Mr. TOLAND. I show you your income tax return for the year 1940 and I ask you to tell the committee what you reported as salary received for that year? Miss BOWMAN. $4,448.38. Mr. TOLAND. And that correctly reflects the amount that appears on the exhibit that I heretofore showed you, for the amount of money you received from Jack & Heintz, Ltd.? Miss BOWMAN. It must be, sir. It is reported that way. Mr. TOLAND. I would like to read into the record the return of Adeline Bowman, 12,900 Forest Hill Avenue, East Cleveland, Ohio, for the year 1940: Salaries and other compensation for personal services, $4,448.38. Mr. COLE. What was the last year in which you received no bonus while you were employed by Mr. Jack? Miss BOWMAN. I couldn't tell you. Mr. COLE. Did you receive any bonus in 1940? Miss BOWMAN. I couldn't say. It is all in the record. You have all the records. Mr. COLE. Counsel has just read you your own income tax return in 1940 in which you set forth your income as being $4,400. What amount of that, if any, was represented by a bonus, or was that your salary? Miss BOWMAN. That was the salary. Mr. COLE. That was your salary? Miss BOWMAN. Yes. Mr. COLE. Then you didn't receive any bonus in the year 1940? Miss BOWMAN. It isn't marked down there. Mr. COLE. Then apparently, 1940 was one of those lean years that you spoke of, out of the 22. What was Mr. Jack doing in 1940? Miss BOWMAN. Working. Mr. COLE. What was his business, what was he making? Mr. COLE. You were working for him as his private secretary just a year and a half ago in 1940. Now, if you are worth $25,000 to him now as secretary, it seems as though you might be able to tell us what he was doing in 1940 in a business way? Miss BOWMAN. I think perhaps you better ask him. Mr. COLE. No, you can tell us. Anybody who is worth $25,000 can remember back to 1940. The CHAIRMAN. What business was he in in 1940? Miss BOWMAN. Wasn't he in the Jack & Heintz Co.? Mr. TOLAND. According to the records, November 15 was the first payment from Jack & Heintz that you received, which equalled the amount that appeared in the tax return of $4,400. Miss BOWMAN. I wish you would ask Mr. Jack that. Mr. COLE. Did you ever, prior to 1941, receive a bonus from Mr. Jack amounting to $20,000 in any one year? Miss BOWMAN. I don't remember, sir. Mr. COLE. You certainly would remember any one year that you received a bonus of $20,000. Don't you think you should remember it? Miss BOWMAN. No, I don't. The CHAIRMAN. Thank you, Miss Bowman. Mr. TOLAND. In connection with Miss Bowman's testimony regarding her sales of securities, I offer in evidence certain documents furnished by her. (Four documents were received in evidence, marked "Exhibit 27" and are filed with the committee.) TESTIMONY OF DONALD W. LAKE, COMPTROLLER, JACK & HEINTZ, INC. Mr. TOLAND. May it be understood, Mr. Chairman, that there are some original records of the company that I have introduced, that are produced under subpena, that they be withdrawn ard photostats substituted in lieu thereof. The CHAIRMAN. Of course, and I would suggest that you photostat as much of the records as you can and let the records go back. Mr. TOLAND. Will you tell the reporter your full name? Mr. LAKE. Donald W. Lake. Mr. TOLAND. And where do you reside, Mr. Lake? Mr. TOLAND. How long have you been so employed? Mr. LAKE. That is right. Mr. TOLAND. Tell the committee briefly your previous business experience and the amount of annual compensation that you received up to and including August 1940, prior to your employment with this company. Mr. LAKE. I was employed as a public accountant for approximately 12 or 15 years. Mr. TOLAND. With what company? Mr. LAKE. Ernst & Ernst; and Laubscher & Smith; and Touche, Niven & Co.; and a few others. Mr. TOLAND. What was your annual compensation? Mr. LAKE. The annual compensation, as I recall, ran between $2,000 and $2,400. Mr. TOLAND. And what was the compensation that you were receiving in August 1940? Mr. LAKE. I believe it was $2,400 a year. Mr. TOLAND. And what was the compensation that was fixed when you were first employed by Jack & Heintz, Ltd.? Mr. LAKE. Two and a quarter a month, I believe; two and a half. Mr. TOLAND. And what is your compensation now? Mr. LAKE. $7,500. Mr. TOLAND. I show you what purports to be a pay-roll sheet of Jack & Heintz, Ltd., showing the first entry thereon for November 15, 1940, with the total amount received by you of $632.54, and ask you if that is a correct record as to the payment you received from that company? Mr. LAKE. That is right. Mr. TOLAND. I offer it in evidence. (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. 1941? Mr. TOLAND. Weren't you receiving $3,600 a year April 15, 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. (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. LAKE. That is the pay-roll check, right. 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. LAKE. $10,000. 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 conditiors 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. |