◆ SpookStack

2 Pendergast va. United States. time the premiums impounded by the court accumulated, until by 1936 they amounted te almost $10,000,000. The lure of this sizeable amount of other people’s money played an important part in the scheme which was hatched. Street was in charge of the rate litigation for the insurance companies. Pendergast was a ‘‘political boss’’, O’Malley was the then Superintendent of Insurance. MeCormack was an insurance agent. Of these only O'Malley was a party to the litigation, Street agreed to pay Pendergast a ‘‘fee’’ of $750,000 to use his influence over O'Malley and obtain a settlement of the litigation which would be satisfactory to the insurance companies. O’Malley was agreeable. McCormack was the go-between. Street made an initial payment of $100,000 in currency which was divided $55,000 to Pendergast, $22,500 to O’Malley, and $22,500 to McCormack. Thereafter an agreement was reached and reduced to writing in form of a memorandum. Q’Malley would approve as of June 1, 1930, 80% of the increase in rates which the companies had sought; the parties would appear by their attorneys and join in seeking appropriate orders for distribution of the impounded money; 20% was to go to the policy holders, 50% directiy to the insurance companies, and 30% to Street and another as trustees for the insurance companies, The latter were to account to the companies but not to the court or the Superintendent, Thé memorandum agreement was not disclosed to the court. But on June 18, 1935, the insurance companies filed in each case a motion reciting terms of settlement and praying for an order of distribution. On the next day the insurance companies and O’Malley filed stipulations agreeing that the court should make the order of distribution. Thereafter on June 22, 1935, October 26, 1935 and January 24, 1936, hearings were held in open court on the motions, and briefs were filed. Counsel, who were wholly innocent and acting in good faith, assured the court of the honesty, fairness, and desirability of the settlement. On February 1, 1936, the court acting in re- liance on the representations and without a hearing on the merits entered a decree ordering distribution of the impounded funds as prayed in the motions. It also dismissed the bills, reserving juris- diction, however, for certain purpases. Petitioners then proceeded further with their corrupt plan. About April, 1936, Street paid $330,000 in currency of which Pendergast received $250,000, O'Malley $40,000 and McCormack $40,000. In the fali of 1936, Pendergast received another $10,000