For ways that are dark;

              22 HASKINS & SELLS March
"For Ways That Are Dark"
PE N I T E N T I A R Y terms have fallen
to the lot of certain individuals who
have specialized in inter-company tangles.
Odium has been the portion of others who
have turned tricks of high finance, some
apparently innocent, some intended to
deceive. What will be the fate of the in­dividual
who conceived and staged the
treacherous little drama described below
is difficult to foretell. It is to be hoped
that contact with one of our offices will
teach him the error of his ways and the
utter futility of hoping for success while
such tactics are employed.
The story is related substantially in the
words of our office concerned, in a letter
to the Executive offices, as follows:
"In the preparation of our balance sheet
for the Lateska Corporation of Indiana,
as of December 31, 1920, we shall appreci­ate
having you advise us by wire on the
following:
"The cash account as per the books
showed at December 31, 1920, a debit
balance of some 375,000, represented prin­cipally
by moneys on deposit with the
Bullard Bank & Trust Company. The
confirmation received from the Bullard
Bank & Trust Company certifies that the
Lateska Corporation of Indiana had such
amount to its credit as of December 31,
1920.
"Upon investigation, however, we find
that on January 3, 1921, the bank debited
the account of the Lateska Corporation
of Indiana in the sum of approximately
$75,000. Upon discussing the matter with
Mr. W. F. Sutton, president, we find the
transaction to be as follows:
"On December 31, 1920, the Lateska
Corporation (of Illinois) the parent cor­poration,
gave to the Lateska Corporation
of Indiana (a subsidiary corporation, the
audit of whose books and accounts we
are at present discussing) its check in the
sum of approximately $75,000 as part
payment on account of the amount owing
by it to the Lateska Corporation of Indiana
which check the latter deposited to the
credit of its account in the Bullard Bank
& Trust Company.
"Mr. Sutton further advises us that he
made a personal loan to the Lateska Cor­poration
(of Illinois) of some $75,000 by
sending his check to that company which
check was to be deposited to meet the
check of that company which had been
issued to the Lateska Corporation of
Indiana; however, owing to lack of time,
he was unable to forward to the bank
funds to meet the check drawn by him
on his personal account and he notified
the Bullard Bank & Trust Company not
to clear the check of the Lateska Corpora­tion
(of Illinois) which he had deposited
on December 31, 1920.
"Mr. Sutton frankly states that his
whole idea in this transaction was to show
a substantial cash balance in the accounts
of the Lateska Corporation of Indiana
and feels that so long as the Bullard Bank
& Trust Company certified that at De­cember
31, 1920, there was $75,000 to the
credit of the Lateska Corporation of Indi­ana,
we should show it on the balance
sheet of that company.
"We, however, take the stand that the
transaction was an incomplete one inas­much
as the check of the Lateska Cor­poration
(of Illinois) had not been cleared
and therefore the original transaction of
the deposit of this check becomes null and
void.
"Mr. Sutton advises that it is quite
customary for corporations to have trans­actions
of this nature, either by means of
loans for two or three days, or otherwise,
at the close of their fiscal periods, to enable
them to show substantial cash balances
on their statements.