The Boy Wonder

In these days of signers and counter-signers, collateral and credit investigators, a man who can chisel a bank is rare indeed. Last week, after a fortnight at their adding machines, red-faced country bankers in three Eastern states totted up losses of better than $800,000 as victims of one of the niftiest and most labyrinthine swindles since Boston's dapper Charles Ponzi was in his prime. The man credited with the feats of financial erring do was Earl Belle, 26, a baby-faced Pittsburgh sharpie currently residing scot-free in Rio de Janeiro. So slick was his pitch that only this spring he was interviewed by Mike Wallace as a wonder boy of finance, the proprietor of a budding empire worth, he claimed, something like $10 million. To Tough-Guy Wallace, Belle explained: "If you claw your way up" to success, you never have to ask anyone for anything. "It's a terrible feeling to have to call on anybody for help."

That Terrible Feeling. Last week, as FBI and SEC agents unraveled the details, no one felt worse--or needed more help--than the officers of the 23-year-old Manufacturers' Bank of Edgewater, N.J. The New Jersey State Banking Commission prepared to liquidate its assets, having ordered it closed when it discovered that the bank, with $2,100,000 in deposits but only $130,000 in capital, had apparently lent Belle $150,000 without adequate security.

Thanks to Federal Deposit Insurance, 95% of the depositors, those with less than $10,000 in their accounts will be repaid in full. The rest must take their dubious chances, including the town of Edgewater, which had $68,000 in the bank.

Edgewater was only one of the marks. In Huntington, N.Y., the bigger (16 offices)--and presumably more experienced --Security National Bank had also been taken by Belle, to the tune of $475,000. And in McKeesport, Pa., the Peoples Union Bank & Trust Co. announced that it too had handed a Belle company $200,000 without security, filed suit against his sagging corporations for repayment of the loan principal plus 5 1/2% penalty.

"Whoever Got Rich?" What the banks bit on was as airy a bit of corporate superstructure as any schoolboy could dream up during a dull study period. The son of a middling prosperous shoe merchant, Belle declined an offer to go in his father's business ("Whoever got rich fitting shoes?"). Instead, he started out legitimately enough as a co-founder of the Eastern Investment and Development Corp., formed to specialize in industrial uplift of moribund towns; he helped revive tiny (pop. 1,800) Saltsburg, Pa. with a campaign that attracted three new industries with a payroll of about $1,000,000 annually. Then, perfumed with a reputation for good works, the E.I.D.C. group really started operating. Belle and his friends acquired control of Cornucopia Gold Mines, Inc., which owned a worked-out Oregon claim that had only one visible worth--a listing on the American Stock Exchange--planned to use Cornucopia as a holding company "shell" for half a dozen small subsidiaries (claimed 1956 sales: $5,200,000) that it had located and had taken options to buy.

The scheme was to issue new shares of Cornucopia, swap them for stock in the proposed subsidiaries. That part of the deal never got off the ground. Smelling a rat, SEC stepped in, and refused to clear a proxy statement to get existing shareholders' permission for the issue. Meanwhile the American Exchange had suspended Cornucopia from trading for failure to file required financial statements. Nevertheless, even though Belle & Co. only held options, they were able to install officers in some of the companies (making textiles, hot-water heaters and electronics, a printing plant, real estate, etc.) and sweet-talk the banks into loans on the companies' names and supposed assets.

The great trick--and growing danger--of such a scheme is to keep the balloon expanding, paying off one loan with another. But when SEC moved in and started investigating, there was nothing to do but get out--quickly. A month ago Belle apparently started systematically looting the companies. As a sample of his thoroughness, he even tried to get the employees' pension funds of one of the companies, Troop Water Heater Co. Though the bank that held the funds in trust refused to go along, Belle got partial revenge. All but about $900 of the final week's paychecks for Troop, amounting to $4,500, bounced because Belle withdrew the funds before he fled.

Flying Down to Rio. In Rio, where he was comfortably ensconced last week in a $300-a-month apartment with a view of famed Sugar Loaf Mountain, Belle blandly denied that he had stolen a dime. "All I got," said he, "is $2,600--my wife's savings." As to the other $800,000 or so, Belle said unscrupulous former associates stole it. He also said that he would "never" return to the U.S. "I guess permanent exile is punishment enough."

That may be all the punishment he will get. Though the FBI charged him with swindling, Brazil has no extradition treaty with the U.S., and there is very little the Government can do to make him come home unless Brazil decides to cooperate.

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