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Classs A Common Stock
September 27, 1947 (green)
September 20, 1947 (brown)
Security Bank Note Company
12" (w) x 8" (h)
Show the exact certificate you will receive
Preston Thomas Tucker is most remembered for his Tucker 48 sedan, initially nicknamed the "Tucker Torpedo", an automobile which introduced many features that have since become widely used in modern cars. Production of the Tucker '48 was shut down amidst scandal and controversial accusations of stock fraud on March 3, 1949. The 1988 movie Tucker: The Man and His Dream is based on Tucker's spirit and the saga surrounding the car's production.
The Securities and Exchange commission bothered the Tucker Corporation from its earliest days. The SEC was embittered after small automaker Kaiser-Frazer was given millions of dollars in grants towards development of a new car, and subsequently squandered the money. While Tucker took no money from the federal government, small upstart automakers were under intense SEC scrutiny, and Tucker was no exception.
One of Tucker's most innovative business ideas caused the most trouble for the company and was used by the SEC to spark its formal investigation. His Accessories Program raised funds by selling accessories before the car was even in production. Potential buyers who purchased Tucker accessories were guaranteed a spot on the dealer waiting list for a Tucker '48 car. Tucker also began selling dealerships before the car was ready for production, and at the time of the trial had sold over 2,000 dealerships nationwide at a price of $7500 to nearly $30,000 each.
Feeling pressure from the SEC, Harry Aubrey Toulmin, Jr., the chairman of the Tucker board of directors, resigned and wrote a letter to the SEC on September 26, 1947, in an attempt to distance himself from the company. In the letter, Toulmin indicated that he quit "because of the manner in which Preston Tucker is using the funds obtained from the public through sale of stock." Describing Tucker as "a tall, dark, delightful, but inexperienced boy", Toulmin added that the Tucker '48 machine "does not actually run, it just goes 'goose-geese'" and "I don't know if it can back up." In reply, Tucker stated that he had asked Toulmin to resign "to make way for a prominent man now active in the automobile industry." The "prominent man" turned out to be Preston Tucker himself.
In late 1947, a radio segment on Tucker by popular journalist Drew Pearson criticized the Tucker '48, calling it the "tin goose" (referring to Howard Hughes' "Spruce Goose") and noting that the first prototype "could not even back up". The first prototype lacked a reverse gear because Tucker had not had time to finish the direct torque drive by the time of the car's unveiling. This was corrected in the final driveline, but the public damage was done and a negative media feeding frenzy resulted. Tucker responded by publishing a full-page advertisement in many national newspapers with "an open letter to the automobile industry" wherein he subtly hinted that his efforts to build the cars were being stymied by politics and an SEC conspiracy. Nonetheless, dealership owners began filing lawsuits to recover their money, and Tucker's stock value plummeted.
SEC trial and demise of the Tucker Corporation (1949–1950)
In 1949, Tucker surrendered his corporate records to the U.S. Securities and Exchange Commission. United States Attorney Otto Kerner, Jr. began a grand jury investigation in February 1949. On March 3, 1949, a federal judge handed control of the Tucker Corporation over to Aaron J. Colnon and John H. Schatz. Soon thereafter on June 10, 1949, Tucker and six other Tucker Corporation executives were indicted on 25 counts of mail fraud, 5 counts of violations of SEC regulations and one count of conspiracy to defraud. The indictment included 46-year-old Tucker, Harold A. Karsten, 58, "alias Abe Karatz"; Floyd D. Cerf, 61 (whose firm had handled the stock offering); Robert Pierce, 63; Fred Rockelman, 64; Mitchell W. Dulian, 50, Tucker sales manager; Otis Radford, 42, Tucker Corporation comptroller; and Cliff Knoble, 42, Tucker advertising manager.
Tucker publicly called the charges "silly and ridiculous" and hailed the indictment as "an opportunity to explain our side of the story". Tucker and his colleagues' defense was handled by a team of attorneys led by William T. Kirby.
Another publication, Collier's magazine, ran an article critical of Tucker on June 25, 1949, which included leaked details of the SEC report (which was never released publicly). This article was reprinted in Readers Digest as well, expanding the scope of the negative press concerning Preston Tucker.
The trial began on October 4, 1949, presided over by Judge Walter J. LaBuy. Tucker Corporation's factory was closed on the very same day. At that point, only 37 Tucker '48s had been built. A corps of 300 loyal employees returned to the factory (some without pay) and finished assembly of another 13 cars for a total production of 50 cars (not including the prototype).
At trial, the government contended that Tucker never intended to produce a car. Throughout the trial, the SEC report on Tucker was classified as "secret" and Tucker's attorneys were never allowed to view or read it, but it was leaked to the press nevertheless.
As the trial proceeded, the government and SEC brought several witnesses (mostly former Tucker employees) to highlight the rudimentary methods used by Tucker to develop the car; the early suspensions were installed three times before they worked, and early parts were taken from junkyards to build the prototype. Answering back in Tucker's defense, designer Alex Tremulis testified that it was common industry practice to use old car parts for prototype builds, and pointed out this had been done when he was involved with developing the 1942 Oldsmobile under General Motors.
Tucker Vice President Lee Treese testified that Tucker's metal stamping and parts fabrication operations were 90% ready to mass-produce the car by June 1948 and that outside interference had slowed the final preparations for production. This back and forth between the prosecution and the defense continued until November 8, 1949, when the judge demanded the SEC prosecutors "get down to the meat of the case and start proving the conspiracy charge."
Defense attorney Kirby directed attention to automaker Kaiser-Frazer, pointing out that early models of their government-funded new car model had been made of wood and that when this project failed, Kirby stated in court documents that "Kaiser-Frazer didn't get indicted, and they got 44 million dollars in loans from the government, didn't they?" All told Kaiser-Frazer had received nearly $200 million in government grants, but did not produce the car they promised.
After a break for Christmas, the trial resumed in January 1950. The government's star witness, Daniel J. Ehlenz, a former Tucker dealership owner and distributor from St. Paul, Minnesota, testified that he had lost $28,000 in his investment in the Tucker Corporation. However, on cross-examination, the defense used this witness to their advantage when Ehlenz testified that he still drove his Tucker '48 given to him by Tucker and that the car had 35,000 miles on it and still cruised smoothly at 90 miles per hour.
The tide turned in Tucker's favor when the government called its final witness, SEC accountant Joseph Turnbull, who testified that Tucker had taken in over $28 million and spent less than one-seventh of it on research and development of the car. He stated that Tucker had taken over $500,000 of the investors' money for himself, but never delivered a production car. Kirby rebutted Turnbull's claims on cross-examination, asking for proof of the allegations of financial mismanagement from Tucker's seized financial records. Turnbull was unable to offer such evidence. In closing his witness testimony, Kirby asked Turnbull, "You are not here suggesting these figures are figures of monies taken fraudulently, are you?" Turnbull's answer was, "Not exactly, no."
After this final SEC witness, Tucker's defense attorneys surprised everyone by refusing to call any witnesses to the stand. Defense attorney Daniel Glasser told the court, "It is impossible to present a defense when there has been no offense". In his closing arguments, Kirby became tearful and emotionally told the jury to "stop picking at the turkey," and stated that Tucker "either intended to cheat and that's all they intended to do or they tried in good faith to produce a car. The two are irreconcilable." He then invited the members of the jury to take a ride in one of the eight Tucker '48s parked in front of the courthouse before they made their decision.
On January 22, 1950, after 28 hours of deliberations, the jury returned a verdict of "not guilty" on all counts for all accused. Tucker had prevailed at the trial, but the Tucker Corporation, now without a factory, buried in debt, and faced with numerous lawsuits from Tucker dealers that were angry about the production delays, thus, was no more.
Preston Tucker's reputation rebounded after the acquittal. His optimism was remarkable; after the trial was over, he was quoted as saying, "Even Henry Ford failed the first time out". Tucker Corporation assets were auctioned off publicly in Chicago. One remaining Tucker '48 car was given to Preston Tucker, and another to his mother.
In the early 1950s, Tucker teamed up with investors from Brazil and auto designer Alexis de Sakhnoffsky to build a sports car called the Carioca. Tucker could not use the Tucker name for the car, as Peter Dun, of Dun and Bradstreet, had purchased the rights to the name. The Tucker Carioca was never developed.
Tucker's travels to Brazil were plagued by fatigue and, upon his return to the United States, he was diagnosed with lung cancer. Tucker died from pneumonia as a complication of lung cancer on December 26, 1956, at the age of 53. Tucker is buried at Michigan Memorial Park in Flat Rock, Michigan.
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