University Daily Kansan, May 3, 1985
NATION AND WORLD
Page 11
E.F. Hutton hushed by check-fraud fine
By United Press International
WASHINGTON — E.F. Hutton Co., a major player on Wall Street, pleaded guilty yesterday to 2,000 federal counts of mail and wire fraud and was fined $2.75 million in a check-kiting scheme that may have involved a total of $10 billion.
Bob Ogren, chief of the Justice Department's fraud section, estimated that more than 400 banks lost "tens of millions of dollars" in interest payments on money that did not exist as a result of the 19-month E.F. Hutton scam and said other firms may be doing the same thing.
THE 82-YEAR-OLD company said the activities "did not involve or threaten customer or client funds. The injured parties were certain commercial banks, to which the company will make full restitution."
EF Hutton, the nation's fifth largest brokerage firm, has agreed to pay back all the money illegally but so far she has set aside only $8 million.
Attorney General Edwin Meese said at a news conference the firm's guilty plea by Hutton and the $2.75 million fine "sends a message to the business so-called white-collar crime by business enterprises will not be tolerated."
No individuals were charged in the scheme, which the Justice Department described as check kiting, where checks are written on funds of distant banks before money is available to cover them.
At a later briefing for reporters, Ogren said, "There are some indications we've received it is happening other places." He did not elaborate.
Asked why no individuals were prosecuted Meese said, "It developed as a corporate enterprise It involved the activities of the corporation."
THE COMPANY ENTERED its guilty plea in federal court in Scarleton, Pa., to 2,000 separate counts of mail and wire fraud — each charge representing a single check. Those checks were worth $4,399 and the estimated E.F. Hutton ran $10 billion through the system.
Albert Murray, an assistant U.S. attorney from Pennsylvania who spent 18 months working on the case, asked how the scheme succeeded.
Each count drew a fine of $1,000 and the additional $750,000 levy was to deray the costs of the government's investigation.
The department said that between July 1, 1980 and Feb. 28, 1982 E.F. Hutton drew against uncollected securities for $35 million, sometimes exceeding $250 million.
"YOU REMEMBER THE old saying ... When E.F. Hutton, whatever," he said. "It may seem rather weird, but the bottom line is that when E.F. Hutton comes with its bank account and the millions of that it generates a day, very few banks are going to question the activity
E. F. Hutton, based upon its
Pay teachers for merits, Bennett says
By United Press International
WASHINGTON - Education Secretary William Bennett says the average teacher salary of $2,000 is about right for the "average teacher," but the very good ones should get more and bad teachers should get "zero."
The NEA, which has pushed for higher pay for teachers, noted the average teacher salary was now just over $22,000 and asked Ben Carson to change its name to be" Teachers are now among America's lowest-paid professionals.
Bennett, in an interview with the National Education Association, America's biggest teachers' union, also said that if given a magic wand that could accomplish one change in teaching, a wave would it to eliminate drugs.
"No drugs—none zero, out, gone,
disappear." Bennett said in the
interview to be published in the June
edition of the union's monthly maga-
The secretary said, "Well, I don't think there's a platinum form that says this is what teachers' salaries should be. I think it should be a function of local facts and circumstances, ability to pay, and obviously, in my view, merit — what teachers deserve."
He said, "I think it should be higher for very good teachers. I think it should be about where it is for students." It should be more focused. "It should be zero for bad teachers."
Bennett, 41, a former college scholar and football player, was asked if he had stayed in touch with any of his school teachers. He said, "I met him at a third grade teacher upon my appointment as secretary in January."
Bennett said, "She said she never would have guessed it in a million years."
Robert Fomon, chairman and chief executive officer of E.F. Hutton, said "This is a sad and difficult day for E.F. Hutton and for me, personally."
corporate integrity and its financial
commitment, was able to conduct the
scheme.
Securities and Exchange Commission regulations bar any convicted felon — including a company — from trading in securities for at least 10 years, but Hutton asked for and was granted a 180-day exemption from the rule while the commission investigated its actions.
SEC spokeswoman Mary McCue said the exemption was granted to avoid disruption of the securities market. She also said SEC Chairman John Shad, a former executive of the Securities Department, out of participation in the case.
Fomon said the situation developed because Hutton had a policy during the time the scheme was operating of rewarding branch managers for the success.
As an example of how the scheme worked, Murray used 1981 records of E.F. Hutton's transactions with the Virginia Bank in Alexandria, VA.
Day after day, Hutton owed the bank about $9 million. Each day, new checks were deposited to cover the previous day's checks, but the bank never got the money — only more checks.
During the year, Hutton actually deposited $33 million in customer receipts at the bank. At the same time, it took $640 million from the balance being covered by $99 million in bogus deposits, Murray said.
Justice Department officials refused to disclose names of E.F. fulton executives involved in connecting the profitable paper shuffle.
BLUE RIDDIM BAND
reggae dance May 4
Lawrence Opera House
doors open at 8 tickets $4
NEED SUMMER OFFICE WORK?
NEED SUMMER CARE!
Work temporary as a Typist, Data Entry, 10-Key, PBX or
General Office. Rate range $4.00 to $5.50/hr.
You will be assigned to jobs in the area you prefer.
We serve over 900 accounts in Johnson, Jackson and Wyandotte counties.
For appointment to register, phone Debra Heister:
(816) 931-3222
Crown Services, Inc.
Temporary Personnel Specialists
4510 Bellevue, Ste. 120 Kansas City, MO 64111
ATTENTION MINORITY GRADUATES
Are you graduating Spring '85, Summer '85, and/or know someone who is a Fall '84 graduate? The Office of Minority Affairs is having its annual "Minority Graduation Banquet" to honor graduating students.
IF YOU WOULD LIKE TO ATTEND OR WANT MORE INFORMATION, CALL 864-4351
The Jayhawker Yearbook
is in!!! Distribution will be in front of the Kansas Union
and
on Wescoe Beach
Tuesday, May 7 - Thursday, May 16
10 a.m. - 5 p.m.
Cost is $22
Cost is $22
Drinking Myth of the Week
The Student Assistance Center
CASH OUT OF TEXTBOOKS
Now thru Finals
Jayhawk Bookstore
1420 Crescent Rd.·Lawrence, Ks. 66044 (913)843-3826
"At the top of Naismith Hill"