CHAPTER FIVE
I had to decide on a direction for my investigation. Shooting in the dark has its advantages, because sometimes you hit targets you didn’t know were there. But on the other hand, the odds aren’t great, and you waste time when you find out what you hit is irrelevant. I knew that Ward, for lack of a better name to call him, was already long off the U.S. radar. He wasn’t going anywhere years after he’d vanished, if he hadn’t done that thus far. So time wasn’t of the essence-a reverse form of a phrase I had frequently used when I (briefly) practiced law and wanted to move lazy people into doing something. He couldn’t get more lost. I thought of Alex, my Mossad Academy training instructor, who used to say that urgent is the legitimate son of neglect. But now, I was practicing futility. I needed to get a more current physical description of my man-or men. I called the OTS, the Office of Thrift Supervision, a federal agency that regulates the federal and some state savings banks and savings-and-loan associations. I was hoping that its examiners might have included identification information in their reports.
“That South Dakota case is a really old one, inherited from the Federal Home Loan Bank Board, our predecessor regulatory agency,” said Brian DiLorenzo, an assistant general counsel. “The documents may be archived. Actually, they may even have been destroyed under our regular document retention schedule. Hold on.” I heard him click on his computer keyboard. “Well, it seems that $20 million is a lot for just one in what looks like a series of scams. I see here that we still have these files open.”
“Could I please have a copy of any investigation reports? I’m trying to figure out where the money is. Maybe we could recoup some of it.”
A few days later a big envelope containing four inch-thick folders came by Federal Express. DiLorenzo’s attached note said, “You’re in luck. Enclosed are pertinent documents of the scams perpetrated by your con men against four regulated institutions. Please call me if you need further assistance.”
I leafed through the files. They included the reports of four savings banks that had been had by a con man- or maybe con men?- and various regulatory steps that OTS’s predecessor agency had taken when it seized the four failed institutions. One document attracted my attention. It was a letter written by Harrington T. Whitney-Davis on letterhead of Fidelity Trustees of America, Inc., the name of the firm he had misleadingly and fraudulently used to perpetrate his scam on the South Dakota savings bank. In the letter, Whitney-Davis confirmed that he had received $560,000 from the savings bank to purchase limited-edition treasury securities as an investment for the bank. There was an impressive looking signature by “Harrington T. Whitney-Davis,” but there was also a handwritten note attached: “Tim, I’ll call you later on today concerning dinner. HTWD.”
So the manager of the defrauded savings bank was having dinner with fraud artist “Whitney-Davis.” Maybe it meant nothing, but when you’re a manager of a savings bank, meeting for dinner the person who later took off with $20 million belonging to the bank and its customers might not be that innocent.
“No,” said the OTS attorney I called after reading that file. “There was no criminal investigation of the savings-bank manager. Why do you ask?”
“Did you try to figure out why he was such easy prey for Harrington T. Whitney-Davis’s scam?”
“I wasn’t working at the Federal Home Loan Bank Board at the time, and the only information I have is what I’m seeing in the file. Our examiners must have been satisfied that there was no criminal wrongdoing by anyone at the savings bank. They never made a criminal referral to the FBI about any bank insider.”
“Do you know who the bank manager was during the scam and whether he still works there?”
“He was asked by the bank’s board to resign after the scam was discovered. Being cleared of criminal charges doesn’t mean he should be allowed to make more mistakes. So the bank let him go. If it hadn’t, the regulatory agency would have done so when it took over the insolvent bank. His name is Timothy B. McHanna.”
I called FBI Special Agent Kevin Lee. “Sorry, I haven’t looked up the file yet,” he said.
“I’ve got a different question. Did you interview Timothy B. McHanna, the manager of the defrauded savings bank in South Dakota?”
“Let me see,” he said, clicking on his computer. “Yes, he was interviewed, but apparently he never became a subject of an FBI investigation.”
“And?”
“That means we didn’t establish that he might have been engaged in any criminal activity.” He sounded so formal.
“I guess being gullible isn’t a crime yet,” I muttered. But it was lost on him. “Do you know where McHanna is now?”
“Let me look him up for you.” A moment later he said, “He’s an essential witness against Whitney-Davis, if that defendant ever shows up again. So we’ve kept track of him. McHanna now lives in New York City.”
He lived on the posh Upper West Side of Manhattan, inside a prewar residential building, one of those sporting a royal name written in stylish lettering on a long green canopy, with a uniformed doorman who opens your car door. McHanna had certainly come a long way from his $37,000-a-year job as manager of a small savings bank in a small dusty town in South Dakota. Additional inquiries brought me to his business: McHanna Associates, business consultants, located in the equally high-rent Financial District. A quick search of public records showed that the company had four employees and described its activities as “providing consulting services to foreign banks seeking correspondence and other business arrangements with U.S.-based banks, as well as providing other services to the banking industry.” McHanna Associates also provided “consultancy services to charities in the United States for their international banking needs.” Nice niche with plenty of opportunities, I thought. I decided to pay him a visit.
In a small and nicely decorated office, I introduced myself to the receptionist and mentioned the South Dakota savings bank and Whitney-Davis. “Mr. McHanna will see you now,” he soon said.
“Tim McHanna,” said a short, bald man in his late fifties, and gave me his hand for a firm shake as I walked into his office. His eyes were a dark brown. He was dressed in a tailored dark suit with a yellow tie. His initials were embroided on his button-down white shirt, and he wore golden cufflinks.
“I’m really ashamed that Whitney-Davis conned me,” he said without my asking. He was eager to give me his version. Too eager, I thought. I went over the history of his relationship with “Whitney-Davis” with him. No great discoveries here-the same story already chewed up by savings-bank examiners and the FBI.
I decided to change course. “Please tell me about your business,” I said in an interested tone. “I hear you’re providing services to foreign banks.”
Clearly relieved that I had changed the subject, McHanna launched into explaining his company. Due to increased U.S. trade with many foreign countries, overseas banks found it increasingly important to associate themselves with U.S. banks that could be their correspondents to collect on checks drawn on U.S.-based banks, and provide for all their other banking needs in the U.S. The relationship could be unidirectional or bidirectional, meaning that each bank at its discretion could decide whether to use the other bank for a given transaction. There was no exclusivity commitment by either bank.
“Do you provide additional services? I read someplace that you also assist charities.”
He hesitated for a moment. “Yes, in fact we do, but it’s not what we are promoting these days.” There was a subtly reluctant tone in his answer.
“Is business good?” I didn’t want to reveal that I had picked up on his lack of enthusiasm to elaborate.
“Can’t complain,” he replied.
Back at my office, I ran a quick check on McHanna. There was something about him that I didn’t like. Maybe it was because he had the sweetness of a funeral-home director. A newspaper interview I found far back in the LexisNexis database service increased my interest. A small savings-industry newsletter had interviewed McHanna during the period that Whitney-Davis was perpetrating his scam, but before it was discovered. In the interview, McHanna boasted how innovative and resourceful thinking could increase the profit base of a small savings bank. “We are developing additional investment vehicles for our customers that will add an international aspect to our line of products. We will enable our customers to invest in foreign currencies through Tempelhof Bank in Zurich, Switzerland. That’s why we hired the services of Mr. Harrington T. Whitney-Davis, a renowned financial advisor.”
