The Card Shark

With the rise of computer punch-card accounting and the decline of the clerk's pen-entry ledger, company comptrollers have relaxed in a new atmosphere of mechanical morality. They have been confident that neither false entry nor ink eradicator could juggle the electronic accounts. But last week, Walston & Co., one of Wall Street's largest brokerage firms, found that the computer is no more honest than the hand that feeds it. In eight years, Walston Vice President and Computer Specialist Frank B. Haderer, 50, had stolen more than $260,000 from the electronic till, to become the first known big-league electronic embezzler.

Haderer helped install Walston's IBM bookkeeping brain in 1950, was made manager of the firm's accounting department in 1957 because he knew more about the system than anyone else. Thus he had no trouble working out a simple way to wholesale larceny. He would go to the office after hours, make out punch cards to show a withdrawal from Walston's big, fluctuating margin-interest account of some $300,000, put the money in his trading account, and punch out a deposit card. He would feed both cards into the machine. Since the computer kept books for both accounts, the auditors, for eight years, always found the company balances in perfect order. Even so, as a further precaution, Haderer never took more than $3,000 a month. As a check on the computer, the company required slips to match the punch cards for all deposits and withdrawals. Haderer slipped up on the slips. When Walston decided this year to audit its employees' trading accounts independent of the general audit, it found cards in Haderer's account that had no corresponding slips. An old-fashioned check of Haderer's account uncovered the theft.

This file is automatically generated by a robot program, so reader's discretion is required.