, not considering your monthly bonus nor your Christmas bonus, of $20,500 in 1941. Mr. LAKE. That is right. The CHAIRMAN. You received a bonus at Christmas of how much? Mr. LAKE. $600. The CHAIRMAN. In addition thereto you received $37 per month. bonus? Mr. LAKE. That is right. The CHAIRMAN. In 1942, in the third month, you received a bonus of $7,000? Mr. LAKE. That is right. The CHAIRMAN. Making in all $27,500 in bonuses you have received those three bonuses amount to $27,500. Mr. LAKE. Yes. The CHAIRMAN. Plus your monthly bonus of $37.50. Mr. LAKE. That is right. The CHAIRMAN. Plus your $600 bonus for Christmas. Mr. LAKE. That is right. The CHAIRMAN. How many months have you been with the company? Mr. LAKE. Fourteen and a half months. The CHAIRMAN. Fourteen and a half months. You first started. in at how much salary? Mr. LAKE. $225. The CHAIRMAN. $225 per month? How much is that a year? Mr. LAKE. $2,700. The CHAIRMAN. Then when was your salary raised? Mr. LAKE. I think I received one check on the basis of two and a quarter and then it was raised to $300 the following pay-day. I think that was the 1st of December, or something like that. The CHAIRMAN. The 1st of December '40? Mr. LAKE. '40. The CHAIRMAN. What was your salary in '41? |