Downfall
At the same time that Richard Whitney was achieving great success, his brother George had also prospered at Morgan bank and by 1930 had been anointed as the likely successor to bank president, Thomas W. Lamont.
While Richard Whitney was assumed to be a brilliant financier, he in fact had personally been involved with speculative investments in a variety of businesses and had sustained considerable losses. To stay afloat, he began borrowing heavily from his brother George as well as other wealthy friends, and after obtaining loans from as many people as he could, turned to embezzlement to cover his mounting business losses and maintain his extravagant lifestyle. He stole funds from the New York Stock Exchange Gratuity Fund, the New York Yacht Club (where he served as the Treasurer), and $800,000 worth of bonds from his father-in-law's estate.
Having retired as president of the NYSE in 1935, Whitney remained on the board of governors, but in early March 1938, his past began to catch up with him when the comptroller for the NYSE reported to his superiors that he had established absolute proof that Richard Whitney was an embezzler and that his company was insolvent. Within days, events snowballed, and Whitney and his company would both declare bankruptcy. An astonished public learned of his misdeeds on March 10 when he was officially charged with embezzlement by New York County District Attorney Thomas E. Dewey. Following his indictment by a Grand Jury, Richard Whitney was arrested and eventually pleaded guilty. He was sentenced to a term of five to ten years in Sing Sing prison. On April 12, 1938, six thousand people turned up at Grand Central Station to watch as a scion of the Wall Street Establishment was escorted in handcuffs by armed guards onto a train that delivered him to prison.
Despite everything, Richard Whitney's wife and family stood by him and friend May Kinnicutt and her husband, G. Hermann Kinnicutt, a partner in a stockbrokerage firm, provided Mrs. Whitney with a farmhouse to live in at Far Hills, New Jersey. George Whitney eventually made restitution for all the money his brother owed.
A model prisoner, Richard Whitney was released on parole in August 1941 after serving three years and four months in Sing Sing. He became the manager of a dairy farm, supervising three farmhands and twenty-five cows. In 1946, he went back into business when he became president of a textile company that made yarns from the ramie plant, which grew in Florida. Banned from dealing in securities for life, he was living a quiet life in Far Hills, New Jersey at the time of his death on December 5, 1974.
Read more about this topic: Richard Whitney (financier)
Famous quotes containing the word downfall:
“Children demand that their heroes should be fleckless, and easily believe them so: perhaps a first discovery to the contrary is less revolutionary shock to a passionate child than the threatened downfall of habitual beliefs which makes the world seem to totter for us in maturer life.”
—George Eliot [Mary Ann (or Marian)
“Show me one thing here on earth which has begun well and not ended badly. The proudest palpitations are engulfed in a sewer, where they cease throbbing, as though having reached their natural term: this downfall constitutes the heart’s drama and the negative meaning of history.”
—E.M. Cioran (b. 1911)