The Dummy Corporation

During the Second World War, the president of a Maryland munitions maker with public shareholders was accused, with six others, of setting up a dummy corporation to siphon profits from the company's government contracts. Prosecutors said stock in the dummy company was handed out for nothing, executives drew inflated salaries and bonuses from it for little work, and the main company was billed on false claims to own timber. Two cheques obtained through the scheme were cashed or deposited at local banks, which then mailed them to the paying banks for collection. His co-defendants pleaded no contest; he went to trial on mail-fraud counts based on those mailings. The defence argued that the mailings were routine bank clearing that happened after the money was already in hand.