In Room 475

For the past nine weeks Room 475 in the ornate old U. S. Post Office Building in Chicago's Loop has been carefully guarded from the press. Three tired deputy marshals, under orders to arrest loiterers, watched the three entrances and occasionally looked into an adjoining toilet to see that no reporter had his ear glued to the door. Inside Room 475 a Federal Grand Jury was investigating the income of one of the biggest U. S. publishers, and neither smart young District Attorney William Campbell nor his Washington boss, Frank Murphy, wanted to risk a complaint that the case was being tried in the newspapers.

Last week the doors were thrown open. After hearing 227 witnesses and studying the reports of 50 auditors, the Grand Jury had indicted Moses Louis Annenberg on ten counts of income-tax evasion. Publisher Annenberg, said the Grand Jury, had wilfully neglected to pay $3,258,809.97 in taxes, plus penalties and interest of $2,289,574.92--a smashing total of $5,548,384.89, which made this the largest criminal tax-evasion case in U. S. history, not excepting Alphonse Capone's.

Moe Annenberg's total take from tipster sheets, racing wire services, pulp magazines and the Philadelphia Inquirer has made him probably the richest publisher in the U. S. Beginning as a Chicago newsboy, he worked into the circulation department of the Hearstpapers, became circulation manager of the old Examiner in 1904. The strong-arm tactics used in Chicago's circulation wars gave Moe Annenberg and his older brother Max (now circulation director of the New York Daily News) a reputation that has dogged them throughout their careers. Moe went from Chicago to Milwaukee, from Milwaukee to New York, where, from 1919 to 1926, he was circulation manager of all Hearst publications. While working for Hearst he began picking up racing papers for himself; when he quit Hearst, the Annenberg network of sheets and services reached into thousands of poolrooms throughout the U. S.

With his income from racing tipster sheets and a national leased wire service that furnished odds and payoff prices, Moe Annenberg branched out. He began publishing Radio Guide, Screen Guide, Official Detective Stories, Click. Three years ago he bought the respectable old Inquirer, and since then he has shown more & more reticence about his activities on the other side of the tracks. He has played the public-spirited publisher in Philadelphia by declaring the Inquirer's political independence, the honest-minded publisher by printing the news of his tax troubles on the front page.

Last week's news was no exception. On Page One of the Inquirer appeared the following two-column headline:

ANNENBERG INDICTED

IN INCOME TAX CASE:

WELCOMES COURT TRIAL

One column carried the United Press story of his indictment, the other column an Associated Press story of the Annenberg reaction to the indictment. Excerpts:

"We will have an opportunity to present our side at the trial. I have complete confidence in our courts. . . . I ask only that the public reserve judgment until all of the facts are known. . . . I regret keenly that the Government has found it necessary to place the blot of an indictment on the name of my son, Walter [indicted with two other Annenberg officials on charges of aiding and abetting the alleged evasion]. . . .

"Since the tax investigation has commenced I have been informed that perhaps our bookkeeping systems have not kept pace with the growth of the business and it may be that some taxes are owing to the Government. . . . I have assured the Government that any taxes which are rightfully due it will be paid. . . ."

Despite Publisher Annenberg's assurances, the Government was in no mood to settle out of court. If found guilty, Moe Annenberg might spend the rest of his life in prison.* This week a second Grand Jury will resume an interrupted inquiry to determine whether the Annenberg racing news services violate antimonopoly statutes. Said District Attorney Campbell: "There is more to come. There will be some very interesting and colorful charges."

*Each of the ten indictments carries a maximum penalty of five years. Publisher Annenberg is 61.

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