Hot Bonds

When a bold thief strolled into Manhattan's Continental Bank & Trust and filched $500,000 of Government bonds one fine day last autumn, the underworld from the Bowery to the Barbary Coast agreed that it was the slickest job of the year (TIME, Dec. 12). Last week the thief was still at large but Continental's bonds turned up in Texas. San Antonio's $2,000,000 Commercial National Bank had them in its portfolio. When San Antonio's citizens learned this they rushed for their deposits; the bank closed. Few days later the bank's former president, Z. D. Bonner, and Lawyer John J. Cunningham were clapped in jail for receiving and concealing stolen goods.

At the time of the theft police advanced the theory that the sneak thief had used a stick tipped with chewing gum to lift the bonds from behind the teller's window. William J. Burns Detective Agency believe that he might have wheedled from a runner or other company employe the exact time that the bonds would be delivered, arranged to have a crony telephone the teller when he crooked a finger. The telephone would distract the teller for a split-second, and a split-second is all a smart thief needs. Once the thief had the bonds they probably passed, as most hot bonds do, through the hands of a "front man" (intermediary) to a fence and then to San Antonio's Commercial National. The thief at most received 40% of their face value. If they had been corporation bonds he would be lucky to get 20%. The front man takes a cut of at least 10% and the fence, whose job is the most difficult, might realize (for Governments) as high as 75% of the face value.

The market for hot bonds is chiefly among reputedly honest businessmen who are in financial trouble. They buy them cheap, use them as collateral for loans or to sweeten portfolios of their institutions. Some are sold to insurance companies which would rather pay a "reward" of 40-c- on the dollar for the bonds than stand the full loss covered by their policies. Repurchase of loot from the famed $1,000,000 Grand National Bank robbery in St. Louis two years ago broke a first-class scandal involving many a St. Louis lawyer, businessman and politician.

Most famed of all U. S. hot bond fences was James A. Connolly of Minneapolis who did business as an over-the-counter broker, was listed in the Security Dealers of North America redbook. Though he operated chiefly in the Midwest, his favorite trick was to wire a Manhattan broker for a bid on a block of bonds. Whatever was bid he promptly accepted, then mailed the bonds draft attached to a Manhattan bank, received his money long before the broker sniffed a rat. In New York State a seller of hot goods has virtually the same legal status as a thief. But in Minnesota and many another State, the fence can plead ignorance. Thus for years Fence Connolly did a land-office business. He was finally nabbed by U. S. postal authorities in 1931, given a 15-year sentence, but while awaiting the outcome of an appeal died in jail.

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