"The Chairman" and His Board

By Gordon Bock

The caper took a month to plan, and just 64 minutes to execute. On Friday, May 13 -- a date chosen in a spirit of mischief -- an $18,000-a-year clerk at First National Bank of Chicago set in motion a simple scheme that nearly bilked his employer out of $68.7 million. Aided by a gang of accomplices and his knowledge of a few secret codes, Gabriel Taylor, 27, electronically transferred the money from accounts belonging to Merrill Lynch, United Airlines and Brown-Forman distillers to accounts that some of the conspirators had set up under assumed names at two banks in Vienna. Before the gang could collect its loot, First Chicago discovered the fraud and alerted the FBI, which last week located the money and arrested Taylor and six alleged coconspirators on charges connected with illegal wire transfers. But the embezzlers came tantalizingly close to succeeding and showed how vulnerable banks and their vast computerized cash-movement networks can be to a dishonest insider.

In this scheme, though, the apparent mastermind was an outsider: Armand Moore, 33, a burly ex-con from Detroit who called himself "the Chairman." Moore was paroled from Minnesota's Sandstone federal prison in 1986 after serving four years of an eleven-year term for fraud. In 1982 he created a Chicago "bank," actually a telephone answering service, and issued himself letters of personal credit. So convincing were these documents that ten air- charter companies leased planes to Moore, who used them to take off on cross- country shopping sprees. By the time he was caught, he owed $180,000 to the charter firms.

After his release, Moore apparently began eyeing a much bigger target: First Chicago. His contact was a cousin, Herschel Bailey, 30, who knew Otis Wilson, 30, a clerk at the bank. Wilson introduced Taylor to Moore and by last month the group included Neal Jackson, 31, Leonard Strickland, 49, and Ronald Carson, 40. They plotted their scam at meetings in a Quality Inn on Chicago's west side.

Taylor had worked for First Chicago for eight years, and was employed in its wire-transfer section, which dispatches multimillion-dollar sums around the world via computers and phone lines. The bank's biggest customers routinely call this department to transfer funds, often paying money directly into suppliers' accounts. As at most banks, transfers require that a First Chicago employee call back another executive at the customer's offices to reconfirm the order, using various code numbers. All such calls are automatically taped. Taylor had access to the codes and knew the names of the appropriate executives at various corporations. The gang's original plan called for stealing $232 million from the accounts of quite a few companies, including Hilton, but the group eventually settled on taking the $68.7 million from United, Brown-Forman and Merrill Lynch. The Chairman was able to recruit Taylor, who had no previous police record or employment problems, by offering him a cut of $28 million.

At 8:30 a.m. on May 13, a gang member posing as a Merrill Lynch executive called First Chicago to arrange the transfer of $24 million to the account of "Lord Investments" in Vienna's Creditanstalt bank. He first heard a taped message: "This is First Chicago transfer operations. Your transaction is being recorded." Unfazed, the caller placed the order with one of Taylor's unwitting co-workers. Taylor pretended to phone another Merrill Lynch official for backup confirmation. He really called the Chicago home of Bailey, who gave an authentic-sounding "approval" as the tape rolled. The $24 million was promptly wired to New York's Citibank for later transfer to Vienna.

At 9:02 came another call, purportedly from Brown-Forman (makers of Jack Daniel's whiskey). A few code words and computer keystrokes later, and $19.7 ( million slid with the smoothness of sipping bourbon from Brown-Forman's account, through the New York computers of Chase Manhattan Bank and into the account of "Walter Newman" at Vienna's Focobank. At 9:34, an additional $25 million flew from the ledgers of United Airlines to Citibank for relay to the account of "GTL Industries" at Creditanstalt.

On Monday, May 16, the plan broke down -- for the most banal of reasons. United and Merrill Lynch did not have enough funds in their accounts to cover outstanding checks, which started to bounce, alerting First Chicago officials that something was amiss. The bank traced the problem to Taylor and called in the FBI. Taylor named his coconspirators and agreed to make incriminating phone calls to Moore and the others that the FBI taped as evidence. Although Brown-Forman's funds were credited in Vienna, the money taken from United and Merrill Lynch was intercepted at Citibank before it left the country.

Investigators were amazed at how far the scheme proceeded before being discovered. If the gang had settled for smaller amounts or picked accounts that were less active, the crime might have gone undetected long enough for the culprits to withdraw the money from the Viennese banks. Says an investigator connected with the case: "They came a lot closer than the banks want to acknowledge."

What worries crime experts is that wire transfers, which banks use to zap some $1 trillion in funds around the globe each week, could be so susceptible to security breaches. Says a senior officer of First Chicago: "It's impossible to do something like this without the help of an insider. But once you have the insider, it's almost a childlike process."

The Chairman and his board of embezzlers made crucial mistakes, but they exposed many of the flaws in the banks' security systems. If those flaws are not fixed, copycat crooks may try new, improved versions of the scheme. Warns First Chicago Spokesman Anthony Zehnder: "There are a lot of people out there taking notes."

With reporting by William McWhirter/Chicago