The Grain Scandal (Cont'd)

As young go-getters in Rochelle, Ill. (pop. 5,400), Frank and James Spellman were doing nicely buying, selling and trucking grain. Then they expanded, and bought a grain elevator. In 1949, they got a contract with the Agriculture Department's Commodity Credit Corp. to store 200,000 bu. of grain. The Spellmans, both in their early 303, began expanding faster. They added to their fleet of trucks, worked into real-estate deals, began shipping grain to Chicago by rail.

But their bubble burst. Last week they were indicted on 28 counts by an Illinois federal grand jury for fraudulently selling $282,000 worth of CCC's grain that they had been paid to store. It was the latest indictment in a series of grain scandals (TIME, Jan. 28) that may end up costing the Agriculture Department $5,000,000 to $7,000,000.

The Spellmans' warehouse, the Government charged, was not big enough to store 100,000 bushels of grain in the first place. After the Spellmans started selling the grain, they took pains to fool any Government inspectors who might come along. At the top of the elevator, just below the catwalk, they hung small 275-bu. bins so that anyone looking in would think that the elevator was full. At the bottom, they kept just enough grain to cover the elevator door space, in case anyone peeked in. But they need not have been so careful. In the two years they stored Government grain, no one bothered to check up on them. Not a single inspector called at their warehouse.

The shortages were discovered only because the Spellmans expanded so fast that they didn't have enough cash to pay their bills. When a Chicago grain broker tried to collect by attaching their property, the

Spellmans knew they were in trouble, owned up to the shortages and filed in bankruptcy. Now out on bail, Frank Spellman has a job as a truck mechanic; James is working for a construction company. CCC figures the- Spellmans owe it $316,959, including the fees paid them for storage.

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