The CBS Murders (6 page)

It was not long before Modell had reason to regret his trust. The agreement he had with Margolies provided that Margolies would regularly provide Modell with information on sales as well as payment for the items that were sold. But the reports just didn't arrive, and after a few months Modell told Margolies that the jewelry would have to be returned.

Margolies put up no argument. In fact, he told Modell, his concession with JGE was just not working out as well as he had hoped, and he was actually in the process of taking back the merchandise from the ten JGE outlets. Once he had the gems, they would be stored in his office on Fifth Avenue at Forty-seventh Street and then returned to Modell and others who had entrusted their products to him.

Modell waited. The jewelry never showed up. He called Margolies. Margolies apologized for the delay and set a date when he would return the gems to Modell. Came the day, and the jewels did not appear. What arrived was a sorrowful phone call from Margolies. A terrible thing had happened. During the previous night, someone had broken into his office and looted the safe. What could Margolies do? It was one of those things. Perhaps the best thing would be for Modell to put in a claim with his insurance company. Modell not only did that, but he also called the cops. What he learned gave him pause. They were not conducting an active investigation of the reported burglary. Why? Modell asked. Because, he was told, their initial investigation had revealed no sign of damage to the Margolies office, no sign of forced entry into the safe—no sign, in fact, of a theft of any kind.

But Margolies insisted that there had been a burglary, that his safe had been broken into, and that Modell's goods had been stolen. With Margolies stonewalling that way, Modell had little choice but to take a small settlement from his insurance company, swallow the heavy loss on the $100,000 in merchandise, and vow never to do business with Irwin Margolies again.

For instance: Margolies did not forget his success with the Modell scam, and when the opportunity arose to play it again, he did not hesitate. It was six years later, on December 15, 1980. Candor was in operation then, a going concern, if not going very far or very fast. About four-thirty that morning, the burglar alarm in Candor's offices on West Forty-seventh Street went off in the headquarters of Jeweler's Protective Service, which was charged with protecting Candor's premises as well as those of scores of other operations in the diamond center. Jeweler's Protective might have the job of safeguarding the property, but Margolies had neglected to supply the agency with a key, so there was no way to get inside and find out if, indeed, something was wrong. The only alternative was to call the Margolies home in Westchester and tell them there might be some trouble at the office. Madeleine Margolies took the call. She sounded still half asleep. When she heard the news, she said there was nothing she or her husband could do about it at that hour. When they got to the office in the morning, they would check and get back to the agency.

In midmorning, Irwin Margolies called Jeweler's Protective. He was furious. He had been robbed, he raged. Somebody had broken into Candor Diamond through a rear window, which, somehow, had been left unlocked. That somebody had cracked the two safes in the manufacturing area and made away with diamonds, gold, and other valuables worth about $200,000.

To Jeweler's Protective, the whole thing emitted a foul stench. Nobody in the diamond business is so careless as to forget to lock the windows when the workday ends. Nobody in the diamond business ignores a summons about a possible burglary, no matter the hour. Nobody in the diamond business stores the valuables in the small safes in the work areas at the end of the day; they are used strictly in the daytime by workers making the jewelry. Come evening, everything is removed to larger and more secure safes in other parts of the office.

But Irwin Margolies shouted that he had been robbed and that his losses were staggering. He reported the burglary to the police, who investigated briefly but could find nothing to convince them that a crime had actually occurred. He reported the burglary to his insurance agent and said he wanted to file a claim for his $200,000 loss. The agent, Arthur Schwartz of Schwartz Hirtenstein and Company, who handles the insurance for many companies in the diamond center, was sympathetic. He told Margolies to put together an inventory of what had been stolen so that a proper claim could be filed, and then the insurance company would make good the loss. Somehow or other, Margolies just never got around to furnishing that inventory, despite a number of calls from Schwartz, and a short time later, he told the insurance agent that he had decided to take his loss in silence and was withdrawing his insurance claim. Schwartz was not a little surprised. He found it hard to remember another occasion when a client failed to follow through and pursue collection on his insurance when he had suffered a major burglary.

Margaret Barbera, the controller and keeper of the books of Candor Diamond and who by then had become a trusted employee of Margolies, would later offer an explanation. Margolies, she said, had come to her one day and told her of his plan to pretend that there had been a burglary and thus collect the $200,000 in insurance. What he wanted was her cooperation. She should prepare the inventory of fictitious items that he would say had been stolen and so satisfy the insurance company. She refused, Barbera claimed, and as a result, Margolies pulled back.

For instance: In May 1981, Margolies approached L. M. Van Mopes and Sons Ltd., a highly respected London-based diamond merchant. He was expanding, he said. He was about to turn out jewelry of a far better quality than he had in the past and, as a result, he needed very-good-quality diamonds. Of course, like most small businessmen in the business, his ready cash was tied up. Would Van Mopes take promissory notes in exchange for the diamonds, notes that would be paid off as soon as the new items were on the market, if not sooner? It was not an unusual request. Van Mopes agreed. It turned over $220,000 worth of high-quality diamonds to Margolies. He turned over $220,000 in promissory notes.

Over the next four months, the diamonds vanished and the promised payments never were made. Despite all its efforts, despite pressures and entreaties. Van Mopes learned that dealing with Irwin Margolies, that trying to make an impression on him, was like trying to make dents in the air. It was out the diamonds, and all it had to show for its trust was a handful of worthless paper.

To the world at large, Irwin Margolies held himself out as an honest and successful businessman, proprietor of a small but rapidly growing and profitable concern, devoted husband and father who provided his wife and children with all they could wish, devout Orthodox Jew who was dedicated to his religion and its commandments and moral precepts.

To some who dealt with him and who came to know what that meant over the years, however, Irwin Margolies was a devious and crooked man who would stop at little to reach his goals, who could never be trusted to keep his word, who traveled twisted paths in preference to straight ones, who broke without moral scruple any religious commandment that stood in his way. He was, someone would say later, one bad dude.

But still, he had his winning ways. He was a salesman who could sell himself, who could convince people who should have known better that what he had to offer was the real thing, that the outward veneer was no veneer but solid all the way through.

And Irwin Margolies had a friend who, in 1980, showed him the way to make his dreams come true, finally to reach out and seize that prized gold ring.

8

Henry Oestericher was a few years older than Irwin Margolies. They had known each other for much of their lives, and their friendship had endured through the years. Like his old and close friend, Oestericher was a man with unrealized dreams. When he was young, he had dreamed of success and fortune in the jewelry business. He had grown up in it. His father was a prominent and successful jewelry merchant and manufacturer, had been one of the pioneers in the use of factoring—the borrowing of money secured by accounts receivable and anticipated sales—in the jewelry business to support the growth of his firm. But when the younger Oestericher tried his hand at the family trade, he failed.

He turned to the law, and fantasized of fame and fortune at the bar. But after a quarter of a century as an attorney, he still operated only from desk space granted him as a favor in the offices of other lawyers on West Forty-fourth Street just off Fifth Avenue. He had never handled a major case, either in court or in the office, was reduced to scratching for business wherever he could find it, was dependent to a large degree on the legal affairs thrown his way by Margolies, more out of that old and enduring friendship than because of any legal talents Oestericher might have revealed.

To support himself and his family, his legal practice providing only a meager income, far from enough for the life-style he aspired to and tried to maintain, Oestericher spent a good part of his working hours as a landlord's agent, managing buildings around New York and in New Jersey. But even here, his buildings were not in the luxury class, not along the Upper East Side or Upper West Side. They tended to the seedy, like the one on West Forty-fifth Street where Vinnie Russo maintained his catering establishment and where Donald Nash kept his desk and telephone. Oestericher managed a couple of apartments in New Jersey and, among others, the Somerset Hotel at Broadway and Forty-seventh Street, a fleabag cited too many times to count for violations of the buildings and sanitation codes, for nonpayment of taxes, and for scores of other infractions. And it was notorious as a haven for the neighborhood prostitutes; Oestericher's connection with it earned him, from some of the area's denizens, the nickname “The Pimp of Father Duffy Square,” the statue of Father Duffy of World War I fame staring across at the Somerset.

Then, one day early in 1980, Henry Oestericher came up with an idea that might make all his dreams and those of his close friend come true.

As he sometimes did in private with somebody he could trust, with a close confidant, Margolies that day was bemoaning his fate to Oestericher. The business wasn't growing fast enough, was constantly teetering on the edge. He had been forced to mortgage his Westchester home to keep it afloat. He was constantly having to invent new and more outrageous scams to bilk the unwary and raise the needed cash, and a lot of them seemed to backfire, and certainly none brought in enough really to make the effort pay off as he wanted. What he needed was a foolproof scheme that would bring in enough so that he would never have to worry again.

Oestericher listened. He had heard the story before, was well aware of what lengths Margolies had been driven to, was willing to go to, and was capable of. He knew, too, or he expected that if he could come up with the scheme that would help Margolies, he would gain his own reward. It had been on his mind for some time. Now was the time to spell it out.

What did Margolies know about factoring?

Margolies knew enough to know that it was a major financing method in the garment industry; it was the way those companies, trapped in a seasonal business, were able to get the cash to turn out new lines every season.

Had Margolies thought about going to a factor to finance his jewelry manufacturing business?

Margolies had not. Factoring was not a particularly common practice in the jewelry business, though it was done. Besides, Candor Diamond was a small company without much of a growth record. It was doubtful if one of the major factors would jump at the chance to finance his accounts.

Don't be too sure, Oestericher said. He himself knew plenty about factoring. After all, his father had been one of the earliest jewelry merchants to go that way. Perhaps Margolies was right that one of the long-established jewelry factors might look the other way if he approached. But, Oestericher said, he knew of a factor who might just leap at the chance. John P. Maguire and Company, the factoring division of Irving Trust Company, had, for some years and with considerable success, financed garment firms. But it was anxious to spread itself out from that highly volatile industry into one that might be less seasonal and a little more secure. Garments were garments, and if a line flopped, the factor was left holding a lot of cloth and some clothes that nobody wanted, and it would be lucky if it could sell off for pennies on the dollar. But the jewelry business was something else again. If the earrings and bracelets and broaches and other trinkets didn't sell, there were always the diamonds and the gold and the other jewels used to make them. They didn't lose their value. They always could be sold, and they would bring plenty on the market and so would be a protection against major losses. Oestericher knew people at John P. Maguire, knew how anxious they were to get a foot in the door of a new market for their money. Would Margolies like an introduction? Or, better still, why didn't he have his Scarsdale bank, which held the second mortgage on his home, make the opening contacts and thus provide an element of stability and probity?

The more Margolies listened, the more he liked the whole idea. He and Oestericher were not, that day, merely talking about finding a new source of funds to support Candor Diamond and help it grow, of course. What they were talking about, and both men knew it, was a scheme to take John P. Maguire not for thousands but for millions.

Soon after that discussion, Margolies approached officers of Scarsdale National Bank, told them he had heard that John P. Maguire might be interested in factoring jewelry manufacturers. Since he personally didn't know anybody there, would the bank make the necessary introductions? Scarsdale National was more than happy to comply. Within a few weeks, Margolies was deep in discussions with Maguire.

On March 21, 1980, the negotiations were completed to everyone's satisfaction, and a contract was signed between Maguire and Margolies. Under the agreement, Maguire would advance Candor Diamond up to 85 percent of the sales price of its merchandise, the money to be transferred to Candor's account electronically once Candor Diamond shipped its merchandise to its customers and received invoices that would then be forwarded to Maguire. In exchange, Margolies personally guaranteed his company's debts to Maguire, and Candor Diamond gave Maguire a lien on its entire inventory of diamonds, gold, and other valuable gems and merchandise. Further, all the income from Candor Diamond's sales was assigned to Maguire. Candor Diamond's customers were to be notified, by a sticker pasted on the invoices and bills, that the company's sales were factored and that all payments were now to be made not to Candor Diamond but directly to Maguire, were to be mailed when due, normally within thirty to ninety days, to a post office lock box maintained by Maguire.