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35 - Phillip Musica.

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35 - Phillip Musica.

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Phillip Musica. Philip Mariano Fausto Musica (1877 – December 16, 1938), also known as F. Donald Coster, was an Italian swindler whose criminal career spanned parts of three decades. His various crimes included tax fraud, bank fraud, and bootlegging. However, he is best known as the mastermind of the McKesson and Robbins scandal in 1938, one of the largest financial scandals ever perpetuated by a single person. Early life. Musica was born in 1877 in Naples, Italy, to Antonio and Maria Musica. His family moved to New York City when he was seven years old. He grew up in Mulberry's Bend, a rough neighborhood in Little Italy. Philip would eventually have three brothers and a sister. As a boy, Musica admired Theodore Roosevelt, at the time the New York Police Department's hard-charging police commissioner. He followed Roosevelt's activities in the newspapers and attended his public speaking engagements. Musica started copying the commissioner's speech and mannerisms. First convictions for fraud. A. Musica and Son. Musica dropped out of school at the age of 14 to help out at his father's small grocery store, A. Musica and Son. Within two years, he was running the store. He soon left day-to-day operations to his younger brother Arthur while turning his own attention to building an import-export operation. By importing cheese, olive oil, and spices directly from Italy (as opposed to using a middleman), he was able to underprice his competitors. Within a few years, A. Musica and Son was one of the largest importers of Italian food in New York, grossing a half-million dollars a year. The Musicas moved to a home in Bay Ridge in Brooklyn and became leaders of the city's Italian community. There was a dark secret to the store's success, however. Musica bribed dock officials to replace the real bills of lading with phony ones listing the weights of their shipments as substantially lighter than they really were. The unpaid tariffs grew to astronomical proportions when the Musicas increased their orders. Combined with the lower prices they paid for importing directly, they substantially outsold all their competitors in Little Italy. In 1909, Mayor George B. McClellan Jr. began a drive to clean up the East River waterfront. Police soon discovered the fraud, and Philip and Antonio Musica were arrested for tax evasion, tax fraud, and bribery. Musica pleaded guilty in return for having the charges against his father dropped (even though his father had signed several of the phony invoices) and served a year in jail. However, President William Howard Taft pardoned him after only six months. U.S. Hair. Not long after getting out of jail, Musica founded the United States Hair Company, ostensibly to sell hairpieces that fashionable women of the day used to create elaborate hairstyles. Good-quality hair sold for as much as $80 a pound. Musica had his mother gather up nearly worthless sweepings from barbershop floors. He then put them in crates with a layer of expensive hair on top. The money was soon rolling in again, and Musica moved his family to a larger house in Bay Ridge. He also bought a suite at the Knickerbocker Hotel. Musica sent his mother to Italy with the ostensible purpose of getting loans to finance the shipment of long strands of human hair across the Atlantic. The bankers bought the story, and Musica soon set up satellite offices around the world. However, these were nothing more than maildrops for the paper trail to support the existence of the company's nonexistent inventory. In July 1912, U.S. Hair was capitalized at $2 million, with $600,000 in assets—mostly human hair located abroad. Three months later, Musica took the company public, and it was listed on the Curb Exchange. The original price of $2 a share jumped to $10, making Musica an instant millionaire. Then just as fast as Musica rose, he fell—and this time almost as ignobly as he had three years before. By the time U.S. Hair went public, it was $500,000 in arrears to several banks. Two British banks got suspicious of U.S. Hair's financing and refused to honor some company drafts, sending U.S. Hair stock into a tailspin. To get as much money as possible out of the company before being unmasked, Musica sought a $370,000 loan from Bank of Manhattan (now part of JPMorgan Chase), pledging 216 crates of hair as collateral. However, a bank clerk discovered a bill of lading for Musica's collateral had been altered. Suspicious bank representatives went to the piers to inspect the hair and discovered that the crates held only a small layer of valuable hair. The rest of the contents were nearly worthless ends and short pieces. The total value of the contents in the warehouse was about $250. Musica got word that the bank had alerted federal authorities and proceeded to strip his Bay Ridge home of virtually everything of value. The Musica family fled to various cities on the East Coast before meeting in New Orleans. They got on a ...

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