by Paul R. Spitzzeri
Indicted and arraigned for their audacious and preposterous scheme to bilk “investors” of hundreds of thousands of dollars for a purported merger of railroads involving a third of all track mileage in the nation, Thomas M. Hennessey and Harry D. Hibbs stood trial, presided over by Judge Edwin F. Hahn at the Los Angeles County Superior Court. Their lead attorney, Paul Schenck, however, did what he could to forestall every step in the legal process, but the first step was pleading not guilty when arraigned on 5 June 1925, with Judge Hahn setting a trial date of 8 September.
When, however, the case was called, Schenck asked for a continuance because he had another trial to which to attend, so Hahn delayed the proceeding another week. Jury selection proved to be easy and eight women and four men, with alternates of a man and a woman, seated quickly. The trial, though one report said it would last around six weeks, also moved speedily as Schenck made it clear that he would not offer much of a defense other than to claim that the prosecution was not warranted.
In its edition of the 8th, though, Sadie Mossler of the Los Angeles Record posited that, “if ever there were two harassed, worried-looking individuals they were Thomas Hennessey and Harry D. Hibbs . . . when they appeared in Superior Court this morning.” Despite the delay in the trial, an official with the federal Interstate Commerce Commission, which the schemers claimed had a key role in their merger plans, was allowed to testify that there was no record of any such project. Mossler added that the crowded courtroom included investors who were witnesses, others who were not called to testify and “others who came near investing and are congratulating themselves that they did not succumb to the siren song of sudden wealth.”
Yet, when the Los Angeles Times of the following day discussed the proceedings, it remarked that,
Both Hibbs and Hennessy appeared to be in high good humor when the case began. Hennessy, a slight frail man, particularly seemed to enjoy himself. He grinned broadly the better part of the time. His codefendent sat stolidly at the side of his attorney, smiling slightly at time, but otherwise he appeared rather disinterested.
Once the trial was launched, the first witness for the prosecution, led by Deputy District Attorney Charles Fricke, assisted by Leonard W. Hamner, who was involved in the matter from early on in the process, was James P. Black, a former Chicago printer and publisher living in the Angel City, though his testimony was oft-interrupted by Schenck, mainly over what constituted a conspiracy. The Los Angeles Illustrated Daily News reported that Black’s testimony on cross-examination was such that it “scored a decisive victory” for the defense because he said he was fully cognizant that he was gambling with his money when he invested and did not ask Hennessey what was to be done with the funds.
Notably, reported the Record of the 16th, as Fricke told the jury that the prosecution would show that the defendants were involved in the scheme for more than a decade, Schenck merely told the twelve persons chosen to decide the fate of his clients that his intent after the prosecutors rests was to ask that an immediate acquittal be rendered, because, he told the court, “the merger is genuine and is still going on.”
Some of the interesting aspects of the trial included the naming, because of Hibbs’ “little black book” documenting transactions being a prime exhibit of evidence, of another film industry figure as an investor, this being actor Bryant Washburn, who, however, was able to recoup his $5,000 sum. When realtor W.P. Cooper was called to the stand, he testified that Hennessey and Hibbs referred to investors as “Dickie Birds,” and, when asked why, he offered “I suppose the idea was that the money would take wings and fly away, never to return.” The Record recorded that, during Cooper’s statements, “Hennessey himself sat and smiled and even laughed.”
Yet, Hibbs got into no small amount of trouble when Fricke submitted an affidavit to Hahn concerning purported jury tampering as the defendant spoke to a juror outside the courtroom. While Schenck insisted the Hibbs did not know the man he saw outside the building was a juror, fellow defense counsel Leo Silverstein told the court he saw the conversation and intervened, but Fricke added that the defendant tried to continue the conversation.
Apparently, no other jurors were aware of the situation and Hahn imposed a total gag order on all in court, but Sheriff William I. Traeger, on request, installed more bailiffs because it was found that Hibbs and Hennessey were observed smiling and tipping their hats to female jurors, leading to a severe reprimand by the jurist.
Meanwhile, Schenck caused a mild sensation when, in asking one question in a cross-examination of investor John Brokaw, charged that unnamed Wall Street interests sought to derail his clients’ merger plans. Perhaps as a response, prosecutors brought up San Diego attorney Franklin, known commonly as Fred, Grant, this being the name of a figure that Hennessey and Hibbs insisted held an all-important contract, as well as their funds, but he told the court that he had never heard of either man.
Also brought up from San Diego was a granddaughter of former president and Civil War general-hero Ulysses S. Grant, who the promoters claimed was an ancestor of Fred Grant and she confirmed that Fred Grant was no relation to her family. The Record also summarized the testimony of former Merchants’ National Bank of Hollywood official, John Ransford, telling readers that his account was “almost unbelievable” as Hibbs was able to extract $11,000 from his “Dickie Bird” despite offering no “documentary proof” of the project, including names of partners, evidence of the financial veracity of the scheme, or any official papers. It was added that “spectators in the courtroom gasped with astonishment at each new revelation” from a financier who certainly ought to have known better.
The Record‘s Jack Carberry penned a feature on the defendants in the paper’s number of the 22nd in which Hamner asked a question and, though not a direct answer, a statement by Hennessey might as well have been one:
What manner of men are these who, without proof, without security, without even an office from which to work [legitimately?], and with only the gift of their tongues to aid them, pulled between $800,000 and $1,000,000 from the pockets of the city’s leading bankers, financiers, capitalists and politicians?
You folks out here in Los Angeles may think I’m a little fellow, but back in New York, my home, I’m big—mighty big.
Carberry remarked that “no more entertaining character studies have ever been presented to a Los Angeles jury than those revealed by Hibbs and Hennessey in their personalities and their statements.” This included the defendants’ physical appearance, with the former said to have “much of the fictional characteristics of the banker, or broker, in his appearance, though he was also described as soft-spoken so that “nothing . . . can explain how he prevailed” on Ransford or Los Angeles County Supervisor Frank E. Woodley to cough up their sizable investment amounts.
Hibbs, it was added, came from a small town in Ohio and ran a hardware store, likely the one his father operated, and, Carberry commented, “it is hard to imagine him in that position,” though the defendant told the journalist that he migrated to Los Angeles after he “made a little money.” Nothing was said about his work as a Barker Brother furniture store floor walker, either.
As for Hennessey, the upstate New York native was said to be “thin and dark, ” but the writer added, “but what a different background,” at least, according to his telling, when it came to the alleged massive estates of his uncle ($20 million) and father ($3 million), not to mention a second uncle in New Jersey. Despite these grandiose (and false) claims, Carberry told readers “one cannot help but feel that it is Hibbs, not Hennessey, who looks like ‘big money.'” Then again, he reported that it was all but certain the defendants would take the stand, though whether they had any surprise witnesses to buttress their claims was another matter.
It turned out that there were none of the latter and the brokers did not offer a defense through testimony. The next day’s edition of the Record reported that Schenck “would enter no defense” because “he announced himself as so confident of acquittal that to interpose a defense for his clients would be but a waste of the court’s time.” Instead, the defense attorney made it known that he “was to ask for a direct verdict of not guilty” and, if this was denied, closing arguments would ensue. Schenck insisted that the prosecution “blew up in the stretch,” possibly based on the fact that Fricke motioned for dismissal of 10 of the 46 charges.
The Times, also of the 23rd, observed that Fricke rested after Supervisor Woodley’s testimony and that of a Western Pacific Railroad executive who knew nothing of the defendants or the scheme they claimed involved his company as well as an Angel City attorney whose name in Hibbs’ book was next to a $10 million figure, but who knew nothing about it, the jury was cleared from the courtroom and the attorneys dickered over the defense motion for an advised acquittal verdict. Moreover, the paper informed readers that,
The contention of the defense was that whatever crime the brokers had committed it was not larceny by trick or device, which is the offense named in the indictment, but embezzlement, or false pretences, or something else again.
Schenck called but one witness, a lawyer advising Brokaw and who said there was nothing mentioned by the defendants about any bribery, which was alleged, of Interstate Commerce Commission members or a Denver federal judge, though the attorney added that he told his client that the scheme “looked untrue” and recommended his not invest.
The Los Angeles Illustrated Daily News, in its number of the 24th, observed that Schenck’s motion of acquittal was, predictably, denied by Hahn. When Fricke delivered his closing argument, noted the Record, he called the merger plan the “greatest bunco tale and the most fantastic fairy story in the history of the California courts.” Apparently, Schenck’s argument was not summarized and, when the two alternate jurors were released, as the jury headed for deliberations, they unequivocally stated that they would have voted the defendants guilty.
The jury deliberated not quite five hours and then returned to court to find Hennessey and Hibbs guilty on 30 counts, there were acquittals on three county, each subject to 1-10 years in prison by statutory sentencing guidelines. Schenck and Silverstein immediately announced intentions to appeal and for the release of their clients pending the outcome and, when the foreperson, who indicated that one person was a holdout for a time in the belief that Hibbs as hoodwinked by Hennessey, but it was pointed out that the former collected money and then tried to short the balances in his favor, read the verdict, “Hennessey sat with his chin [in] a palm, unmoved, apparently, and Hibbs twiddled a bit of paper in his fingers.”
Carberry was colorful in his commentary, writing, with a remark that was striking:
The Road to Billions was closed today.
A detour sign reading “Guilty” had been posted on the Highway to Wealth . . .
The detour leads to the county jail . . .
None who had followed the trial of the two convicted swindlers believed that the law, in their conviction, had punished the real culprits behind their plan.
For as Hibbs and Hennessey, handcuffed together, walked through the yawning door of the county jail last night, it was hard to believe that this pair—an Ohio hardware dealer and a New York street car conductor [this was new information!], were the brains which talked $1,000,000 or more out of the pockets . . . of [many] of wealth and power.
On 2 October, Hahn handed down the sentence, of which the Record noted “thirty years in prison for a certainty” and “the possibility of 300 years behind the gray walls of San Quentin” State Prison. This was said to be “the heaviest sentence in the history of California courts in connection with a ‘bunko’ game” and the judge also denied the motion for the convicts’ release pending an appeal.
Schenck, however, appealed passionately for this, insisting, “Hibbs is an old man and confinement in jail will mean his death” while “Hennessey, too, is ill, and we fear that life imprisonment will so injure his health that he can live but a few years.” What the defense attorney did not say was that parole would be very likely for these first-time offenders. While Hahn ordered their immediate transport to prison, after a court-appointed physician determined that neither men was in poor health, further delays ensued due to the standard appeals, but also a rehearing ordered by the state Supreme Court.
An Express article from 16 October noted that,
The smiles of pretense have been replaced by the stern lines of reality on the countenances of Harry Hibbs and Thomas Hennessey, “10-for-1” railroad merger brokers.
Worry is written in every line and crease in their faces. It producers from their puffs beneath their eyes . . .
The worry that is so plainly written around the corners of their mouths and in the crow’s feet of the eyes, is not the worry of men who love freedom. It is the worry of old men who see the creeping hand of death.
Hibbs, apparently the spokesperson for his partner, told the young unnamed reporter that the convicts were sick, but also said that they were treated as other prisoners, though he added that, as to their business issues, “they’re not all straightened some of them out before we go away. I don’t know when that will be.” Evidently remembering Schenck’s assertions that they should avoid speaking to the media and possibly incriminate themselves, Hibbs concluded the interview with, “really boy, we haven’t anything to say. Just say a good word to us. That’s all we ask.”
An appeal hearing was held in July 1926 and a denial was issued four months later, while a motion for a retrial was also rebuffed. As noted above, the Supreme Court allowed a rehearing in early 1927, with a new state law allowing for an en banc hearing in Los Angeles for the first time, but a decision was not rendered for another half-year, with the high court rejecting the effort, stating that the scheme was
a colossal venture that would have taxed, if not staggered, the nation’s best financial geniuses to have financed, organized and carried forward to completion . . . [the investment by so many was] an exhibition of imperturbable credulity that almost passes human understanding.
Hibbs was received at San Quentin on 24 August 1927 and Hennessey a week later and their sentences were affirmed by the state prison board at the end of the following year. In November 1929, Hibbs sought an early parole, though the reason was not stated in a press report and it was unsuccessful. The 1930 census enumerated the two in prison, with Hibbs working as a carpenter in the furniture factory, appropriate given his past employment for Barker Brothers, with Hennessey serving as a gate tender.
In March 1931, the duo applied for pardons, claiming that “announcement of plans for the merger of several eastern railroads establishes their innocence,” with Hibbs asserting that this news meant that the merger “is the first step in the plan we were working on” and that the consolidation in business was typical was such that “time will prove that the work we were doing was one of real worth.” More remarkably,
We were to collect $800,000,000 to put the merger across. Investments still will get ten-for-one on their money if we are freed to continue our work.
Not only this, but it was reported that “many of the investors who lost money in the spectacular scheme still believe in the two convicts and make trips to San Quentin to talk over the progress of the venture . . . some send money with which Hibbs and Hennessey are allowed to buy prison commissary supplies.” Parole eligibility was as of 24 August 1932, or five years from the time Hibbs entered prison and it appears that a niece, who was working on a new application, of the elder of the two prisoners, was hoping to get support from Asa Keyes, who was at San Quentin on a bribery conviction involving another enormous economic scandal, the Julian Petroleum fiasco.
In November 1931, however, Hibbs was paroled, due to failing eyesight and other health problems, and returned to his wife. A newspaper headline the following month stated “HIBBS HAS HOPES FOR COMEBACK,” but the article did not identify any specific plans associated with whatever return was being considered. He died, while still on parole and not long after his spouse’s passing, in June 1935 at age 69, but who knows if he still harbored those hopes for the rail merger plan.
Hennessey remained in prison until his minimum five years was served for parole and was released on 31 August 1932. He returned to Los Angeles, as well, and, his wife having secured a divorce in 1926, lived with a gas station owner and his wife near Fairfax and 3rd streets when the 1940 census was taken, receiving his parole discharge the following year. Unsuccessful pardon attempts were made in 1936 and 1940. What happened to him afterward could not be located.
The Hennessey-Hibbs merger project is a most remarkable one in Los Angeles history for many reasons, not the least of which may be that, in a booming city in a culture which prizes wealth above most anything, such an obviously sketchy scheme would seem to be have a profusion of red flags, especially for people in government, finance and other fields that, ostensibly, involve some measure of intelligence, prudence and care of thought and action. Yet, we hear of examples in our own time, a century later, where schemers and scammers convince gullible individuals and groups, many of whom refuse to accept the fact that they’ve been had, to fork over their money for any number of enterprises that, to other, seem patently crooked. Some people never learn!