“What sort of predicament?”
“The body of George Tustin Bishop was lying on the floor. He had been shot, and apparently the killing had taken place within an hour or so of the time my son boarded the yacht.”
I digested that information. The sweating started again. My palms were once more moist. I was in it now, all right. A nice murder, and I was tied up with the Billings boy, fake alibi and all.
“My son reached a decision,” Billings went on. “It was not a commendable decision, but, nevertheless, having reached it, it was irrevocable and we must deal with it as an accepted fact.”
My silence showed him how I felt about that.
“In order to understand the circumstances,” Billings went on, hastily, apologetically, “you must realize that my son felt that I might have been involved in the matter.”
“In what way?”
“There had been some trouble with Bishop.”
“What was the nature of that trouble?”
“It was a financial matter.”
“You owed him money?”
“Good heavens, no, Mr. Lam. I owe money to no man.”
“What was the nature of the trouble, then?”
“Bishop was a promoter, a mining promoter.”
“He owed you money?”
“Yes, but that was not the issue; that is, he owed the bank money. Not individually, but as a majority stockholder of the Skyhook Mining and Development Syndicate.”
“Go ahead.”
“I’m afraid all of the details would take too much time.”
“Go ahead. Tell me. We have time now. Later on, we may not have it.”
“Well, it’s a long story.”
“Give me the highlights.”
“Bishop was a peculiar character. He was a very heavy individual depositor in the bank of which I am president. In addition to that he had huge interests in various mining development companies, the nature of which we do not clearly understand. In fact, as we begin to investigate his mining activities, they become more and more mysterious.”
“What about the money he owed you?”
“Well, as I mentioned, he has perhaps a dozen various companies in which he holds apparently the controlling interest, but where stock is offered to the public.”
“With the permission of the corporation commission?”
“Oh, of course. He gets permission to sell the stock. They are listed as highly speculative stocks and there are ample safeguards to see that the promoters do not make the money at the expense of the public. However, now that the bank has started an investigation we find that there is a certain peculiar overall pattern in connection with these corporations.”
“What?”
“They are formed; money is borrowed at the bank for development. A certain amount of development work is done, and then the mine has a tendency to become inactive and—”
“What about the loans?”
“The loans are paid off promptly when they become due.”
“What about the stockholders?”
“That is the peculiar thing, Mr. Lam. It is something I cannot understand.”
“Go ahead.”
“A certain amount of stock is sold to the public; not a great amount. Most of that stock is held in escrow. Then apparently — and you understand I didn’t know this until the last forty-eight hours when our investigators reported — the stock is bought up by someone who pays the stockholders just about what they paid for the stock.”
“Suppose the stockholders don’t want to sell?”
“The stock that is not sold back—”
“Wait a minute, you say ‘back.’ What do you mean by that?”
“We have every reason to believe that the person who buys the stock is the representative of George Tustin Bishop.”
“All right. What about the people who don’t want to sell?”
“They’re permitted to hold their stock for another six months or a year, and then an offer is resumed. Eventually they either sell the stock or it becomes valueless. The mine languishes with no further development work being done.”
“Now, what,” I asked, “would be the idea of making a wash transaction of that sort? There must be considerable overhead.”
“There is. Not only are there legal expenses, but there is the selling commission. There is, however, no great drive to sell the stock. A prospectus is put out and the stock is sold in every instance entirely by mail. After a small percentage has been sold, selling activities are discontinued. Then the corporation goes through a quiescent period, after which the stock is bought back.”
“It doesn’t make sense,” I said.
“Exactly.”
“All right, tell me about this Skyhook Mining and Development Syndicate.”
“Now, there we have a very peculiar situation. The organization of that corporation apparently followed the usual pattern. Permission was given to sell the stock at par value, allowing a fifteen-percent commission for the salesmen, but with the understanding that all of the balance of the money must go into the treasury of the corporation, and that there could be no disbursements until certain prerequisites in the nature of development work had been done.”
“How was the money secured for the development work?”
“The understanding of the corporation commission was that the sales of the stock would be handled by a syndicate, and that the fifteen percent, together with contributions made in the form of a loan by the organizers, would go toward the initial development.”
“So that the stockholders would be getting a free ride?”
“If you want to put it that way, yes.”
“And that was done?”
“That was done. The corporation was permitted to endorse a note, which was signed by George Tustin Bishop, with the understanding that every penny of the proceeds would go into the treasury of the corporation.”
“How much was the note?”
“Twenty-five thousand dollars.”
“Then what happened?”
“Then a peculiar thing happened. Something about the name appealed to the investing public. I understand the solicitation was by mail, but the public reacted very favorably. The records indicate that some fifty percent of the treasury stock was sold to the public under the conditions laid down by the commissioner of corporations.”
“That was a departure from the usual pattern of the Bishop corporations?”
“Yes, sir. Very much so.”
“And then what happened?”
“Then,” Billings said, “Bishop flatly refused to meet the note. He drew out every cent of money he had in our bank and stated he had no funds with which to meet that note, and that we would necessarily call upon the corporation as an endorser to make good the amount of the loan.”
“What had happened to the money in the treasury of the corporation?”
“It had been spent for development work. Now, then, Mr. Lam, I dislike very much to go into this because it is something that would ruin us if it became public.”
“What?”
