Request to reimburse SF Mint Superintendent for theft 0

[RWB]

This little letter summarizes what is known as the "Dimmick Defalcation." In 1901 Walter Dimmick, chief clerk of the San Francisco Mint stole $30,000 in new double eagles - 6 bags - from the Cashier's Vault. This was possibly the largest theft from a US Mint since the 1850s. The Superintendent, Frank Leach, had to make good on the loss. Leach became mint director in 1907.

Edited April 2, 2020 by RWB

[kbbpll]

Ah, Dimmick. If I remember right, the $30000 was never found. People tried to connect it to the Saddle Ridge Hoard, but the dates and denominations didn't make sense, among other things.

[GoldFinger1969]

1 hour ago, kbbpll said:

Ah, Dimmick. If I remember right, the $30000 was never found. People tried to connect it to the Saddle Ridge Hoard, but the dates and denominations didn't make sense, among other things.

Yeah, you had a similar situation with the 1928 DE's from the Philly Mint.  The Mint Supervisor (Dessler ?) was personally liable and the Mint lobbyists got Congress to pass a law holding him blameless.  OK, I can live with that but....

I think that the theft of those 1928 DE's is the reason why the Mint has a hard-on for the 1933 DEs.  They were so upset at being caught asleep on the missing $5,000 in DE's that they decided that if somebody had the GALL to switch a measly $500 or even $200 in other DEs for the 1933 DE's....with NO LOSS to the Mint in terms of $$$ or gold....well, that's a high crime and misdemeanor.

How else to explain why the SS was hunting the 1933 DE in 1944 when they were supposed to be on the lookout for Nazi saboteurs ?  

Edited April 2, 2020 by GoldFinger1969

[Conder101]

I don't believe it was the SS job to be on the lookout for Nazi saboteurs, that would have been the FBI's job.

[GoldFinger1969]

6 minutes ago, Conder101 said:

I don't believe it was the SS job to be on the lookout for Nazi saboteurs, that would have been the FBI's job.

I think the SS assisted the FBI on internal stuff back then. Regardless, I don't think worrying about "stolen" coins totalling $200 face value was what they should have been worrying about in 1944.  JMHO.

Edited April 2, 2020 by GoldFinger1969

[GoldFinger1969]

Roger, the Philly Mint was never able to find out who swiped $5,000 worth of 1928 DE's ?  Did the SS or FBI suspect George McGann ?

Edited April 9, 2020 by GoldFinger1969

[RWB]

10 hours ago, GoldFinger1969 said:

Roger, the Philly Mint was never able to find out who swiped $5,000 worth of 1982 DE's ?  Did the SS or FBI suspect George McGann ?

The United States Secret Service (the abbreviation "SS" brings up a jack-boot and skull image) had Edward McKernan, Vault Custodian, as it's prime focus. USSS agents were Frank Burke and E.O. Shreve.  It was decided that a bag of 1928 DE went missing between June 1933 and 1936. McKernan was the suspect because he had unlimited access to the vaults, although by rule he was always to be accompanied by another employee.

George McCann was not implicated. As Cashier of the Philadelphia in 1940, he was removed from his post because he had stolen silver coins from the U.S. Mint, totaling $339.90. McCann was tried in the U.S. District Court for the Eastern District of Pennsylvania, Criminal Case #8618.

USSS was part of the Treasury department and handled all investigations relating to Treasury business. The FBI is part of the Justice Department and prior to the "Patriot Act" collaborated with Treasury largely on international currency investigations. There are extensive Secret Service files at NARA in College Park, MD. [ Record Group 87 – United States Secret Service Division (Treasury) ]

[GoldFinger1969]

And they never found out what happened or found the coins ?  Wow.....$5,000 goes missing, not a peep.  A couple of 1933's get exchanged, and all hell breaks loose for 80 years.  

[GoldFinger1969]

BTW, your writeup for the Heritage Auction on the 1928 Double Eagle bag was outstanding.

I don't know why this isn't discussed more.  Something is wrong when $1 MM (current value) in 1928 DEs is really stolen and yet all the air is sucked out of the room on an exchange of 1933's.

[RWB]

Well, Dimmick was convicted of stealing 6 bags full and no one ever found out what happened to those, either. Admittedly, Dimmick was in a good position to dispose of the new coins -- they were common items along the US West coast and Canadian Pacific.

[GoldFinger1969]

1 hour ago, RWB said:

Well, Dimmick was convicted of stealing 6 bags full and no one ever found out what happened to those, either. Admittedly, Dimmick was in a good position to dispose of the new coins -- they were common items along the US West coast and Canadian Pacific.

Would the Super or Mint Director be liable if someone under him was found guilty of the actual theft ?  

The letter says Dimmick was in San Quentin (wonder if he knew The Hammer of C-Block; old "Rockford Files" joke ) so I'm surprised he didn't let on where the DEs were in exchange for a reduced sentence.

[RWB]

RE: "Would the Super or Mint Director be liable if someone under him was found guilty of the actual theft ?"

People with fiduciary responsibilities were bonded. The bond was called for any amount not recovered, up to the bond's value. The remainder rolled to the next higher bonded employee. In the Dimmick or 1928 DE cases, this was the Superintendent. Note that Leach paid the $25,000 shortage from his personal funds rather than have his bond called.

Edwin Dressel, who had accepted the mint assets on taking the appointment, chose to request Congressional action immediately after the investigation came up empty.

[GoldFinger1969]

Wow....I guess the people who took those jobs either had some $$$ in the bank or made alot of $$$ as Mint personnel to offset the risk of theft.

Plus I guess the bond helped.  Not sure who put it up, but I personally find it more than a coinicdence that the Philly Mint led the drive to get Congress to pass the Reimbursement & Liability Bill for Mint employees and at the same time they decide to go after the 1933 DEs.

Edited April 10, 2020 by GoldFinger1969

[GoldFinger1969]

On 4/9/2020 at 11:18 AM, RWB said:

The United States Secret Service (the abbreviation "SS" brings up a jack-boot and skull image) had Edward McKernan, Vault Custodian, as it's prime focus. USSS agents were Frank Burke and E.O. Shreve.  It was decided that a bag of 1928 DE went missing between June 1933 and 1936. McKernan was the suspect because he had unlimited access to the vaults, although by rule he was always to be accompanied by another employee

(1)  Why wasn't McKernan considered a possible accomplice to Israel Switt's "theft" of 1933 DE's ?

(2)  I thought that the Vault (and maybe the Cashier's stache) had double-locks and you needed 2 VIPs to unlock them to enter the area ?  Maybe not the Cashier's area, but I know I remember you needed 2 people to access the vault from FMTM.

[RWB]

By the time of the 1933 DE fiasco, McKernan was dead. Remember - there were no reports of anything missing except the bag of 1928 DE.

Regulations required 2 people present to enter a vault, but not necessarily Mint Officers. In daily work the vault custodian and his assistant came and went largely at-will and it appears that the 2-person rule was often ignored. The Cashier's vault was different and the Cashier controlled access because of the frequent need to pay out cash for deposits and take in deliveries before they went to the Vault Custodian for longer term storage.

[GoldFinger1969]

5 hours ago, RWB said:

By the time of the 1933 DE fiasco, McKernan was dead.

Do you know when he died ?  Not seeing an obit or Wikepedia entry.

[GoldFinger1969]

5 hours ago, RWB said:

Regulations required 2 people present to enter a vault, but not necessarily Mint Officers. In daily work the vault custodian and his assistant came and went largely at-will and it appears that the 2-person rule was often ignored.

You mean 1 of the locks was left open ?  Or maybe both ?  Or that the asst would give his key to the Cashier so he could go to the Vault with both keys ?

If both guys are personally liable for any theft, I would think neither would want anybody but themselves opening the lock unless that other person was their spouse or sibling. 

I'm beginning to understand how these guys lost an entire bag of 1928 DE's. 

Edited April 23, 2020 by GoldFinger1969

[RWB]

2 hours ago, GoldFinger1969 said:

Do you know when he died ?  Not seeing an obit or Wikepedia entry.

My error - it was McKernan's assistant who was dead. McKernan retired Oct 31, 1936 and died Feb 22, 1950.

[RWB]

2 hours ago, GoldFinger1969 said:

You mean 1 of the locks was left open ?  Or maybe both ?  Or that the asst would give his key to the Cashier so he could go to the Vault with both keys ?

If both guys are personally liable for any theft, I would think neither would want anybody but themselves opening the lock unless that other person was their spouse or sibling. 

I'm beginning to understand how these guys lost an entire bag of 1928 DE's. 

Not quite.... The Cashier's vault was controlled by the Cashier as representative of the Superintendent. The Vault Custodian was subservient to the Cashier but also reported, in theory, to the Superintendent. The Vault Custodian and his assistant controlled the "working vault" that was opened and closed each day. The other vaults were under seal and required special permission to open and were then sealed by a committee or 3 or 4 people.

The 1928 DE were in  what was once a working vault but was later a sealed vault.

[GoldFinger1969]

Got it...I think.   Thanks, Roger.

[Conder101]

And with the Cashiers vault, since they would be constantly going in and out of it all day long it was probably opened in the morning and then left open all day long, then closed that evening.  Access during the day would be controlled by who was allowed in the Cashiers office.

[RWB]

Yes. The Cashier's vault was more like a normal bank vault than a storage vault. The door was within the Cashier's office. It held money for payroll, payment of depositors, small purchases of Mint supplies, and other working cash plus bars awaiting pickup by customers such as jewelers and dentists. Depending on space available and the time era, the Coiner's deliveries passed through the Cashier's office on their way to either the working vault or sometimes long-term storage.

Much of the operating system in a US Mint resulted from necessity, and not deliberate planning.