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Post by Rab on Mar 5, 2006 10:12:23 GMT -5
[Originally posted on LindyKidnap March 7 2002.] As I mentioned here several months ago, I have been studying Hauptmann's finances. I have posted some of the detail in response to a poster on Mike's board so I thought I should share it here also. This first post relates to the central tenet of the Genau report, that Hauptmann deposited some $26,000 in cash following the kidnapping. I have analysed the Genau report. It is a disingenuous accounting, misleading and perhaps even dishonest. It basically says "here are all Hauptmann's cash deposits, add them up and it comes to $26,000". But of course there was churning between accounts. There were some strange movements of money and one needs to "net" those to gain a true understanding of his activity. I have done this via spreadsheet, showing Hauptmann's activity across all his accounts and showing the net effect of his cash deposits. There is to me a clear unexplained enrichment but not one of the order of that claimed by Genau. Here is a link to a HTML version of the spreadsheet: homepage.ntlworld.com/foxleywood/all-accounts.htmI would be happy to email anyone the MS Excel version for further study. The spreadsheet reconstructs the activity from the Genau report showing, crucially, Hauptmann's cash balance at any one time across ALL his accounts. This eliminates the churning and the accusations of double counting. I have started at a zero base, that is assuming Hauptmann had no cash in these accounts. Starting with a zero base enables us to look at the activity post-kidnapping only. So, remember, if the accusation is that Hauptmann used his own money to fund his stock trading then there needs to be a withdrawal from somewhere to substantiate this. The spreadsheet shows the details and the rolling balance (rightmost column) following each transaction. This rolling balance is not necessarily a balance on hand but rather a balance of all cash deposited less all withdrawals up to that date. Obviously stock purchases and losses would deplete the actual balance on hand but that is not what concerns us, the focus should be on net cash deposits. I have also grouped by colour those transactions which appear to be obviously related in terms of movement between accounts; there may be others. So, in subtracting the withdrawals we see a peak of net cash across Hauptmann's accounts during summer 1933 of some $18,600. Remember, this is with cash movement between accounts eliminated. During 1932 the amounts are relatively modest but building steadily. This method is actually generous to Hauptmann in that it eliminates all withdrawals - including those which are probably just for spending money. So, while it's not an unexplained $26,000 there is certainly an unexplained peak of some $18,600 down to $15,000 by the time of Hauptmann's arrest. Just so we're clear: this is actual cash money, not stocks or stock values or profits from stocks. Just cash deposits balanced across all of Hauptmann's accounts. To me this is unexplained enrichment. Though it does indicate that Hauptmann probably didn't account for all of the money. Remember also that this is just cash deposited to his accounts - it doesn't include cash spent or earnings lost. I have compiled a separate spreadsheet detailing what is known of their income and expenditure post-March 1932 and will post that later - it helps give a more rounded view.
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Post by Rab on Mar 5, 2006 10:14:16 GMT -5
It is often claimed that Hauptmann made profits from fur trading with Fisch and that this accounts for his apparent affluence. The support for this theory comes from entries in Hauptmann's ledgers which show transactions with Fisch and which are detailed in the Genau report.
What we have in Hauptmann's ledgers is an apparent accounting of transactions but little in the way of backup to show that these transactions were anything more than Fisch's imagination.
Only one of the transactions, on May 26 1933 shows a counter-party, that is the person who supposedly bought the furs. This is also the only one which indicates a cash payment. (Genau p36) But, unfortunately, the counter-party is Klar and Miller, the very same company who according to Kennedy (CoC PB 148, 163) was a figment of Fisch's imagination for which he created bogus letterheads and had Louise Helfert type out a list of non-existent furs.
The accounting of fur transactions in Hauptmann's ledgers show a paper profit of nearly $7000 but I don't think we can fairly say that Hauptmann made $7000 from his fur dealings as it is very clear from the ledger that Hauptmann did not have a full share in each transaction. In some he is shown to have a 20% share, in some a half share and in others apparently no share. So even if these transactions were all real - which I doubt somewhat for reasons discussed below - Hauptmann's share would have been $2,498 (50% of May 5 1933, 50% of May 26, 20% of July 15, 50% of Aug 8 and 0% of Oct 24). (Genau p36/37/38)
I have two reasons for doubting these transactions. Firstly, there is no record in the ledgers or Hauptmann's bank deposits (apart from the $2000 which I'll discuss at a later time) of any money coming from Fisch to Hauptmann in terms of profit. And, crucially, there is no record of any money going from Hauptmann to Fisch. If we are to believe that Hauptmann was making profits from furs then we must also accept the corollary - that he was investing in furs. And if that is the case then where is Hauptmann's percentage of the stake coming from? There are no withdrawals from his accounts for the cash supposedly spent on furs. So, for example, on May 5 1933 $1,680 was supposedly spent on furs. Hauptmann's 50% stake would have been $840 but there is no withdrawal from any of his accounts at that time to account for this expenditure. Nor for the later ones. Check the "all accounts" spreadsheet. You will see that, in fact, at these times Hauptmann was depositing money, not taking it out. So where was his stake coming from?
My second reason for doubting the accuracy of these transactions is Hauptmann's reaction after Fisch's death. He apparently comes to realise that he has been swindled by Fisch and later claims that Fisch owed him $7,000, which is more or less the paper profit shown on the furs. If he was making money with Fisch and if his accounting is an accurate record of profits actually made and received, why does Hauptmann claim to have been swindled? I have a theory which makes perfect sense in terms of Hauptmann's account and subsequent behaviour after Fisch's death and fits in with the events as related by Kennedy. Think about the facts and it makes perfect sense. Here it is:
Hauptmann and Fisch were certainly in partnership and they were playing the stock market and fur market together. But - and this is the important bit - money was not changing hands. I believe that Hauptmann was playing the market for Fisch using his own money. And he was led to believe by Fisch (through the fake letterheads etc discussed in Kennedy) that Fisch was making big profits for them in furs. But they were holding their own money, Hauptmann funding Fisch's investments with his own cash in the mistaken belief that Fisch was funding him on the fur side and that the paper profits he was recording were actually real and were a security against Fisch's stock debts. There is a precedent for this in Hauptmann's trading: he traded for Anna's Uncle Fred Gleiforst with his own money and paid Gleiforst a total of $182.50 profit for investments Gleiforst never had to actually make. (Genau p11/12). To me this theory accounts for the upsurge in activity in Hauptmann's stock market dealings during the summer of 1933. He was dealing not with Fisch's money, but with his own money at Fisch's urging believing that the paper profits from the furs acted as security. When Fisch left the trading returned to a more conservative level. When Fisch left for Germany he told Hauptmann that their profits were tied up in furs - a convenient supposed purchase of furs for $21,900 on Nov 3 1933, a month before Fisch left - and that they would lose money by selling them quickly. When Fisch died Hauptmann couldn't find all the furs and the ones he did find were worthless. (Kennedy).
So, it's a theory. As is the suggestion that Hauptmann made profits in fur trading. There is nothing to support it apart from Hauptmann's own ledgers which appear to me to be an accounting of paper transactions.
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Post by Rab on Mar 5, 2006 10:18:43 GMT -5
It is often claimed that Fisch paid money to Hauptmann and it was this money that accounted for the largest of the cash deposits to Hauptmann's brokerage accounts, mostly during Summer 1933. Insofar as I am aware, though, Hauptmann's own ledgers show only one payment from Fisch to Hauptmann and that is $2,103 on July 10 1933 "to 20% basis". (Genau p34). This amount is reflected in a deposit to Hautpmann's savings account, not his brokerage account, of $2,000 on July 20 1933. There is a later recapitulation in the ledger of the Fisch/Hauptmann account (the 17,500/17,000 accounting) and it shows no further money from Fisch apart from $15 on Nov 10 1933. (Genau p35) What it does show is $2,000 paid back to Fisch on Nov 14 and this is reflected in a $2,057 withdrawal from Hauptmann's brokerage account of the same date. So the only significant passing of money between Fisch and Hauptmann as recorded in the ledger is the $2,000 or so from Fisch which appears to have been repaid before he left for Germany and there is certainly nothing that I have seen which details other payments from Fisch, though I'm willing to be convinced if somebody can show me such. I reiterate again though what I said in my post regarding the fur trading: I believe that Hauptmann was trading on Fisch's behalf with his own money believing, falsely, that they were making profits in furs.
The accounting of the 17,000/17,500 accounts in Hauptmann's ledgers, which appear to be some sort of partnership books are interesting. There are many withdrawals under the "Richard Account" some of which correspond to withdrawals from Hauptmann's bank/brokerage accounts and some which don't. So it does made one wonder where these other "withdrawals" were coming from. The other point is that the transactions of the "Richard Account" continue on until July 1934, months after Hauptmann was aware of Fisch's death (end of April according to Kennedy). This seems rather strange unless it was some attempt to straighten things with Pinkus Fisch. But Fisch's safety deposit box was opened on June 5th 1933 (Kennedy) so surely the extent of the deception must have been apparent to Hauptmann before further "transactions" in the 17,500 account later in June and in July. Perplexing.
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Post by Rab on Mar 5, 2006 10:20:21 GMT -5
In order to explain the Hauptmanns apparent affluence and seeming lack of income post-kidnapping, it is often claimed that they had significant savings which allowed them to live as they wished. However, this is a difficult proposition to support.
Anna had a savings account at the Central Savings Bank (#4180). It was opened on Oct 27 1924 and closed on January 16 1928 when the balance was transferred to a new joint Hauptmann account (#25454). The balance when the transfer took place was $411.16. What happened to all Anna's savings? On Oct 4 1927 $3,750 was withdrawn from the account which the Hauptmanns used to buy their first mortgage leaving $288.28 in the account. Don't be misled by talk of the "money in Anna's account". She didn't have her own account after Jan 1928 - they had one joint account until in March 1933 (the same time as the brokerage name switch) account #25454 was closed and a new account (#110071) was opened in the name of Anna Schoeffler only but this continued to be, in effect, their joint account. (All this Genau p44).
Now to Richard. He had an account (#7614) at the Bank of Manhattan, opened Sept 12 1927. This was closed on Jan 16 1928 when the balance was transferred to the new joint account at Central Savings. The balance was just $782 (Genau p47). So in total on January 16 1928 the Hauptmanns had about $1,200 in savings, having spent the majority on the mortgage.
Now the confusion starts. Obviously they earned money between then and the kidnapping four years later. But they also spent money. Anna went to Germany in 1928 at a cost of about $700 for passage (Fisher), not counting loss of earnings and spending while there. Then in 1931 they paid $737 cash for their car. And they took the trip to California with Kloppenburg which cost $500 (Kennedy) and at least four months loss of earnings for each of them. So this is significant spending by the standards of the day. But the thing that it seems dug deepest into their finances was Richard's playing of the stock market. This is what happened:
On Nov 29 1929, just after the crash, Richard decided to start playing the market. He took $2,800 from their savings account (which considering they started with $1,200 18 months before and then paid for Anna's trip this must have been most of the balance), added $200 cash and opened a brokerage account with Carleton & Mott. He suffered large losses and had to pay in an additional $1,500 in June 1930 as well as smaller margin calls. (Genau p2). Up until the kidnapping he deposited cash in this account to the amount of $4,651 and made a trading loss of $3,543 (Genau p3). After depositing another $623 following the kidnapping, he closed the account and was left with the stock on hand, the equity of which was about $1300 (Genau p21).
So what this shows, to me at least, is that any savings the Hauptmanns had - from a base of $1,200 in Jan 1928 - cannot have grown much considering their spending, their absences from work on vacation, the difficulty for Richard in getting steady and well paid work during the depression and, most of all, Richard's losses in the stock market.
Hauptmann admitted during testimony that they only had about $200 in their joint savings account in March 1932. It's important to remember, and this is a source of confusion for many, that the Hauptmann's only had one savings account in March 1932. They also had a small (some $600) amount of equity at Carleton Mott. So where was all this other money if it wasn't in the savings account?
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Post by Rab on Mar 5, 2006 10:22:01 GMT -5
homepage.ntlworld.com/foxleywood/iande.htm...is an estimate of Hauptmann's outgoings and income from April 1932 until his arrest. This is obviously a fraught area. We really don't know Hauptmann's income - and I suspect he had some - and we really don't know all his expenditures apart from what I would call the headline items, such as the radio, boat and so on. But if we can accept that there is income we are unaware of and expenditure we're unaware of then perhaps the differential between the two is somewhat as shown. I have included as income Hauptmann's supposed $4000 in the trunk at home. I have to say that there is little actual evidence that this ever existed but I have included it on the basis of keeping an open mind. The recurring expenses have been calculated on a monthly basis. I haven't adjusted for 5 week months, so again this is probably slightly generous to Hauptmann. The conclusion - with the usual caveats - is that Hauptmann's expenditure exceeded his income by some $6300 from March 1932 until his arrest. In 2002 terms, that's a spending overrun of $83,000 over two and half years. If we choose not to believe he had $4000 at home then the overrun is obviously significantly more.
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