Preston Tucker and His Battle to Build the Car of Tomorrow

by Steve Lehto

  The parties seeking to take over the company hired an engineering firm to assess the corporation and its assets and determine what it would take to begin mass production of the Tucker automobile. After two months of study, the firm announced it would cost no less than $71 million to accomplish the task. The cars would have to be sold for almost $3,300 to make the venture worthwhile. They recommended scrapping the Tucker design. Gone would be the Cord transmission, which Tucker had planned to discontinue anyway. They would eliminate the center headlight, use a conventional suspension and frame, and redesign the body panels and bumpers. Some changes were purely cosmetic, hinting that they simply disliked Tucker’s car because it was different. One headline said, PRESTON TUCKER WOULDN’T KNOW HIS OWN AUTO.13 The matter was set for a hearing.

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  The criminal trial started on October 5, 1949, before a jury of eight women and four men.14 The previous day in bankruptcy court, Judge Igoe had canceled the Tucker Corporation’s lease on the Chicago plant,15 so headlines announcing the opening of the trial often mentioned the loss of the plant—for example, TUCKER LOSES AUTO PLANT; TRIAL OPENS. The loss of the plant likely meant the end of the endeavor,16 but the parties seeking to take over the operation without Tucker continued fighting. They told the court that if they were allowed to proceed, not only could they begin profitably manufacturing Tucker autos, but the first ones would be rolling off the assembly line within ninety days.17 The judge did not appear to be convinced.

  At the criminal trial, opening statements laid out the legal arguments for the jury and the press, who would report daily on the proceedings. US Attorney Otto Kerner Jr. said that the defendants “obtained money by means of untrue statements of material facts and that the defendants conspired to violate the laws of the United States.”18 Millions of dollars had been raised with “false and misleading advertisements” and then squandered through “misuse of the funds.”

  Defense attorney Frank J. McAdams responded that Tucker had encountered “innumerable obstacles” and still “missed by only a few weeks attaining mass production.”19 He told the jury how the announcement that the SEC was investigating the company in mid-1948 had begun a chain of events that doomed the enterprise. “That very same day, the War Assets Administration rejected the Tucker Corp.’s bid for a steel blast furnace. The SEC investigation continued up to the time of the indictment. It destroyed all credit of the corporation. The investigation was the fatal blow. It blocked the small amount of additional financing which was needed to put the Tucker automobile into mass production.” He said the company had only needed another $3 million when the SEC actions shut down the plant. He summarized by telling the jury that the defendants had all acted “in good faith” and that the statements made in Tucker advertising “were and are true.”

  Entering and leaving the courthouse became an ordeal for Tucker—a bit more than for the other defendants, who were not as recognizable. Tucker had appeared in the press so much in previous years and had been so willing to talk that now reporters often mobbed him as he entered or departed the courthouse. Tucker’s son John explored the building and discovered a circuitous route that took his father away from the reporters by taking an elevator the wrong direction, crossing a floor, and then taking another elevator. By doing this, Tucker evaded the press on days he didn’t want to be bothered with them.20

  Tucker was understandably concerned about his financial well-being. Not only was he spending a fortune on attorneys, he worried about creditors coming after his personal assets. Around this time he approached management of the co-op where he owned the two apartments and sought to have them transferred into his mother’s name. If he had thought of it when he moved in, he could easily have put his mother’s apartment in her name, but he hadn’t. Now, the management refused.21 Their reasons were never made public, but it seems likely they viewed his request as an attempt to hide his assets. Tucker would be forced to weather the legal storm and see what happened.

  Among the first witnesses called was Charles Pearson, author of the Pic article, which had started the buzz for Tucker. Pearson admitted writing the article, and the prosecution asked him to read the entire article to the jury. Some reporters wondered what the purpose of Pearson’s testimony was, speculating that the prosecution “apparently planned to try and prove that the article was part of a conspiracy on the part of Tucker and his co-defendants.”22 If that was the case, why wasn’t Pearson charged?

  Pearson later wrote about his time on the stand:

  I was one of the first witnesses, and when I got back to Chicago to take the stand and saw Tucker again, I could see that he had taken a terrific beating since I had seen him a few months before. His nerves were on edge and he was depressed, and bitter against the forces and men who had put him out of business before the trial even started. Yet he was at the same time confident that he would be vindicated. No matter how events were against him, nothing could shake his confidence in himself.23

  The prosecution ran into trouble with their fourth witness—of more than seventy planned. Mark Mourne, Tucker’s cousin, had been one of the corporation’s founders and testified about the early days of the company. At the time he was called to testify, Mourne was an attorney in Colorado.24 The prosecutor asked him if he had discussed Abe Karatz with Tucker, and the defense attorneys objected. The jury was sent out and the court warned the prosecution to steer clear of Karatz’s criminal history, which had been ruled inadmissible. After the judge made his point, the jury returned, and the prosecution asked the witness what he had talked about with Tucker.25

  “I told Mr. Tucker that Mr. Karsten [Karatz] had a criminal record.”

  Attorneys for the defense immediately objected and demanded a mistrial. US Attorney Kerner, of course, opposed the suggestion. Kerner argued that Karsten’s criminal record—conspiracy to defraud a bank more than fifteen years earlier—was “similar in character and related in time” to the charges for which Karsten and the others were now on trial.26

  The judge disagreed and declared a mistrial. The court told the parties they would start over after picking a new jury.27 While a new trial might seem extreme, it was the correct decision in this instance. The defendants were being tried together, and the court had ruled that one defendant’s criminal history—a single conviction fifteen years earlier—was irrelevant, particularly in the case against the other defendants. If the court had not granted a new trial, the other defendants would have been able to argue on appeal that their cases were tarnished by the jury hearing that a codefendant had been convicted of fraud.28

  Later, Mourne denied that he had brought up Karsten’s criminal record on purpose, saying it “‘popped out’ under prosecution questioning.”29

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  A second jury was selected by October 18, consisting of six men and six women. The second trial began with US Attorney Kerner telling the jury the government would prove Preston Tucker had set out on a massive fraud scheme and that the Tucker Corporation was a sham, its only purpose to bilk investors and “to prey upon the public, the dealers, and distributors, and the stockholders.”30 In all respects, it was the same story as at the first trial.

  The second trial’s first witness was George Lawson, the man who had drawn the original design for the Torpedo. He told the jury he had only been paid $10,000 for his work even though he believed he was owed $45,000.31 Almost all the early witnesses were former employees or associates of Preston Tucker around the time he launched the company. Prosecutors knew it had problems when not all of them were friendly to their side. It appeared that many of Tucker’s former associates still were fond of him and felt he had done nothing wrong.

  Mark Mourne was called again to testify. This time, the court admonished him to steer clear of the topic that had caused the mistrial. His testimony was uneventful.32

  * * *

  People following the Tucker trial in the papers may have caught an intriguing story playing out in Washington with another car company. Kaise
r-Frazer had recently run into financial trouble. It had approached the Reconstruction Finance Corporation and asked to borrow money, explaining that it would not be able to continue operating without the infusion of cash, much of which would be used to finance cars being sold wholesale to dealers. When critics questioned whether this was a wise use of taxpayer funds, the RFC responded by releasing details of the loan to the public. The RFC agreed to lend Kaiser-Frazer $34.4 million with the repayment to be made within eighteen months.33

  Kaiser-Frazer, before receiving the first dollar of the $34 million, then went back to Washington and asked for another $15 million loan.34 Less than a week later it was reported that a second loan was approved, but only for $10 million. To secure the funds, the company simply pledged the assets of the company. Kaiser-Frazer said it needed the tens of millions of dollars “to finance dealers who handle the firm’s automobiles.”35

  Kaiser-Frazer most likely received preferential treatment from the federal government because one of its cofounders, Henry J. Kaiser, had been instrumental in helping the US war effort. Kaiser had overseen the group of companies awarded the contract to build Liberty Ships and was greatly admired in Washington. When the war ended, he had turned to building cars, teaming up with Joseph W. Frazer.

  * * *

  Alex Tremulis was the thirteenth witness in the second trial, and the prosecution tap-danced around the issue of his Tucker prototype. Knowing that he admired his creation, they did not ask him if it ran well or if it was a real car. They asked him a few questions about how cars are marketed and then asked him what the prototype was called. Tremulis told the prosecutor, “the Tin Goose.” With that, the prosecution’s questioning ended.36

  The defense cross-examined Tremulis, who was obviously a friendly witness. He explained that while they had indeed used some parts from a junkyard as a starting point, the Tin Goose was largely a unique creation. And further, what had been done to create it was common in the industry. The men at Tucker were no guiltier on this point than any other auto manufacturer. Everyone did it. And there was nothing wrong with it.37

  Tremulis was mortified when he read the local newspaper coverage of the trial. An unhappy Tucker employee had testified the same day that the Tin Goose was a “monstrosity” and the newspaper had confusingly put that statement next to Tremulis’s in the headline. Later, Tremulis recalled that the headline “read, in effect, ‘Tucker Car Called Monstrosity—Stylist Labels Car Tin Goose.’”38

  The prosecution resumed its disparaging line of questioning with manufacturing VP Lee Treese. Wasn’t it true that many of the Tucker ’48’s features were borrowed from other auto manufacturers? Yes it was—and, he pointed out, some of those same auto manufacturers had since borrowed some features from the Tucker ’48 for their car designs. Again, it was a common industry practice.39 After each witness, courtroom observers became more and more convinced that the prosecution team knew very little about the auto industry.

  Unusual as it was for government witness testimony to be so helpful to the defense on direct examination, many witnesses provided even more help for Tucker and his codefendants on cross-examination. On cross, Treese told the court that the die program for making the Tucker body panels was near completion when the plant shut down. He swore they were on the verge of mass production. When asked why they failed, Treese told the jury it was outside interference. Asked for an example, he told of being kicked out of his own office so SEC investigators could set up shop in it and dig through company papers.40

  One of the most highly touted pieces of evidence the prosecution seized upon was an engineering report. An engineer named Robert Walder had been paid the handsome salary of $1,000 monthly by Tucker to critique the company’s progress. Walder’s report had not been optimistic, and neither was Walder’s testimony. He testified Tucker’s men were exhibiting “just plain dumbness and inexpert engineering.”41 He called the Tucker engine project hopeless and “still-born,” and said it would never get the mileage Tucker hoped for. He told Tucker he had a better chance of “flying to Mars on a broomstick.” He continued, “It seems fantastic that personnel charged with the guidance of your development program should make so many flagrant mistakes. You nonscientific and green experimenters mean well, but for a man’s work, hire a man.” The critical report, portions of which were read to the jury, had been created at Tucker’s request. If he wasn’t trying to actually build cars, why would he hire someone to evaluate his car-building process? And lost in the shuffle was the fact that the report was created in August 1947 and addressed only problems with the 589 engine and dual torque converter setup.42 The report was not critical of the car itself. After receiving this report, Tucker took Walder’s advice and scrapped the 589 and torque converter configuration. Even so, Walder had resigned from the Tucker Corporation after only two months.43

  Despite his testimony seeming favorable to the prosecution, Walder provided another avenue of attack for the defense. Though they were barred from discussing Abe Karatz’s criminal record, they often played up the fact that he used an alias, calling him “Abe Karatz, a.k.a. Karsten.” During Walder’s testimony Karatz’s attorney noticed he had a heavy German accent. Suspecting that Walder may have changed his name, he asked him, “What was your father’s name?” The family name had indeed been Braunwalder, and Robert Walder had been known much of his life as Robert Braunwalder. The attorney asked him how he was identified on the subpoena issued by the government. Was it, “Robert B. Walder, alias Robert Braunwalder”? No, it was not.44 Clearly, the defendants were being held to a different standard than everyone else.

  Some testimony consisted of former Tucker employees describing the ineptitude of Preston Tucker or others in the organization. William Stampfli told of how the suspension arms broke in the hours leading up to the Tin Goose’s world premiere. On cross-examination he was asked if it wasn’t true that the specifications had called for steel suspension arms and the ones that had broken were aluminum. A flustered Stampfli clearly did not know much about what went into the car. How much time did he spend working with the Tucker Corporation research department? “I didn’t even know they had one,” he admitted.45

  It was because of witnesses like Stampfli that a copy of the SEC report would have been a gold mine for the defense. He was one of a number of prosecution witnesses who made contradictory statements to the SEC. In the report, Stampfli swore that in May 1947, the Tucker Corporation “had nothing” ready by way of an engine or drivetrain for the Tin Goose.46 Yet, just a month later, the Tin Goose was unveiled with an operating engine and drivetrain. Surely Stampfli knew that those components were not created in just a month. Stampfli was so uninformed he told the SEC the Tucker Corporation never “road tested” any cars: “As a matter of fact none of the cars had even reached the stage where such tests would be in order.”47 He was either lying or unaware of the tests at Indianapolis. Regardless, the defendants had no way of knowing that Stampfli had made the statements to the SEC, which kept them from cross-examining him about them.

  Other testimony was so bizarre it made observers wonder if the prosecution was encouraging witnesses to perjure themselves. Paul Wellenkamp, a former Tucker Corporation engineer, testified that he found no evidence that any Tucker cars or their parts were tested at Indianapolis. The prosecutor pointed out to the jury that Tucker had claimed in advertisements that the cars’ components had been tested at the famous racetrack. Therefore, Wellenkamp’s testimony was meant to demonstrate that no such testing had taken place.48 It was a misguided argument, as Tucker’s ads were simply pointing out that various items like disc brakes and independent suspension had been successfully used on cars at Indianapolis for years. But Wellenkamp was wrong about the road tests, as well; he’d only worked for Tucker for three months and was not an employee when Tucker and Offutt took the fleet of Tucker sedans to Indianapolis for testing.49 Presumably, one of the reasons he parted company with Tucker is that Wellenkamp had advised Tucker to scrap everything uniqu
e about his car “and (start) substituting standard equipment.”50

  Even so, not everything Wellenkamp said was bad for Tucker. On cross-examination he was asked, “Do you think it was an honest effort in good faith to produce that kind of an automobile?”51

  He answered: “Yes, sir, I do.”

  The prosecutors seemed focused on arguing that the Tucker Corporation was inept when it came to building cars. But was that criminal? At one point the judge chastised the prosecutors. He reminded them that the case was not about whether Tucker or his associates knew how to build a car. The men were on trial for fraud and conspiracy. Perhaps the prosecution should start moving in that direction?52

  Elsewhere in the courthouse, the stockholders committee in the civil case got their hearing and announced they had a deal that would save the corporation and allow them to continue operation. They proposed a new stock issue to be offered to then-current Tucker stockholders. An SEC attorney told the judge that the group had not registered any stock offering with the SEC, so at that point what they were proposing was illegal. The committee then told the judge they would raise another $20 million by borrowing it from the Reconstruction Finance Corporation. It is unclear if the committee knew that Tucker had applied for RFC loans to save the company but had been denied. The judge denied the committee’s request.53

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  The rest of the Tucker family continued to live their lives as best they could while their patriarch was on trial. John Tucker had attended Chicago Latin School, a local private school, and had met Mary Jane Dodman, who was a year younger and a student at a nearby school. The two began dating, often ending the evening at the apartment on Lake Shore Drive for hot chocolate. Years later, Mary Jane recalled that Preston Tucker would sometimes allow himself to be seen not wearing a suit and tie, occasionally dressed in flannel pajamas when the young couple returned in the evening.54