The CBS Murders (11 page)

On Monday morning, July 27, Margolies called his travel agency. He and Madeleine, he said, had to leave for Israel right away. They couldn't wait until August 9, when they were supposed to leave. Was there a flight that day? If so, they had to be on it. The travel agency checked. There were seats available on a TWA flight leaving that evening. Book them, Margolies ordered.

Before he and Madeleine departed for the airport, he went to Bank Leumi and cashed a check for $15,000. And then he wrote two more checks, for $25,000 each, to Oestericher and Oestericher's law partner, Norman Schwartz, and delivered them. The checks were for legal services, already rendered and to be rendered.

And then they were off.

Through the weekend, Casey waited for Margolies to call to set up the visit to the jewelry show. The call did not come. Monday passed and still he did not hear from his client. On Tuesday morning, he called Candor's office and spoke to Thelma Williams, the receptionist. He told her he had been expecting a call from Margolies but it had not come, and he was wondering just when he could go up to the Hilton to see the Candor exhibit. Williams said Margolies was traveling and she had not heard from him for several days, but someone would get back to Casey.

No one got back to Casey. He called Candor again on Wednesday and again on Thursday, and got the same response from the receptionist. He began to get very worried. On Friday, July 31, he called Harris Freedman, Candor's accountant and, though Casey didn't know it, Margolies's partner in Gortz, Inc. He told Freedman that over the past couple of months, Maguire had been receiving an assignment of about $500,000 a week in Candor sales and had been depositing about $450,000 every week in Candor's bank account. Suddenly it had stopped. Over the past week, he said, there had been no assignment of sales and no requests for advances. What's up? he asked. Freedman had no idea. Could Freedman check, Casey asked, since he had been unable to locate Margolies all week? Freedman agreed.

Later in the day, Freedman called Casey. He had called the Margolies home in Westchester, he reported, and had spoken to Madeleine's parents, Herman and Molly Malen. They told him they had no idea where Irwin and Madeleine were and that they were staying at the house to take care of the two boys.

Casey immediately called Candor again. Once more, Thelma Williams told him that Margolies was away. But this time she said that his brother-in-law, Scott Malen, was in charge. He asked whether she knew if there would be any sales assignments for that week. She didn't know, and then she asked if Maguire was going to make an advance so Candor could meet its payroll.

Casey was a very worried man. He decided it was time to do some very close checking. He ordered his collection department to begin trying to verify the nearly $6 million in accounts receivable assigned by Candor to Maguire.

Over the next twenty-four hours, Carlos Paniagua, Maguire's collection manager, made thirteen calls to thirteen supposed Candor customers. All but two denied they had ever bought or received or been billed for any Candor merchandise. The two exceptions were Caldor and the Army-Air Force Exchange Service. And Caldor said yes, they had bought Candor jewelry, about $3,500 worth, but that the money had not been paid, since it went against a $31,716 debt owed to it by Candor. According to the invoices assigned by Candor to Maguire, Caldor had purchased $415,000 worth of trinkets during that period.

Over the same period, Paniagua's next in command, Peter Paul Petraglia, called sixteen other supposed Candor customers. Every one of them denied having any record of open accounts with Candor, though a few said that in the past they had bought jewelry from the manufacturer, but not in the amounts Petraglia questioned them about. On his books, for example, Helzberg's Diamonds in Kansas City owed Candor, and thus Maguire, $342,000. On Helzberg's books, the amount bought from Candor during all of 1981 was only $32,000, and that had long since been paid.

Casey was staggered. It now looked as though nearly every assignment of sales by Candor to Maguire had been a fiction, and Maguire had advanced millions against nothing. He called Harris Freedman and broke the news to him. Freedman said he was thunderstruck. When Casey asked, Freedman agreed to go with the Maguire official to Candor's offices, look at the books and records, and check to make sure that the gold and diamond inventory was intact, was worth the more than the $2.5 million that Margolies had claimed in his agreement with Maguire, giving Maguire a security interest in that stock.

On the afternoon of August 7, Casey, Freedman, and one of Freedman's associates made the trip to Forty-seventh Street. They were greeted by the receptionist, Thelma Williams. They told her they had come to examine the books and records and take a physical audit of the inventory. She told them Malen was away, at the bank, and she could not let them in.

Later, two more Maguire officials made the journey to Forty-seventh Street. They, too, were blocked at the door. Casey called the office, spoke once more to Williams, asked again if he could come to Candor. Once more she told him Malen was not in and she could do nothing without his permission. Casey asked if Candor intended to assign any more sales or request any more advances. Williams said she didn't know. And then, just before the conversation ended, she asked, plaintively, if she was going to be paid that week.

Maguire officials now summoned their attorney, David Blejwas of Hahn and Hessen, for advice. When Blejwas heard what they had turned up—that about 80% of all the invoices assigned to Maguire for payment since the beginning of the factoring agreement were phony, and that nearly all of those submitted since April 1981, on which more than $5 million had been advanced, had no basis in reality—he said that the only answer was to throw Candor into bankruptcy and thus try to save what could be saved, if anything. On August 10, Blejwas went into Bankruptcy Court and made his arguments won his point, and obtained an order declaring Candor involuntarily bankrupt. The court then authorized an interim trustee and a federal marshal to enter Candor's premises, by force if necessary, and seize the company's assets.

Before the day was out, the trustee, the marshal, and Maguire representatives were in the Forty-seventh Street offices. They searched every corner. They went through the inventory and what books they could find. When they left, they were filled with disbelief and shock. The inventory was practically nonexistent. There was only about $10,000 worth of jewelry. Half the books were missing. And the bank records revealed that Candor's account stood at $52,000.

PART THREE

DEALS

14

They were no innocents abroad, taking in the sights and sounds of the Holy Land and the Old World with wide-eyed incredulity. Irwin Margolies later would say that the trip was a long-planned vacation, not a hurried flight, that it was a needed respite from the incredible pressures of his hectic business, and that it was also an attempt to combine a little business with some deserved pleasure, to renew old contacts and make new ones, to find sources for the materials he needed to make his jewelry, to sell his merchandise in new markets, and to settle some business problems. He and his wife, he would say, had not traveled in high style. Far from it. They had actually lived on the edge of penury while abroad. To pay for the trip and to pay off some outstanding business obligations, he had been forced to sell Madeleine's engagement ring, earrings, and other jewelry within days of their arrival in Israel.

It made a nice story. It had about the same elements and ring of truth as most of his other tales. And it would have amazed the manager of Bank Leumi Israel on Ben-Yehuda Street in Tel Aviv had he heard it, for two days after their arrival, Irwin and Madeleine Margolies appeared in his office. After long discussion and explanations, they opened a secret numbered account. It was in both their names, jointly. Only the bank manager had access to the records revealing their identities. No correspondence relating to the account was to be mailed to the United States. They opened the account with $200,000, in a three-month certificate of deposit earning 19% interest. (Margolies later would claim that the $200,000 had been withdrawn from Candor's New York account and transferred to Israel in the first place to help cover his business debts and that it had been almost immediately withdrawn after the deposit for just that purpose. Abiding by the country's banking regulations, Bank Leumi Israel kept its silence.)

The couple stayed in Israel for two weeks, touring, seeing the sights, and doing a little business in that very important center of the world diamond industry. Then it was on to Munich, where they rented a car for a drive to Zurich. That city is, of course, home to most of Switzerland's major banks and the center of the fabled secret numbered account. By the time the Margolieses departed Zurich, they had a few, and Madeleine had a new $1,100 mink jacket to console her for the supposed sale of her jewelry in Israel.

Then it was back across the Atlantic, not home yet but to Canada. In Toronto, they rented a car to drive across the border to Detroit. In Detroit, they assumed false names and under them boarded a plane for Florida.

While they were away, though, they were not cut off from events at home, not ignorant of what was going on, not out of touch at all. Margolies called Oestericher almost every day, at his office and at home, held lengthy conversations in which he was completely filled in and during which he gave explicit instructions to be carried out in his absence. And he and Madeleine spoke often with their sons, Steven and Douglas, though never over the phone to their home in Greenburgh. Oestericher made the arrangements. Steven and Douglas were to go to specified public phone booths at appointed hours and a call would come to that phone from their parents, wherever they happened to be.

There was much that Oestericher and the Margolies sons had to report, and much that Margolies had to tell them, especially Oestericher. Candor might now be dead, or on its deathbed, bled of every ounce of vitality and viability, but in its place stood Madeleine Chain. In the absence of Margolies, it was being run by Madeleine's brother, Scott Malen, as quondam president and owner, Madeleine later claiming that she had sold him all the stock for a few thousand dollars. Margolies hardly trusted Malen to run even the simplest errands let alone to guide the destiny of a company that he felt was crucial to his future plans. Through Oestericher Margolies gave the directives that guided Malen in his operations.

As important as anything to Margolies was to keep track of Barbera, not to let her feel abandoned in this crisis. Though Madeleine Chain had no offices and no sales, it did maintain desk space at Oestericher's office. And Malen was instructed to keep three of Candor's employees and to pay them in cash every week. Those three included a diamond sorter, the Candor office manager, and Margaret Barbera.

But Madeleine Chain served other purposes, too. It was a funnel through which laundered Candor-Maguire money could be channeled to the Margolieses for their own uses. For instance, Madeleine Chain, according to its books, was kept afloat for a time through an advance of $30,000 from a man named Boaz Sussman. Malen said the money had been received in cash in three separate parcels delivered by the postman. Sussman, however, had a different story when he was turned up. It seems that he was a distant relative of Oestericher and, at Oestericher's urgent entreaties, he had loaned Madeleine Chain about $2,000. And that was the extent of his involvement.

By mid-September, Irwin and Madeleine Margolies were home. The FBI, among others, very much wanted to talk to them, and especially Irwin. What had been a semi-official investigation had, with the uncovering of the fraud and the action to throw Candor into involuntary bankruptcy early in August, become official. The case was on the desk of Special Agent Robert Paquette, working out of the New Rochelle office. He meticulously went through all the records and files and books he could find of Candor and its customers, real and fictional, and of Maguire, and confirmed all that Maguire had feared. What he wanted then was very much to talk to Irwin Margolies. But Margolies was nowhere to be found.

Then he surfaced and called the FBI and said, in all innocence, that he understood somebody wanted to talk to him. An appointment was made for him to appear at the U.S. attorney's office on the morning of September 23. With him was his attorney, Henry Oestericher. Margolies was at his most winning and cooperative, and injured. He answered every question, had explanations for every seeming contradiction and problem. The trip to Israel and the transfer of the $200,000 from New York to Tel Aviv? Simple. The trip was a vacation; the transfer was money to pay business obligations; there had been no luxury journey, though; he and his wife were so broke on that trip that he had to pawn her jewels to raise the cash to finance it.

The swindle of Maguire? He was completely unaware of that until it had all come down around his head. It was all the doing of his comptroller, Margaret Barbera. He had so trusted her that he had given her complete control over the company's books and records, had permitted her to handle the assignments to the factor and all the rest. And now look how she had betrayed him. She had done it to enrich herself. She had destroyed him and his company in the process. She had put him in this kind of jeopardy. His trust had been misplaced. Obviously she was an evil, greedy person, and the law ought to come down on her.

Did the authorities want to know what she had done? He would tell them, at least as much as he knew, and he was sure there was much more that he didn't know. For one thing, she had used a lot of the money she had stolen from him, and Maguire, to make investments for her own personal aggrandizement. And here, he and Oestericher produced the Merrill Lynch order slip showing the purchase of about $795,000 worth of Superior Oil stock. Where had they found that slip? Why, just before Irwin and Madeleine left for Israel, they had searched Barbera's desk and, lo and behold, there it was.