Word: crude
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Last week Dr. Coster and his crude drugs became the X and Y of a mystery-story equation. Other factors were forged Dun & Bradstreet reports, dummy trading companies, phantom warehouses, vanished inventories and missing assets...
...McKesson & Robbins, Inc., whose 1928 expansion was underwritten by Goldman, Sachs and Bond & Goodwin, Dr. Coster transferred a private enterprise of his own, the business of trading in crude drugs from far places-China wood oil, camphor from Japan, Javanese quinine. McKesson & Robbins' crude drug department was very much the private concern of President F. Donald Coster...
...mystery was in the crude drug department, which Dr. Coster ran with the help of Assistant Treasurer George E. Dietrich. Each year the department reported a nice inventory profit from its operations abroad and this profit was added to the inventories and accounts receivable on the books. Accountants Price, Waterhouse & Co. certified that the inventories had been "certified ... by responsible officials" without certifying the inventories themselves...
Last month, while checking up on inventory insurance, Treasurer Thompson found that the insurance did not cover crude drug inventories. Dr. Coster told him the insurance was handled by W. W. Smith & Co., the company's Montreal agent. Mr. Thompson found several Dun & Bradstreet reports in the company files showing W. W. Smith to be a worldwide trading company with assets of between $6,000,000 and $7,000,000. Suspicious Mr. Thompson went to Dun & Bradstreet and was told the reports were forgeries. Next Mr. Thompson began checking up on W. W. Smith and on another Montreal firm...
...Smith had moved its New York office to Brooklyn, where Mr. Thompson interviewed a "funny looking customer" named Vernard who remarked: "I hear you're doing a lot of alcohol business these days." Mr. Thompson found that the crude drug department warehouses were nothing but addresses-one a stenographer's, another a mimeograph operator's. While he was wondering what to do next, the receivership was granted...