The CBS Murders (7 page)

There was nothing unusual about the agreement; it was the standard way that factoring worked. Maguire had no suspicion that anything out of the ordinary was about to take place, for Margolies and his company came highly recommended. (Margolies's past shady dealings and practices escaped Maguire's notice, if the factor even bothered to check.) In fact, if anything, Maguire was delighted with the whole arrangement. It was, company officials hoped, the opening into a new market for their money.

For Margolies, though, the arrangement was the golden ring he had long been reaching for. He was about to become a millionaire, at Maguire's expense. Initially he moved slowly and cautiously, and with a certain circumspection, like a swimmer testing with his toe the temperature of the water. He made his sales, shipped his goods, filed his invoices, and then received, into Candor Diamond's new bank account at Irving Trust (within six months, though, he would close that account and open a new one for Candor, somewhat farther from Irving Trust's reach, at Bank Leumi Trust Company in New York), from Maguire an amount equal to 85% of the sales prices noted on the invoice.

And then, on May 8, he tried a little experiment in fraud. He sent Maguire an invoice declaring that he had just sold and shipped to The Diamond Shop in St. Louis a batch of jewelry worth $7,704. Within a few days, Candor Diamond's account was $6,548.40 richer. The only thing was, The Diamond Shop had never ordered nor received any merchandise from Candor Diamond.

Margolies waited to see whether anybody at Maguire would catch wise, would ask any embarrassing questions. Nobody did. Of course, there still was the question of the payment of $7,704 to Maguire within about ninety days. Margolies figured that he would come up with a solution to that when the time came. What he knew now was that all he had to do was file invoices and Maguire would come up with 85% of the money. If he worked it right, Candor Diamond could become a giant within a very short time, a giant on paper and in the bank, of course, even though nobody in the marketplace ever saw much of its output.

But Margolies was not fool enough to think he could go on this way forever. Someday, of course, Maguire would catch wise and come down on Candor Diamond, demanding an accounting. When it did, somebody was going to go to prison. What Margolies needed was a patsy to take the fall when that day arrived.

9

Margaret Barbera was very good with numbers. She could take a balance sheet, a set of account books, invoices, bills, and more, juggle and manipulate the figures, and, presto, thousands became millions, losses became profits, profits became losses, sales soared or fell, whatever her employer desired, and it would take an expert auditor knowing precisely where to look and what to look for to figure out what she'd done, and even then, it still might slip by. There is an underground of people like Margaret Barbera, eagerly sought after by businessmen in trouble, especially in volatile and unstable industries such as garments and jewelry. Ask the right questions of the right people, and pretty soon a Margaret Barbera, or somebody very much like her, will come knocking at the door.

She had grown up in New York City, in the outlying boroughs of Brooklyn and Queens, child of a large nomadic family—some would say they were much like Gypsies, residing for a time in her childhood in the back of a small truck parked in vacant lots and at curbs, constantly on the move around the city, picking up work and dollars wherever they could be had.

Margaret was the smart one in the family. She was good at figures and was adept at figuring out the angles. When she graduated from high school in 1961, she got a job as a bookkeeper for a major chain store, worked there for a couple of years, and then moved on to mastering computers. But without a college education, she complained, her chances for advancement, for a good job at high pay, were strictly limited. So at twenty-seven, still holding down a full-time job, she got herself an apartment in Ridgewood, Queens, where she would remain until her murder, and went back to school, enrolling in the School of Commerce at New York University. She graduated in three years, with honors and a bachelor's degree in business administration. For another year, she was in graduate school at New York University, but then dropped out. Her grades had fallen sharply and, she told someone, besides, she felt she had learned about all the school had to teach her.

It was 1974 then, and she was a very busy lady. During the day she worked as an accountant for a large midtown company, and at night, in her Ridgewood apartment, she began to develop the skills that would bring her to the attention of needy businessmen. At her daytime job, she was earning $17,000. Nobody knows how much she was taking in at her after-hours work, but what is obvious is that it was occupying more and more of her time and energy, enough so that she was constantly inventing excuses for absences from her regular job. She compiled a long, sad story of constant and unrelenting bad luck. Her mother had cancer, she explained, and so she had to go and take care of her. Other relatives suddenly had fallen seriously ill, and she had been called on to tend them. She herself was ill—with cancer, with a variety of other ailments, serious and not so serious, and she was under treatment, which meant she could not go to work. Her fiancé (a man nobody who knew her seemed aware of) had been killed in an automobile accident and she was in mourning, too stricken to reach the office. By 1977 it had all become too much for her employer, and he felt he had no choice but to let her go.

For the next three years she worked sporadically as an accountant at jobs she picked up through a temporary agency. At night and at other times she continued to ply her growing expertise in less legitimate accounting methods. She, too, it seemed, was waiting for the right moment, the right thing.

Her personal life was an enigma. Obviously she was earning a lot of money at her spare-time vocation, but what she was doing with it, nobody seemed to know. And nobody seemed to know her. Although she had lived for a decade in the same fourth-floor walk-up apartment, her neighbors knew her not at all. Sometimes they saw her on the stairs, passed by, nodded, but she never spoke a word. All any of them knew was that she had few visitors, only one with any regularity, an Oriental woman who arrived and often spent several days. And that was all.

In the spring of 1980, when Irwin Margolies began looking for an expert with figures to help him take John P. Maguire, someone who would become the patsy to take the fall when that day came, Margaret Barbera was exactly what he was looking for. As he had been throughout all his initial dealings with Maguire, Margolies moved with a certain caution. He asked his own auditors, H. W. Freedman Company, if they might happen to know a good accountant who wanted a job. Candor Diamond, he explained, was on the verge of major expansion, its business beginning to show substantial growth that should continue far into the future. As a result, the ledgers and books, the invoices and billings, all the record-keeping was going to be a very complicated matter. He needed somebody who could keep track of it all; there were going to be the government tax people and the state tax people and Maguire and a lot of others who were going to have to be kept informed, and informed correctly. He just wasn't going to have the time to take care of all this himself; he was going to be too busy designing and supervising the manufacturing and the selling. So he had to have somebody who was good and who was reliable. It just so happened that at that very moment, Margaret Barbera was working at Freedman on one of her temporary jobs. She seemed to know her business; she seemed reliable; she seemed just the kind of person to send along, with high recommendations, to Freedman's client, honest Irwin Margolies.

But Margolies was not about to take Barbera on Freedman's word alone. If she was all Freedman said, she certainly was not what Margolies had in mind. He did a little quiet checking among some like-minded friends. Did they know Margaret Barbera? What kind of person was she? Could she be depended on? Would she follow orders? The questions, subtly put, of course, were the tip-off as to what he meant, and the responses he elicited more than satisfied him. Detective Richie Chartrand later learned the identity of at least one of those who had given Margolies the good word about Barbera. “I knew the guy who referred her,” he says. “I'm sure his recommendation was of the highest. I'm sure that knowing Irwin and what Irwin must be looking for, he said she was just the right kind of person. I wouldn't believe a word he ever said. One time he got robbed. They took everything he ever owned. He said, ‘They held me up at gunpoint one night and I only had two Manhattans. They took all my goods. My watch.' But they didn't take his wedding ring. My God. You being robbed, they want to take your stuff, they'll take your wedding ring, they'll cut your finger off to get it. So if you're looking for a special kind of thing and he knows it, he's the right person to go to.”

And so, at the beginning of June 1980, Margaret Barbera went to work for Margolies and Candor Diamond as a parttime bookkeeper. All the pieces of Margolies's plan were now in place. He had Maguire, which appeared by its actions, or inactions, over the first months of the factoring agreement, not merely gullible but almost anxious to be swindled, so pleased to have taken the first step into a new factoring market that it would be a long time, if ever, before anyone there had any suspicions or asked any questions. He had someone to doctor his books and to appear, on the surface at least, a responsible party. But when the crunch came, she would be his pigeon. It was, then, time to grow, time to become rich.

10

No sooner was Margaret Barbera at work than Irwin Margolies sat her down and explained exactly what he wanted. She had no qualms. She had done it for others and been well rewarded, and now she would do it for him, doctor his books and records expertly and gain additional rewards.

But Margolies had a problem, as he explained to Barbera. Some of the phony invoices he had sent on to Maguire were about to come due for payment. Did she have any ideas how to handle that? She did, indeed. Why not, she suggested, just send Maguire a Candor check for the amount?

It was a potential solution, one worth trying. Of course, according to the factoring agreement, the checks to Maguire were supposed to come from Candor's customers, not Candor itself. Would Maguire notice the discrepancy? Margolies wrote out the check, Madeleine Margolies signed it, and then it was sent to the Maguire post office lock box. Margolies waited anxiously to see whether anybody at Maguire would notice, whether anybody would call and say, “Mr. Margolies, there's been a mistake; this isn't the way it's supposed to be done under our contract; we're not supposed to get the checks from you; your customers are supposed to pay us directly; please make sure it doesn't happen again.” But nobody complained. Perhaps nobody at Maguire noticed. Or perhaps somebody did notice but decided to ignore what might, after all, just be a minor peccadillo. After all, Maguire was delighted to have gained entrée into a new factoring market, and it was anxious not to do anything that might get in the way of expansion there. Whatever, it was precisely what Margolies had hoped and hardly dared expect, and what Barbera had predicted.

The door was wide open now, and Margolies strode boldly and confidently through it. Since its inception, Candor Diamond's sales pattern had been essentially flat, hovering at about $500,000 annually. Suddenly it was as though a rocket had been attached to its tail and ignited. The company became, according to the invoices it filed with Maguire, a lot more successful than anybody could have dreamed possible, its sales soaring into the stratosphere at a pace anybody who gave it some thought might have considered neither possible nor logical. But apparently nobody thought very hard about it, if they thought about it at all.

Aided and abetted by Barbera and her fertile imagination, Margolies took off in several directions. Behind it was an adaptation of the scheme hatched and brought to a certain perfection in the 1920s by Charles Ponzi in Boston: Pay the investor back with his own money, only make sure he keeps on investing at an ever-increasing rate so that the debt never catches up with the income. If it's done right and with panache, it will be a long time before the investor catches wise that all he's getting back is his own money from earlier, smaller investments.

On more occasions than not, Margolies simply ignored the stricture to paste the Maguire sticker to his invoices and bills, telling the customers that the sales were factored and that payments should be made not to Candor but directly to the Maguire post office lock box. So the bills—the legitimate ones, at least—continued to go out as always and the customers continued to pay Candor, and then Candor paid Maguire. Only once did anyone at Maguire notice that Margolies was violating the rules and raise a howl. In November 1980, Peter O'Neill, the Maguire officer handling the Candor account, came across one of those Candor checks sent in to pay for an invoice that had been assigned to the factor. O'Neill immediately called Margolies and demanded an explanation. Margolies, with his salesman's winning ways, calmed O'Neill. What had happened, he explained, was that the customer hadn't followed directions and had sent his check to Candor. Rather than go to the bother of sending the check back and making the customer write and dispatch a new one, Margolies simply had deposited the check in the Candor account and written his own to Maguire. O'Neill was appeased. But he warned Margolies not to let it happen again. If it did, Maguire might consider that grounds for ending the factoring agreement. Margolies was not at all concerned. Too many checks had already slipped past Maguire for him to think that O'Neill's catching this one had been anything but an accident that was unlikely to happen often, if ever again. Margolies just ignored O'Neill's warning and continued to do as he had been doing, only more so.

If he could get away with continuing to collect as always from his legitimate customers and writing his own checks to the factor, then he had a clear road into the Maguire treasury to stage a raid on a massive scale. Like a magician pulling rabbits out of a hat, Margolies seemingly pulled names out of directories. Some were the names of retail stores with which Candor had never done any business, or had done no business in a long time, or had done business only on a minimal scale. Onto invoices went their names, showing that they were now making ever-increasing purchases from Candor. Off to Maguire went the invoices. Into Candor's bank account went 85% of the sales figure listed on the invoice.