3: Paragraph 5 They offered me the job, with a salary I probably couldn't have refused even if I hadn't liked the job so much, and I accepted, to start work a few weeks later on 30 April. I gave notice at BNA and started a Wilmington realtor looking for a house. On my next-to-last day of work at BNA, they threw me a going-away party, and I got home in one of those mixed moods: touched by how happy my BNA friends were for me and sad to be leaving them but excited about the prospects at Hutton.

3: Paragraph 6 There was a message on my answering machine from Abbes asking me when I'd been planning to start work, telling me Butler was leaving in a reorganization that would eliminate the job he'd hired me for, and saying we could discuss it when I got to Wilmington. Fat chance! I felt like I'd been punched in the stomach, and I couldn't wait that long to know whether I still had a job at Hutton, so I called Abbes back right then. He kept talking around most of what I wanted to know, but he did confirm that I still had a job, on the same terms, but that it would be a different job: Butler would be staying on for a few months, but then I'd be in charge of personal trusts; and I'd still come on as a.s.sistant corporate secretary, but when Butler left I'd succeed him as secretary.

3: Paragraph 7 So from the first day I reported to work at Hutton, I already knew there was a lot of internal political stuff going on behind the scenes, and I kept my eyes and ears open in self defense. I learned overlapping parts of the following story from Abbes, Hitchc.o.c.k, and the Trust Company's other directors, from Hutton people in New York and around the country, from Wilmington lawyers in several of the firms hired to charter the Trust Company, from the Delaware bank examiners who audited the Trust Company, from the doc.u.ments setting up Hutton Trust Company and Hutton Bank that Hitchc.o.c.k showed me, and from the Trust Company's corporate records that were turned over to me when I became secretary.

3: Paragraph 8 The ent.i.ty most people thought of as E. F. Hutton, the one that advertised in the commercials about people listening, was the brokerage firm whose real name was E. F. Hutton & Co. Inc. It was a Delaware corporation all of whose stock was owned by E. F. Hutton Group Inc., a Delaware holding company whose stock was publicly owned and traded on the New York Stock Exchange. So if you bought Hutton stock, you were buying shares of Group, but if you bought stock through a Hutton office, it was Hutton & Co. that was your broker.

3: Paragraph 9 Hutton Group also owned some other corporations, including E. F. Hutton Life Insurance Company and some investment managers and funds. The chairman of Hutton Group's board of directors was Robert Fomon, and the president of Hutton & Co. was Scott Pierce, who was then-VP George Bush's brother-in-law.

3: Paragraph 10 Much of the money in this country is in pension plans, most of them now "qualified plans" under the federal pension laws known as "ERISA." That money isn't tied up, out of circulation, though -- it's invested in everything from real estate and mutual funds to race horses and precious gems. Managing those investments and doing the paperwork for both pay-ins and pay-outs is also big business, because the fees for management and administration are usually a percentage of the amount in the fund, and even a small percent of a billion dollars is a lot of money.

3: Paragraph 11 By the early 1980s Hutton, like the other financial inst.i.tutions, derived a significant portion of its income from pension funds, either as fees for managing the investments by deciding what stocks or bonds to buy or as commissions for being the broker that actually traded the securities. It's a conflict of interests, prohibited by law, for the same ent.i.ty to manage the investments and get a brokerage commission, for the same reasons it's now illegal for a Justice of the Peace's salary to be a percentage of the traffic fines the JP imposes.

3: Paragraph 12 What happens in many companies is that a few, usually senior management, employees are the trustees for the fund, so they make the investment decisions, and the fund has a broker who buys and sells as directed by the trustees. That's the theory, at least, but what often happens is the committee of trustees don't know enough, or have enough time outside of their work, to make investment decisions, so they take the broker's advice, and that's not necessarily bad. But to keep the brokers honest, trustees with good sense often deal with several brokers and play them off against each other, and that's free-market compet.i.tion and good for everyone except the greedier brokers.

3: Paragraph 13 What Hutton wanted was to become trustee for the pension funds, so it could collect the trustee's fee for managing the investments, and hire only itself as broker, so it could continue to collect the brokerage commission on every transaction. It's like the way they used to catch monkeys for zoos, where they would cut holes, a tad bigger than a grown monkey's paw, in coconuts, empty them out, put some dried rice inside, and chain them to a tree trunk; at night the monkeys would come, reach inside for the rice, not be able to get their fists out, and be sitting there with their paws stuck in the coconuts in the morning, when the hunters would come throw a net over them. The monkeys were too greedy to let go of the rice even to get free, and Hutton was too greedy to let go of the brokerage commissions even to get the larger trustees' fees.

3: Paragraph 14 So someone came up with the brilliant idea to set up a separate Hutton ent.i.ty to be trustee of the pension funds, and collect fees for that, and put all the brokerage through Hutton & Co. That ent.i.ty would be E. F. Hutton Trust Company, and to be able to act as trustee it would have to be some kind of bank. Hutton explored incorporating a bank in several states, but the first few didn't have the right combination of state laws and susceptible officials. Then Hutton looked at Delaware, which was offering some tax and legal incentives to lure companies to Wilmington; you may remember that some credit card companies moved their headquarters to Delaware then to take advantage of those incentives and Delaware's statutes allowing special-purpose banks and unlimited interest rates.

3: Paragraph 15 Hutton hired about five different Wilmington law firms, one after another, to charter its bank, but the first four (including Potter, Anderson & Corroon and, as someone told me, Richards, Layton & Finger and maybe p.r.i.c.kett, Jones, Elliott, Kristol & Schnee) were unsuccessful: some because they filed the application, but it was denied, and some because the other banks they represented objected, so they withdrew from filing Hutton's application. I heard that of those four, only Potter Anderson returned Hutton's retainer; the others kept what they'd been paid even though they failed to charter the bank.

3: Paragraph 16 Then Hutton hired the Wilmington office of Skadden, Arps, Slate, Meagher & Flom, by some measures the biggest law firm in the country, and certainly preeminent in corporation law. Two of Skadden's senior partners were Rodman Ward Jr. and Irving S. Shapiro.

Ward is a formidable lawyer who coauthors one of the leading treatises on corporation law; he's also an interesting person, but he's so smart he sees what's coming so many moves ahead of where you are that it's scary sometimes. Shapiro is either a fool or senile, but he used to be du Pont's CEO, so he's an 800-pound gorilla in Delaware; if you want to see what the Second Coming will be like, just watch how everybody here acts around Shapiro. His value at Skadden is not his minimal ability as a lawyer but his clout with the authorities.

3: Paragraph 17 Shapiro first got the other banks in town, and their Delaware Bankers' a.s.sociation, to back off in their opposition to letting Hutton in, and then he got Delaware's Bank Commissioner John E.

Malarkey to grant Hutton two applications: one for a bank and the second for the Trust Company. Hutton Bank never did much, but Hutton considered using it in several packages that didn't get off the drawing board; we discussed such plans as having it lend money to customers who would then use that money to buy stock or insurance from Hutton, either directly or through trusts at Hutton, for example.

3: Paragraph 18 The Bank's affairs were handled by its two officers: the Trust Company's president Hitchc.o.c.k and Richard Roeder at Hutton in New York. Hitchc.o.c.k showed me the papers setting up the Bank, and Roeder and I had some discussions about it, but I didn't pry into the matter, because it wasn't my problem. I do remember that what business the Bank did was a few loans to some Hutton VIPs, but there were some legal irregularities about the situation, and a major reason we didn't do more with the Bank was that if it got active those defects might come to the attention of the regulatory authorities when they audited. Some of the irregularities had to do with doing business before the law was changed to allow it, and when the law was changed, it didn't cover Hutton Bank, but I'll come back to that later.

3: Paragraph 19 Once Shapiro got the Trust Company chartered as a Delaware limited-purpose trust company in July 1982, other Skadden lawyers prepared the usual corporate start-up doc.u.ments and turned them over to Hutton. From then on, Hutton would call Skadden only when Hutton got into trouble with Commissioner Malarkey and couldn't get out of it without Shapiro's influence.

3: Paragraph 20 Hutton hired Hitchc.o.c.k to be nominal head of the Trust Company; he had worked for State Street Bank in Boston for a long time, and Hutton brought in an outsider to be president so it would look as if the Trust Company was separate from the brokerage firm. In fact, though, as vice-chairman of its board James C. Lockwood was in charge of the Trust Company. Lockwood was the head of Hutton & Co.'s Consulting Services Division, a group that mostly charged fees for advising people which investment managers to hire: If the manager hired was a Hutton subsidiary, then Hutton got the management fee, and if the manager was not a Hutton affiliate, it brokered the investments through Hutton, so Hutton got the brokerage commissions. It was CSD's relationships with the pension funds that sparked the idea of the Trust Company, and Lockwood was responsible for it. He and two of his CSD executives, John Ellis and Len Reinhart, were on the Trust Company's board of directors by the time I got there.

3: Paragraph 21 Lockwood and the rest of CSD would come to Wilmington to share s.p.a.ce with the Trust Company, and they would both move into offices in a new building on the Market Street Mall next to the Grand Opera House the day I started work in 1984, but when the Trust Company started in summer 1982 it was just Hitchc.o.c.k and a few female clerical employees. He selected a software system called SEI and started accepting pension trusts.

3: Paragraph 22 Under the governing laws, regulations, and guidelines, as a trustee the Trust Company had to make both investment decisions and pay-out decisions in the best interests of the trust's beneficiaries, but Hutton never intended for the Trust Company to make those decisions, so no mechanisms were ever set up for them. Instead, once an account executive from the brokerage firm would sign a trust client up with the Trust Company, the Trust Company would make whatever investments and distributions that AE told it to: That violated the laws requiring a trustee to exercise responsibility for the trust and also the laws against self-dealing.

3: Paragraph 23 Hutton had picked Hitchc.o.c.k thinking he was too wimpy to give Lockwood any back-talk but experienced enough to run the operation -- they were only half right: Hitchc.o.c.k lacked the intestinal fort.i.tude to do anything but follow orders, and without experienced bankers making the management decisions, he was useless. Lockwood lacked the banking experience to know what bank operations were supposed to look like, so he couldn't direct Hitchc.o.c.k in enough detail, and then Lockwood suddenly fell sick -- I think it was a heart attack, but then he had prostate trouble, and he was incapacitated for many, many months -- and nearly died; when it was feared he would die, or at least never be able to work again, it was necessary to put someone else in charge of the Trust Company.

3: Paragraph 24 So Hutton promoted Abbes, who had been on the board since the beginning; he replaced Lockwood as vice-chairman and CEO on 12 October 1983, Hitchc.o.c.k remained president and COO, and Thomas P. Lynch of Hutton Group remained chairman. Abbes was a company man in every respect, so he followed Hutton's policy of not telling anyone more than he had to: In Hutton's world, managers didn't let subordinates know what was going on so they couldn't demand a piece of the action for carrying out the schemes, and they didn't put anything in the record that would expose their superiors to liability; when there was a problem, the middle-level manager would take the fall, and whatever higher-ups he was protecting would make sure he had a soft place to fall, often as a consultant to one of the investment management firms Hutton dealt with, if it wasn't possible to move him someplace else within Hutton itself.

3: Paragraph 25 Hutton Trust was never anything but a fa ade of a trust company -- there was no substance to it, and not even much form.

It performed no personnel functions, for example, and had no operational bank accounts and no petty cash. When an employee was hired, Hutton & Co.'s forms for a brokerage firm employee were completed and forwarded to New York, and then the person went on the payroll and was paid on Hutton & Co. checks. All reimburs.e.m.e.nts and employee benefits came from Hutton & Co.

3: Paragraph 26 Each of Hutton & Co.'s branch offices had a coded office i.d. number comprising one letter [out of eleven or twelve possibilities] designating the geographical region and two digits identifying the specific office, and that code was used as an address for telexes as well as an administrative identifier. The Trust Company was treated as a branch office of Hutton & Co. with the code V48, because we were office #48 in the national region; that's what went on all our personnel and payroll records. Hutton's brokerage office in Wilmington was coded A81, because it was office #81 in the Atlantic region; it was a satellite of the Philadelphia office coded A09. There were two brokerage offices in Washington DC, coded C16 and C18 because they were in the Central region, C20 was in Alexandria VA, and C32 was in Bethesda MD.

3: Paragraph 27 Hutton Trust rented a couple of safe deposit boxes and opened three checking accounts, but those weren't operating accounts -- they were for payment of trust distributions. So when someone was supposed to get a pension payment from a fund trusteed at Hutton Trust, Hutton & Co. would deposit enough money in one of those accounts to cover the payment, and Hutton Trust would cut a check to the pensioner, but not necessarily in that order. Where would Hutton & Co. get the money? Out of the pension fund, of course. Wasn't Hutton Trust the trustee and supposed to be holding the fund? Of course that's what was supposed to be happening, but in fact Hutton & Co. never let Hutton Trust near any money except to launder the pay-outs, and that's what's wrong with this picture.

3: Paragraph 28 When Hitchc.o.c.k set up the Trust Company's computerized accounting system, it was designed to track what happened in the brokerage firm's computerized system, but there was no electronic connection between the two. SEI is a perfectly good trust banking software system used by many banks, including some of the best in Wilmington; it has all the capability any trustee needs, but it's only as good as a user programs it to be, and Hitchc.o.c.k didn't program it to do much of what it could, and that requires some explanation.

3: Paragraph 29 For every brokerage customer at Hutton & Co. there was an account in the firm's computer to track the trades. That computer account included the customer's name, address, and social security number as well as the office's code, the AE's code, and the account number; it could be accessed from a Hutton terminal anywhere in the world, but only the AE could authorize trades in the account.

Whenever a trust account was opened at Hutton Trust, Hitchc.o.c.k's clerks would set up an SEI account under the same number as the brokerage account and enter whatever information they were given about the a.s.sets in the trust. If there were a.s.sets that weren't securities -- such as gemstones, real estate deeds, or promissory notes -- they might be listed in the SEI account, but of course they would not be included in the brokerage account. When securities were bought or sold in the brokerage account, Hutton Trust would usually get notice of the trade, and Hitchc.o.c.k's clerks would keyboard that information into the SEI account. But if a.s.sets other than securities were sold, there was no way for the Trust Company to know, because that didn't go through the brokerage firm's computer, so the a.s.sets wouldn't be removed from the SEI account; and if anything was bought outside of the brokerage account, including mutual funds that kept their own accounts, the brokerage firm's computer would report the pay-out of funds, and the SEI account would track that, but whatever a.s.sets were bought with the funds would never appear in either account, so according to our records part of the trust's value would have simply disappeared.

3: Paragraph 30 The important point is that there never were any a.s.sets at the Trust Company. All the a.s.sets were in the brokerage accounts at Hutton & Co., and all the Trust Company ever had was the phantom SEI accounts supposedly reflecting whatever happened in the brokerage accounts. The companies the trusts belonged to got monthly statements from the brokerage firm and monthly statements from the Trust Company, and if they didn't match, the customers were likely to complain to their AEs, who would usually complain to the Trust Company.

3: Paragraph 31 The monthly statements from SEI were printed in bulk by SEI and delivered to us in boxes, and Hutton & Co. sent us copies of the monthly brokerage statement in each account that was coded as a trust account. After the AEs started complaining, when there were discrepancies between the two statements. .h.i.tchc.o.c.k and his clerks would white-out the parts of the SEI statements that didn't match and type in the information from the brokerage statement, because they knew whatever the brokerage statement said was what had actually happened in the account. But they changed only the paper statements and never put the changes in the computer!

3: Paragraph 32 It doesn't take an Einstein to figure out that once the two statements for a trust got out of sync, they would stay that way until at least one of the computerized accounts was changed to bring them back into agreement, but that concept seems to have been beyond everyone at the Trust Company. By the time I got there in spring 1984, it was taking about a week each month to white-out and retype the SEI statements for the month, and that's a week with everyone in the operations dept. working all day and half the night and most of the weekend, which added up to a lot of overtime.

3: Paragraph 33 There was also the problem, actually several problems, that the Trust Company wasn't keeping any tax records. For one thing, even though the pension trusts were exempt from paying income tax, they still had to file information returns about their transactions each year, and you have to keep track of the tax basis of a pension trust's a.s.sets, because at some point you end up distributing those a.s.sets, and you have to know what they're worth for tax purposes then.

But the Trust Company wasn't keeping those records, and the customers kept complaining they couldn't get the information for their annual Forms 5500.

3: Paragraph 34 A second aspect of the problem was that Hutton Trust had about a dozen "collective funds" that were like mutual funds in that the a.s.sets from a lot of separate pension plans would be pooled and invested, and the profits would be prorated among the partic.i.p.ating plans. Those were perfectly legal ent.i.ties, authorized by the Internal Revenue Code and called "pooled income funds," and they're tax-exempt, but they have to file information tax returns every year so the IRS can make sure they're complying with all the applicable ERISA and tax laws.

But Hutton had never filed any tax returns for any of its collective funds because neither Hitchc.o.c.k nor anyone else at Hutton knew they were supposed to.

3: Paragraph 35 The third part of the problem didn't appear until we started doing personal trusts, and that was that non-pension trusts have to file tax returns every year and pay taxes on their profits. So just as any individual or corporate taxpayer has to, a non-ERISA trust has to keep track of its tax basis for a.s.sets and report not only its income from its investments but also its capital gain on the sale of those a.s.sets. And Hitchc.o.c.k hadn't activated the fields to keep track of the tax basis and fair market value of trust a.s.sets, because that information didn't appear in the brokerage firm's computer.

3: Paragraph 36 Compounding that was the fact that a trust usually has "income beneficiaries," who get the income for some definite or indefinite period of time, and "remaindermen," who get what's left at the end of that period. A trustee is required by law to keep track of the trust's capital and income separately, because the trust's beneficiaries have different interests, with the income beneficiaries ent.i.tled to the income and the remaindermen ent.i.tled to the capital.

The fiduciary accounting is worse than the London 'Sunday Times'

crossword puzzle, and it's absolutely impossible without the records, but Hitchc.o.c.k hadn't activated the required data fields in SEI, and neither he nor any of his clerks knew how to keep the records.

3: Paragraph 37 The complexity of the record-keeping and tax-reporting is a large part of the reason fiduciaries get paid such juicy trustees' fees, but somehow that concept had escaped the rocket scientists at Hutton, too. Another reason for the fees is that trustees have to make some hard decisions about distributing money from trusts: Many trust doc.u.ments give the trustees a lot of discretion about making both investments and pay-outs, and if you've ever been in the middle of a family squabble over a legacy you can appreciate that trustees earn their fees. But Hutton skipped over those difficulties by letting the AE on each account make all the investment and pay-out decisions, so all Hutton Trust had to do to "earn" its fee was white-out and retype the statements.

3: Paragraph 38 Three unrelated examples will show you why I often felt as if I was working in a Three Stooges comedy instead of a bank:

3: Paragraph 39 Congressman James T. Broyhill of North Carolina had his share of the money from selling his family's furniture business that he needed to put in a blind trust to avoid conflicts of interest in voting on legislation. Federal regulations cover such trusts and require annual reports, and because such a trust isn't a qualified plan under ERISA, it was considered a personal trust at Hutton Trust. When Broyhill's money came in, Butler decided to avoid any appearance of self-dealing between Hutton Trust and Hutton & Co. by putting it in a non-Hutton mutual fund; Butler chose one, and the AE executed the trade by paying the money out of the brokerage account to the mutual fund, and that was the last we heard of it. Several months later, after Butler was gone from the Trust Company, the AE and Broyhill's lawyer started bugging me to submit the required report, and I couldn't find the a.s.sets -- I found Butler's note in the file saying which mutual fund he had picked, but when I asked that mutual fund, they denied having any account in either Broyhill's name or Hutton Trust's. I finally submitted the report anyway -- after all, as far as Broyhill was concerned the trust was deaf and dumb as well as blind, and it was easy to find out what dividends the fund had paid since the date the money disappeared in that direction -- and things were quiet for several months until Broyhill decided he wanted to move the trust somewhere else because we weren't cooperative enough about providing information about it. It took several weeks, but the AE finally found the account at the mutual fund, under Hutton & Co.'s name, closed it, and turned the proceeds over to Broyhill's lawyer. What's really funny, or scary, is when the AE found the account at the mutual fund, it was one of three in Hutton & Co.'s name with no indication of what customer they belonged to, and he just left the other two sitting there.

3: Paragraph 40 Mr. & Mrs. Burchard were a retired couple in about their 80s, each of whom had a trust, and most of the a.s.sets in the trusts were shares in a bank (I think it was in Illinois, but it might have been somewhere else in the Midwest) that Mrs. Burchard's father had founded and Mr. Burchard had been president of. They had retired to Arizona, and an AE in Hutton's Mesa office talked them into moving their trusts to Hutton Trust so he could sell the stock and use the proceeds to buy them some annuities from Hutton Life Insurance; the commissions AEs got for selling Hutton insurance were even higher than their brokerage commissions. By the time I found out about the trusts, the AE had already sold the stock, and when I told him annuities were an improper investment for the Burchards, he told me not to worry -- the insurance company wouldn't issue annuities on people their age, so he was going to sell them annuities on their son's life, and when they died the son would inherit and sell the policies and invest in something else, and the AE would collect a commission on each transaction! That struck me as an archetypical example of "churning" an account, which means repeatedly liquidating investments and reinvesting the a.s.sets to collect commissions on the new investments. I got into trouble with Abbes for it, but I went over the AE's head to his branch office manager, and the BOM did keep the AE from tying the a.s.sets up in insurance. For some reason, every few months the two Burchard trusts would pop up as exceptions in another internal audit, and I'd get a phone call from some Hutton employee somewhere in the country, and I'd explain what happened, and that person wouldn't bother me about it again. Then one day I got a phone call from a bank officer at the Illinois bank whose stock they'd owned; when the bank had gone to hold its annual stockholders' meeting, the Burchards hadn't voted the stock, and without it the bank didn't have a quorum, because between them they'd owned the majority of the stock. So the bank president had phoned the Burchards and found out what the AE had done and was doing, and he threatened to sue on behalf of the Burchards. I don't know how that situation finally came out, but I've often wondered.

3: Paragraph 41 Mary Alice Anthony had left a trust for her two sons and their children, and an AE in Hutton's Hyannis MA office talked one of the sons, Julian Kaiser, into moving "his" half of the trust to Hutton by promising Kaiser to pay him as much of the trust's income as he wanted. The trust doc.u.ment provided for pay-outs to Kaiser, who was a doctor, or his children if they needed them, and "need" was determined under Connecticut law. Kaiser's children appeared to need the money more than he did, especially as we found in the computer about four brokerage accounts in his name with substantial stock holdings in them, but the AE kept paying Kaiser all the income, and Abbes and Hitchc.o.c.k kept letting him, although I kept putting memos in the file saying that was wrong, and the bank examiners kept saying in their audit reports it was wrong. In February 1986 one of Kaiser's children wrote to Hutton Group's then-CEO threatening to sue for the mishandling of the trust, but I never heard how that came out, either.

3: Paragraph 42 Those three situations -- involving trusts worth more than a million dollars and trustees' fees of tens of thousands -- are just the kind of problems any rational person would expect from not having any mechanism for Hutton Trust to track trust a.s.sets or supervise investments or distributions, but Hutton still shrugs them off as "typical back-office problems in a new venture" according to Shapiro's testimony on 1 October 1991.

3: Paragraph 43 Besides the comic relief, Hutton also provided some romantic interest: One of the CSD units was Hutton Portfolio Management, and it was headed by Greg Phipps, whom I found very attractive, but when I not too subtly let him know I was interested, he rather more subtly let me know he wasn't, so I didn't embarra.s.s either one of us by pushing it. For the most part, Hutton employees didn't have much cla.s.s -- which isn't to say they weren't great to work with and fun to party with, because they were, and the people were part of what I really loved about working there -- but Phipps used an Imari cup for his tea, even when he was alone in his office, you know what I mean?

Once when we went to Hutton headquarters in New York to meet with some customers about bringing a big trust in, he took me on a walking tour around Wall Street, including Trinity Church and the Stock Exchange, and told me their history.

3: Paragraph 44 HPM, the program he ran, supervised AEs who had qualified to act as investment managers, instead of brokers, for their customers' Hutton accounts. So if an account was signed up for HPM, the AE made the buy-sell decisions and executed the trades but received a fee that was a percentage of the account's value instead of commissions on each transaction. Phipps handpicked the AEs who got into the program and supervised their training and their performance, and it was a cla.s.s act all the way.

3: Paragraph 45 One of the times he had me speak to a group of HPMers about using trusts and the Trust Company was in Washington DC on 20 September 1984. It was one of those several-day affairs including training sessions and field trips, and one of the trips the day I was there was to the Capitol to meet one of Delaware's Senators and ride the little train under the building. But when we got to the Capitol, there'd been a bombing in Lebanon or someplace, and the Senators were taking turns being briefed in the little dome-of-silence room that doesn't hold very many at a time, and the Senator couldn't make it, so he'd asked Congressman Carper to meet with us instead.

3: Paragraph 46 I'd never taken much of an interest in politics, and although I'd moved to Delaware on 30 June and had recently registered to vote, I didn't yet know the name of our only Representative, but I did know we had only one. When he finally showed up in the small room where we were having soft drinks and cookies, he had his notebook under his arm, and I swear I thought the name on it was "c.r.a.pper," but I soon picked up that it was actually Carper.

3: Paragraph 47 He made conversation with the group, much of it about finances -- we'd just heard a lecture at the Federal Reserve -- and there was some kidding that the HPMers were from other states, so he was wasting his electioneering on them, and I said, "Well, I'm registered to vote in Delaware," and Carper joked, "Then I'll ignore these men and just talk to you." A little later, after he was told I was one of Hutton Trust's officers, Carper drew me a little aside and started explaining why he was having trouble getting the legislation we wanted through the Banking Committee. At first I didn't have the faintest idea what he was talking about, but the way you find things out is by listening, so I did. When I got back I talked to Hitchc.o.c.k about it, and he told me Carper was trying to get federal legislation pa.s.sed that would extend to Hutton Trust and Hutton Bank -- because they had been chartered outside the period to which the "non-bank bank"

legislation applied -- and then I was able to make sense of what Carper had said about grandfathering.

3: Paragraph 48 That was around the same time that Hutton Trust acquired a new personal trust client, a corporation named International Development Programs Inc., the chairman of whose board was Wilbur Mills.

An AE named John Jennison, in Hutton's C18 office in D.C. where Perry Bacon was BOM, had a client named Barton F. Walker Jr., who was president of Walker & Walker a.s.sociates, Inc., in Maryland and one of IDP's princ.i.p.als, so Walker had brought IDP to Jennison. IDP's president was Thomas M. Owen, whose phone numbers were in Virginia, and its lawyer was Francis L. Jung, who was also general counsel to American Pacific Trading Co. in D.C. The chairman of AmPac's board was Conrad K.

Hausman, who was also one of IDP's princ.i.p.als. The other two IDP princ.i.p.als I dealt with were E. Doug Ward, executive vp of Astrotech International Corp. in Pennsylvania, and Daniel Craig, president of Norsud Corp. in California.