Friday, August 4, 2017

Whiskey Men Who Cheated

Foreword:   This is the fifth in a series of posts that examines the activities of whiskey men who previously have been profiled on the blog, grouping them for analysis under various headings.  In this case the common thread in each story was a predilection for cheating.  Scams were aimed at investors, consumers, and the government.  In each case the old caution “crime does not pay”  was fulfilled — more or less.

The “Bad Boy” of Baltimore:  Throughout virtually his entire life, George Gambrill seems to have been embroiled in the courts.  When he was still 19 and a grain dealer, Gambrill was forced into bankruptcy, unable to pay a host of creditors.  Later he would claim that he had been drawn into the affairs of grain dealer relatives and being young and naive, made the fall guy.  Before long, however, George was back dealing in grain from an office in the posh Eutaw House, a downtown Baltimore hotel, shown here

For Gambrill it proved a short step from grain into distilling with Roxbury Rye as his flagship label.  An energetic marketer, he soon developed it into a nationally recognized brand.  But George continually found it difficult to play things straight.  His distillery manager, John Schooley,  hauled him into court in 1901 claiming that Gambrill had reneged on compensation for his work.  Gambrill’s bizarre defense was that he wasn’t really in the distilling business at all since Roxbury’s entire production had been promised to a New York City wholesaler and he claimed that outfit was running the distillery.  A jury saw his claim as ludicrous and found for Schooley. 

Gambrill continued having problems keeping on the right side of the law.  Still speculating in grain, he bet the wrong way on wheat prices, lost his shirt, and once again was unable to pay creditors.  This time the authorities suspected out and out fraud.  Gambrill was hauled into court in 1910, accused of putting up the same whiskey stocks as collateral for separate forfeited loans totaling $500,000. He was tried, found guilty and sentenced to four years in prison.

The whiskey man vigorously resisted going to jail, appealing his conviction.  A dozen years later, for murky reasons, he had not served even a day behind bars. Instead he was residing comfortably with his wife in their home.  Finally in 1922 a judge quashed the fraud conviction citing Gambrill’s failing health and advanced years (age 77).  That may have been the old fellow’s last con game:  George lived another eight years, dying in 1930 at the age of 85.

Spirits, Sex & Scams:  Alexander Bauer established a liquor house in Chicago about 1886 and soon decided that “sex sells.”  For example, he advertised his Dam-I-Ana Benedictine “Invigorator,”  an 19th Century version of Viagra, with nudes in erotic postures.  A trade card for another alcoholic tonic used a four-leaf clover to suggest an afternoon illicit tryst.  

Bauer’s emphasis on the prurient, however, paled against the outrageousness of his scams.  In 1897 Chicago law enforcement authorities conducted a raid on Bauer’s building at 142-148 Huron Street.  What they found was startling — cases of counterfeit liquor and a large stash of counterfeit labels.  Bauer was taking old bottles, some of them the genuine article with names blown in the glass, refilling them with his booze, slapping on a faux label and selling them as the real mccoy.  Among them was Hennessy Cognac.

Whatever fine Bauer was forced to pay for this scam, it proved to be no deterrent.   Instead, he set up a dummy company at the same address as the A. Bauer Company.  Rather than refilling real bottles and counterfeiting labels, this outfit was in the business of trademark rip-offs.  Soon the building on Chicago’s Huron Street was churning out look-alike labels of well-known alcoholic beverages. 
Predictably, the manufacturer owners of the trademarks struck back in 1902, hauling Bauer into U.S. District Court.  When the federal judge found Bauer guilty, he appealed.  The Appeals Court upheld the earlier ruling and the fines levied on Bauer.  The Chicago whiskey man subsequently reorganized the company, changing its name to the A. Bauer Distilling and Importing Company.  Despite its shady past, Bauer had the hutzpah to claim on his letterhead:  “For 20 years a square deal:  the cause of our phenomenal growth.”

In 1912 federal authorities, acting under the Food and Drug Act, hauled Bauer into court for adulterating and misbranding wines.  When the court agreed and fined Bauer, as before he appealed.  Once again he lost and was forced to pay a fine of $100 and court costs amounting to $73.06.  With such gentle financial slaps on the wrist when caught cheating, no wonder Bauer’s company continued to thrive.  Antics such as his, however, helped fuel the Prohibition movement that 
in 1920 shut down his liquor business for good.

A Forced Confession:  Compared to Bauer, Charles Klyman, also a Chicago whiskey dealer, was small potatoes.   By choosing the wrong opponent, however, he paid a much higher price for his scams.

Klyman first entered the public record in 1888 at the age of 28 when he began a wholesale liquor business.  After struggling along for five years, he changed the name of his company to “The Dr. Anker Bitters Company.”   Another bitters tonic, called Dr. Dunlap’s Anchor Bitters, had a national customer base  Although their label presentations, shown here, differed somewhat, a casual buyer might mistake one beverage for the other.  Given Klyman’s predilections, that likely was his intention.

By 1896, Klyman had resorted to putting counterfeit labels of well-known alcoholic brands on bottles, adding contents cooked up on site, and then selling them to retail outlets.  Law officers tumbled to the scheme when a few downtown Chicago stores were found selling brand name liquor at cut-rate prices.  A raid on Klyman’s premises yielded the evidence.  On the second floor of his Kinzie Street  establishment authorities caught employees washing off old labels, cleaning the bottles, filling them, and slapping on the deceptive labels.  Among whiskey knockoffs was Canadian Club.

Although Klyman faced criminal charges in Illinois, he now had an even more implacable foe in Hiram Walker, the man responsible for Canadian Club.  The distiller was especially aggressive in insuring that counterfeiting or tampering with  that whiskey was hazardous to anyone who tried.  Walker had detectives regularly patrol retail outlets looking for frauds on his brands.   He went hard after Klyman and brought him to his knees.

As his settlement, Walker forced Klyman to write out the “Confession” shown here.  Dated June 3, 1898, it appeared in all major Chicago newspapers and in selected trade publications.  In it Klyman accepted the two conditions Walker demanded:  1) That “in the public interest” he would plead guilty under the Illinois Trademark Act and take his punishment and 2)  That he would never again be “a party to the imitation of any goods whatever….”  The confession reveals Klyman begging for mercy, pleading that “my wife has appealed to you to take into consideration her unhappy position and that of our young children.”

As a Windy City businessman Klyman clearly was finished.  He closed down his liquor house and traded the shame of Chicago for the cold, snow and virtual anonymity of Buffalo, New York.  Although he attempted to open a liquor store there, it appears to have failed and by 1912 he was working as a traveling salesman.

Watering the Whiskey:  It must have seemed like the perfect scheme to Ralph Parilla, a Youngstown, Ohio saloonkeeper and liquor dealer who called his establishment the “Crab Creek Distilling Company.”  Closed down by prohibitionary laws,  Parilla plotted in 1919 to removed barrels of whiskey he owned from a government-guarded warehouse under the pretext of exporting them to Canada.  First, however, he would extract the whiskey from the barrels, substitute water, and truck the barrels over the border.   Then things went terribly, terribly wrong.

Shown here with his wife in happier days, Parilla had thousands of dollars tied up in barrels of whiskey languishing in a warehouse just outside Youngstown. Because of World War I prohibitionary laws, no legal way existed to get it out —except to export it.  The law allowed him, upon getting a federal permit, to withdraw the whiskey without paying taxes by giving a bond that he would forfeit if the whiskey were not within a prescribed time passed out of the U.S. through a designated exit point.  Thereupon, Parilla hatched the scheme to turn whiskey into water.

Parilla saw it a triple “killing.”  He would 1) retrieve his whiskey investment, 2) avoid the $6.60 per gallon federal tax, and 3) retain the liquor to bootleg later at inflated prices.  At first the plot seemed to go well.  Barrels were taken to two locations,  a farm owned by Parilla and a shuttered saloon in town.  Then things began to unravel.  The men removing the barrels from the warehouse had come to the notice of federal authorities as suspicious.  The next day the Feds popped into the shuttered saloon where they found a man with pump and hose, filling a whiskey barrel with water.  Then they went to Parilla’s farm, found more empty barrels and arrested him.

The gambit proved costly to Parilla and his co-conspirators.  They immediately forfeited their $30,000 bond.  Each was released only upon posting a personal bond of $10,000.  On trial in U.S. District court, Parilla and others were found guilty, appealed and lost again.  There is no indication anyone served jail time.  Parilla’s name and crime, however, was splashed all over newspapers in Ohio and beyond.  His subsequent activities are lost in the mist of history.  A photo exists of Ralph in middle age seemingly enjoying life.

Note:  This blog contains longer and more detailed posts on each of the four men profiled here.  They are:  George Gambrill, June 6, 2011;  Alexander Bauer, Feb. 2, 2012;  Charles Klyman, April 16, 2016, and Ralph Parilla, May 28, 2016. 

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