Payoff on a Payoff

Around Manhattan's Title Guarantee & Trust Co., William Benjamin seemed to be a favored character. As head of a war plant (Metropolitan Machine Shops, Inc., maker of machine parts and auto jacks), he borrowed $99,970 from the bank, without very close questioning. When Benjamin later confessed to frauds totaling $493,000 (and went to Sing Sing), Title Guarantee expressed shock, but it also gave off embarrassed sighs of relief. Alone among Benjamin's big creditors, Title Guarantee had been repaid in full.

Spurred by the claims of other creditors, the District Attorney's office dug deeper into Benjamin's business, turned up evidence that led to the prosecution of Title Guarantee and three of its officers.

The bank, the D.A. charged, had known that Benjamin was a swindler. After he got his Title Guarantee loan, said the D.A., the bank had discovered that his collateral (invoices and bills of lading) was worthless. Instead of making this information public, the bank covered up for Benjamin. When other banks asked about his credit standing, Title Guarantee answered that Benjamin "knows the business very well," and that his "account has been very satisfactory." Result: Benjamin was able to borrow $320,000 more at other lenders' windows. He used part of it to pay off Title Guarantee, said he lost most of the rest on the horses.

Under a seldom-used state law, the D.A. charged that the bank and three of its officers were at fault. Last week a jury agreed. Along with Vice President Loren Rockwell, 66, Assistant Vice President Malcolm Angus, 48, and Credit Manager Edwin Carlson, 32, the 65-year-old Title Guarantee (total resources $60 million) was found guilty of conspiring to give out false credit information. The company was also found guilty on four other counts, Angus on one other, and Carlson on three others. The bank and the officers face maximum penalties of a $500 fine on each count, plus three years per count for the individuals.

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