Carefully Synchronized

Senators got a lesson last week in how to turn a fast profit in the great game of trading with the Government.

Their teacher was Joseph E. Casey, a handsome and suave Washington lawyer and former Democratic Congressman from Massachusetts, who appeared before a Senate Banking subcommittee looking into the tangled affairs of the RFC. Casey's testimony did not concern the RFC and at times he was a reluctant witness. But pieced together with facts which the subcommittee already knew, his story was further proof that in Washington, an alert man could hear opportunity knock when the average citizen could not.

In the summer of 1947, Casey organized a company called the American Overseas Tanker Corp. He put $20,000 of his own money into the company and raised another $80,000 from a group of stockholders, including such gilt-edged names as the late former Secretary of State Edward R. Stettinius, Admiral William F. ("Bull") Halsey and Julius C. Holmes, now U.S. Minister in London. Casey then made arrangements with the Maritime Commission to buy five surplus tankers (original cost: $3,000,000 each) for about $8,500,000. Next, he made an agreement to charter the tankers to a Standard Oil Co. (N.J.) subsidiary on a monthly basis. Armed with this contract, he was able to get a $9,700,000 loan from the Metropolitan Life Insurance Co. to pay for the tankers and renovate them. The American Overseas Tanker Corp. turned the tankers over to a Panamanian corporation it controlled, which received the rental on them. After three years, the American and Panamanian firms were sold for a net profit to stockholders of $2,700,000. Net profit to Casey alone: $250,000. Said Casey of the deal: "It was all carefully synchronized."

As far as the testimony went, Lawyer Casey's maneuvers seemed perfectly legal and aboveboard, but there were one or two points that made Colorado's Senator Edwin C. Johnson want to look further. One was his suspicion that the tankers were placed under Panamanian registry to avoid heavy U.S. income taxes. Casey and the other stockholders were only required to pay capital gains taxes at the rate of 25% of their profits.

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