Fraudsters and Charlatans (27 page)

Counsel for the plaintiff was Sir Edward Clarke QC. When he revealed Hooley's and Rucker's offer to buy Grappler shares at £4, a burst of laughter was heard in court. There could be only two explanations, said Clarke. ‘Either they wanted, having got hold of a lot of shares, to create a market, so that they could get rid of them at a profit, or secondly, that they had got hold of some secret information regarding the prospects of the company and were anxious to secure a good thing.' Sir Edward suggested that the former was the true explanation.
⁴³

Crucial to the defence was whether Tumulty had misled Hooley and Rucker into believing that Grappler's licence was transferable had Hooley bought the company. Cross-examined by Hooley's counsel, Mr Stanger, Tumulty admitted that at the time of the meeting in early May 1896 he had known about Hooley's Dunlop venture and was well aware of the importance of establishing a monopoly over licences to produce Dunlop tyres. Asked if he had told Hooley and Rucker that the Grappler licence was unconditional, he replied evasively: ‘I cannot say that I put it that way.'
⁴⁴

Clarke was also careful to question Hooley about the Beeston Tyre offer. Either of the cases examined in isolation might have been looked at leniently, but together there was evidence of a systematic campaign to rig the market, and the court cannot have been unaware of the other cases against Hooley, both those in which he had been given the benefit of the doubt and those still pending.

In his summing-up the Lord Chief Justice made the point that the case was of far greater importance to the defendants than to the plaintiff, in that, if the verdict went against Hooley and Rucker, ‘they would not be entitled hereafter to the reputation and character of honourable men'.
⁴⁵
The most important question the jury had to consider was whether the agreement to purchase was
bona fide
. The one thing that ‘passed his comprehension' was how the agreement ‘could have been come to with the assent of any legal mind. . . . there had, in fact been no real investigation as to whether there was a licence at all or not.'
⁴⁶

On the third day of the trial, the jury, who must have felt their responsibilities weighing upon them heavily, retired shortly before 5 p.m. At 5.10 p.m. they sent out a note: they were unable to agree. The Lord Chief Justice asked if counsel would take a majority verdict, but Stanger said he did not think so and the foreman thought there was no possibility of an agreement after further discussion. The jury was discharged. It was a victory for Hooley, but a brief and bitter one. More than any other case, the Grappler dispute, which was reported in detail, exposed the unpalatable foundations of his dealings: ‘the case has thrown such a strong light upon the financial methods of Mr Hooley and his associates that it has naturally attracted a large amount of public attention,' commented
The Economist
.
⁴⁷

Although Hooley was victorious over Naylor, the Component Tubes case gathered momentum as increasing numbers of shareholders sought compensation. In mid-May it was reported that nine new actions had commenced and another seventy were pending. By 2 June there were 150, and the numbers were still growing.

On 27 May the
Pall Mall Gazette
published a devastating analysis of the performance of Hooley promotions. ‘Do the public realise what they have lost by reposing confidence in Mr Hooley?' it asked,
⁴⁸
providing a tabulated list of seventeen companies floated by Hooley that showed a loss in value of £4,300,000 on a total capital of £8,500,000, while shares in other Hooley-promoted companies were unsaleable. The fault was not entirely a result of the downturn in the cycle trade. ‘Over-capitalisation has been the bane of nearly every concern touched by this particular promoter.'
⁴⁹
The public had already come to the same conclusion. None of Hooley's 1898 promotions was successful. In two cases, the take-up of shares was so poor that the subscriptions had to be repaid.

By the end of May Hooley had been warned not to draw from his account at Lloyds Bank, but he took no notice and a number of small cheques were returned. He was asked for an immediate settlement of £3,000 for work done to one of his estates. The man who had once dealt in millions was unable to pay. The Component Tubes writs were piling up – there were eventually to be over 300 – and there was only one way to cock a snook at his creditors: on 8 June Ernest Terah Hooley filed for bankruptcy. To those in the know, the only surprise was that it had happened earlier than expected.

The Economist
commented:

Mr Hooley, on his own showing, was very far from being a financial genius. He had a certain boldness of conception, but he was entirely lacking in organising and directing power, and although he obtained millions of profits out of his flotations, at the expense of the public, he became a mere channel through which those profits found their way into the pockets of much cleverer people than himself. Whatever the investigation does, it has undoubtedly shattered the idea that Mr Hooley was a serious financier.
⁵⁰

There was initially some public sympathy for Hooley. At the Palace Theatre Miss Julie Macey sang:

Terah–rah Hool–ey–ay!
Terah–rah Hool–ey–ay!
Tear not your wool–I–ay!
Don't fret and mope–I–ay!
But live and hope–I–ay!
You may yet rule–I–ay!
Terah–rah Hool–ey–ay!
⁵¹

There were suggestions that the St Paul's communion set should be handed back to help pay off Hooley's creditors, but Canon Scott-Holland wrote:

Hooley represented a more genial and rowdy type of daylight gambling; popular, loud, open-handed, showing his hand, sharing his spoils, working hard for his money, with a strange perverted British–Philistine belief in the rightness of his cause. There is nothing sinister or crafty about the man. . . . He simply uses, with blunt force, all the advantages which a loose money-market allows him . . .
⁵²

Hooley's explanation for his plight was that he had been too generous to others, had paid away huge sums in blackmail, and had been ‘surrounded by incompetent men'.
⁵³
He remained confident that he would win over the public again, although when a
Telegraph
reporter asked about the man who bought shares on the strength of his name, ‘Well, he was a fool,' said Mr Hooley, curtly. ‘That's the truth.'
⁵⁴
Unsurprisingly, his legal representatives warned him to give no more interviews.

Mr Brougham, the Official Receiver, soon found he had some difficulties. Hooley's books of account were ‘imperfect and incomplete'.
⁵⁵
There was no proper cash book, no ledger showing the dealings with his creditors, no account of his personal expenses and drawings, neither had he ‘prepared a profit and loss account or balance sheet at any time'.
⁵⁶
‘I suppose I might as well admit', Hooley confessed in his 1924 memoirs, ‘that I never made the slightest attempt to keep any proper books.'
⁵⁷
The claims against him, most of which he repudiated, exceeded the value of his estate by about £1 million.

When Hooley appeared at his public examination before Mr Registrar Hood, it was with a cheerful determination that, if he had been ruined, then he was going to take everyone else with him. Declaring that the chief cause of his failure was the withdrawal of capital by Rucker, he claimed to have paid substantial amounts to his associates in inducements, inflated commissions and bribes, and he was happy to stand in court and name names. On the Dunlop promotion alone, he said he had paid away £50,000 to Earl de la Warr, of which half was for distribution to other directors. His solicitors had received £20,000 each, and he had spent £63,000 on supplying newspaper representatives with options to buy shares at par. Some of these claims were probably true – the counterfoil of a cheque for £1,250 bore the legend ‘quieting papers generally on the pneumatic'.
⁵⁸
He also claimed to have paid the
Financial Post
£1,000 for the privilege of writing his own article, which the editor immediately denied, and indeed the correspondence pages of
The Times
were, for a period, filled with letters from solicitors, nobility, the press and many others who had had dealings or acquaintance with Hooley, angrily denying either that they had been paid anything at all, or stating that money received had been for demonstrable
bona fide
business purposes. J. Lawson Johnson announced that, so far from receiving money from Hooley as alleged, he and his co-director had advanced Hooley funds of £130,000. Earl de la Warr was especially aggrieved. He had taken his duties as a director seriously and had had to chair meetings of angry shareholders in cycle companies Hooley had promoted. He said that he had not received anything like the sums Hooley said he had paid, and those he had received he considered he had earned.

Hooley's accusations were so numerous that Hood departed from the usual practice in bankruptcy hearings and permitted those men who had been named to appear in court and make their denials. This happened on 10 August, when Mr Hooley was absent on grounds of ill health. Mr Mackworth Praed of Lloyds Bank commented that on one occasion when Hooley came to the bank for an advance he had said: ‘You know, Mr Praed, that I have lied to everybody, but have always told you the truth.'
⁵⁹

On 28 July Rucker went to see Hooley at the Brunswick Hotel, in response to a telegram requesting him to do so. Hooley, representing that his wife and children were in danger of starving, said that unless the Humber directors helped him he would ‘make it very hot for them'
⁶⁰
on his next examination. A payment of £1,500 was ultimately agreed, but four days later Hooley claimed in open court that he had been approached by Earl de la Warr, Rucker, Broadley and Bradshaw, a broker and creditor, on behalf of the Humber directors, who offered him a bribe to commit perjury. He also accused Broadley of having diverted company money to his own use. All four gentlemen were subject to an order to commit them to prison for contempt of court.

Mr Justice Wright commented on Hooley:

so far as I have had an opportunity of observing him in the box on this and other occasions . . . he is not a witness on whose evidence it would be safe to rely. He is rash, reckless and inaccurate, and sometimes seems to be under illusions which he treats in his evidence as if they were real. So much that is unfounded is mixed up with what is true in his statements that it is hopeless to attempt to disentangle what is true from what is not.
⁶¹

The case against Bradshaw was dismissed for lack of evidence, and Broadley and de la Warr were simply asked to pay costs. Rucker had undoubtedly agreed to pay Hooley money, though Wright, accepting Rucker's explanation, was obliged to wonder if an offer of money to induce someone to tell the truth was indeed a contempt of court. Rucker was fined £200.

On 1 March 1899 Mr Brougham submitted a report revealing that ledger number 1, which recorded Hooley's dealings with ‘certain persons' and last seen in his possession in February 1898, was missing, and books 2 and 3 had been clumsily renumbered to conceal its absence. Ledger 2 – now renumbered 1 – which contained details of the Beeston deal, had been removed from the London office by Hooley in April 1898 and was nowhere to be found. A cash book had been recopied omitting all reference to the missing ledgers, the new pages rebound in the old covers. A petty cashbook and a diary for 1898 both seemed to have been destroyed, and the counterfoils for some cheques had been cut out. Hooley, he said, had ‘concealed, destroyed mutilated or falsified . . . certain books or documents' and he recommended that ‘an order should be made to prosecute the bankrupt accordingly'.
⁶²
Ultimately, however, for reasons that were never made clear, the Treasury took no action against Hooley. Perhaps there were too many titled gentlemen who did not want their names mentioned in court. The estate was not realised until May 1903, when, after expenses were paid and mortgages redeemed, the 355 unsecured creditors eventually got a payout of 4
s
4
d
in the £1.

Hooley was able to retain both Risley and Papworth, which he claimed had been transferred to his wife as presents by some friends, and lived the comfortable life of a country gentleman, although he often complained that all his aristocratic friends had deserted him, for reasons he seemed unable to comprehend. He bought and sold estates in the names of nominees, and had resolved to have no more to do with company promotions, but in 1900 the lure of millions proved too strong and he bought out a number of companies which he claimed would win him back everything he had lost.

In 1903 an investment unexpectedly matured. Adolph Drucker, who had been made bankrupt in 1901, had declined into alcoholism. Some years earlier his associates had used a crooked agent to insure his life for £100,000, but they soon found the premiums too expensive. Just as the policy was about to expire, Hooley had agreed to take it on, and thought no more about it. In December 1903 Drucker collapsed in a New York street, and died shortly afterward in hospital. Allegations that he had been murdered were later believed to be unfounded. Hooley described the incident as ‘the best bit of luck I've had in years'.
⁶³
The luck was short-lived. His new businesses failed, and in 1904, after selling shares in a worthless gold mine, he was tried for conspiracy to defraud, but was acquitted.

Hooley had agreed to provide the trustee of his estate, Duncan Basden, with regular financial statements, but by 1911 Basden realised that these would never be forthcoming and he had Hooley committed to Brixton Prison for five weeks for contempt of court. Hooley was obliged to sell Papworth Hall. In 1912 he was in court again on a charge of obtaining a £2,000 advance on a land deal with a fraudulent statement. Extraordinarily, given his long career, this was the first time he was found guilty of fraud, and he was sent to Wormwood Scrubs, where he served nine months. He observed: ‘though I knew that a sentence of imprisonment practically meant the end of my career, I was philosophical enough to realise in my heart of hearts that I was more sinned against than sinning.'
⁶⁴
There were then claims against him of £250,000 for property deals he had been unable to complete. ‘I had no money to pay any of my creditors, and, furthermore, I hadn't the slightest intention of finding any,' he wrote.
⁶⁵
Hooley became bankrupt again, and was obliged to sell the Risley estate.