Today we’re almost numb to the spectacle of corporate fraud, but I ran across an interesting example from long ago, perpetrated by a Diebold insider. I thought I’d share what I found.
The Diebold we know today was founded in 1876 (after a few predecessor companies such as Diebold-Bahmann, Diebold & Kienzle, and Diebold-Norris & Company went out of business). Dominick Tyler was the secretary/treasurer from this start until his disgrace over 20 years later.
In 1881 Tyler was issued stock certificate #61 for $5,000 but it isn’t clear (or terribly relevant) if this was an investment, or in lieu of salary. In 1882-1884 he and his family became heavily indebted due to reckless speculation, apparently by his son-in-law Mr. Hurford. Tyler’s debts included some to Diebold, and the President, W. W. Clark, accepted Tyler’s stock certificate as collateral and placed it in a safe that both men had access to.
Around the same time, Tyler began passing a promissory note which claimed to be from Diebold, after forging one of the necessary signatures. As time went by the promissory note was passed around to various banks, and each time Tyler reduced the amount as his debts were slowly paid. But on the last round he was discovered and indicted, convicted, and sent to jail in 1898. It’s interesting to note that nobody lost any money in this scam but a judge observed “payment does not condone the offense.”
Meanwhile, in 1891 W. W. Clark tried to find the stock certificate #61 but it was mysteriously missing from the safe. Clark had it declared lost, and a replacement certificate was issued to Tyler, which he then signed over to Clark to pay off his debts. A few years later Tyler discovered the original (which had been canceled in the books but not on its face) and passed it off to a bank as valid. Again he was discovered, in 1895.
Tyler was sentenced to 5 years in prison, but at over 70 years of age he appealed his sentence which was reduced to 3 years.
