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listrurr rk t c3c, fa% nt Liberal Weekly Newspaper We will serve no group or party but will hew hard to the truth as we find it and the right as we see it. The one great rule of composition is to speak the truth. Thoreau Vol. 48 TEXAS, FEBRUARY 26, 1957 10c per copy No. 43 Two AFL Leaders Gave Cage Boost One, $5,000; Other Joined Jacco DALLAS, AUSTIN Two top leaders of the Texas AFL gave supersalesman BenJack Cage crucial assists in selling the ICT insurance venture to the labor movement. One got $5,000 for his trouble and the other went to work for Cage in Houston. William J. Harris, former president of the Texas State Federation of Labor and now a member of the Dallas city council and business agent of the musicians’ local there, accepted $5,000 from a Cage company in return for trying to extend ICT’s insurance operations into AFL unions in other states and to get a blessing from the national AFL. He failed. Paul Sparks, executive sec retary of the federation at the Harris tried to interest AFL, their federations to see if they time, pushed through a re labor leaders in Pennsylvania, would do the same. thing \(about newal of Cage’s lucrative management contract with tucky and Louisiana in the Cage! Mexico was another one. I rrit ICT one month before he operation. I with the Kentucky boys here, and quit the federation to go to He acknowledged, in response ‘ I met with the Louisiana boys work for Cage at a reported to direct questions froin the ob_ here.” fancy salary. server in Dallas, that he got the Sparks, the Observer can report, was chairman of a special committee which ICT Insurance Co.’s directors put in charge of drawing up the 1953 version of the contract that gave Cage 20 percent of all stock sales, 15 percent “off the top” of every ICT premium dollar, and total operating control. It fell to Jerry Holleman, present executive secretary of the federation, to lead the fight to break off with Cage and try to pull ICT Insurance Co. out of the financial fire in which Cage left it. BenJack Cage Talks to AFL Convention in ’52 He said if they’d follow him, ICT would make history. It did. $5,000 in 1952 and 1953 from the North American Development Co., a subsidiary of Jack Cage & Co. which BenJack Cage apparently set up to pay certain salaries. Jack Cage & Co. wrote over $86,000 to North American in 19521953 alone and charged it off as salaries. “I was paid by North American. Reported it on my income tax,” Harris said. He did not receive any additional funds from Cage or any Cage firm, he said. “I went to Pennsylvania, New Jersey, and several other states before the executive committee of In 1953, he recalled, he went by train from New York to Boston to an American Federation of Labor executive council meeting. “I wanted to get . said they had no objection but: would rather not tie the AFL in.”‘ The $5,000 covered his room and: board plus “a few bottles of gin, you know.” Harris answered question willingly. He said he had made these for,” but that “my skirts are This was 1952, he said. ‘KISS ME KATE’ TRADING, TRADING .. . Where Did It Go? A High 01′ Time AUSTIN BenJack Cage’s corporate manipulations of I C T funds through Jack Cage & Co., or “Jacco,” are still tangled in hidden strings on stock, slippery values of stocks and bondd, trades in several directions at once, and mysterious liaisons and competitions that transcend state and national lines. There is at least one big gap in the necessary informationthe corporate history of ICT Corporation. Members of AFL unions in Texas were persuaded to invest principally in. two corporations, ICT Insurance Company and ICT Corporation. In the beginning ICT Life Insurance Co. was a dormant corporation. It came to life in 1956 and is now very much a going concern “a good company,” says Insurance Commission Chairman John Osorio. ICT Corp. is functioning separately now, also. Since Jacco, under its management contract with ICT, did not have to pay claims, and since it took 15 percent “off the top” of every premium dollar, it was to its immediate financial advantage to sell all the insurance it could. Swiftly Cage spread out into 25 states and Alaska. Last week at a press conference, Mullinax said that all this business was unprofitable except in Texas, a portion of Tennessee, “a little of Utah,” and Alaska. In 1955, chimed in Jim Cage, the loss ratio on ICT Insurance Co. business outside Texas averaged 134 percent. “My boys could flip heads or tails and go into 22 states and come out better than that, and he’s five years old,” Mullinax said. He suggested BenJack Cage was “only worried about the 15 cents on the dollar.” Not content with his $7 million premium commissions and his $3 million stock commissions, Cage started holding onto some of ICT’s stock income and speculating with it through Jacco, Mullinax said. “He actually would take his 20 cents profit and put 80 cents on the books, would say 111 pay you back some day,” and he was off, said Mullinax. Eventually he hooked up with 75 companies one way or another. “Many times he lost money on these operations. He got into such shape he couldIn the misty beginnings of the idea of labor members owning their own insurance company in Texas the shadow of Stewart Hopps can be made out. It is known Hopps and Cage were acquainted before Cage put the main idea to the state federation of labor. Hopps; said Jim Cage Thursday, is the “bad boy of the insurance industry.” Cage reinsured some policies with a Hopps concern, Narragansett Insurance Co. of Rhode Island, Mullinax said. \(This means, of course, that some ICT premium income went to Narragansett in return for a transfer of insurance Mullinax: “In five months’ time take back certain assets at a loss of a million dollars. He confessed himself so grossly wrong in that deal, he wanted to pay back that million … he was so contrite about it,” Mullinax said. One of the companies Cage Guide to Confusion: Special Issue on ICT AUSTIN In this edition Observer readers are offered insight into the ICT collapse available in no other newspaper in Texas. On this page begin stories on the involvement of top echelon leaders of the Texas State Federation of Labor in. the BenJack Cage promotion; the elusive international corporate manipulations of “Jacco,” the deficit-financed company through which Cage controlled ICT funds and investments \(often with a notorious insurance speculator, Stewart fabulous spending habits. On page two is a story on the bizarre struggle for control of ICT Corporation between the present leadership of the Texas AFL on. the one hand and the former leadership which had lined up with BenJack Cage on the other, and another story on ICT gifts, payments, and entertainment of various public officials. On three is an account of ICT Insurance’s development since 1951. On page four the Observer gives details on the local unions which invested in ICT Insurance Co.-241 in alland the plans for the House of Representatives investigation. Noted on five are the history of the Insurance Commission’s relationships with ICT Insurance Co. and the significant return of Renne Allred, Jr., as attorney for the ICT receiver. To get the stories the Observer editor spent seven hours with the workpapers of a complete audit of Jacco, attended all the pertinent hearings and conferences, and was briefed extensively off the record by people in on the ICT operation. DALLAS AND AUSTIN The AFL of Texas gave BenJack Cage an open-end ticket to anywhere, and BenJack Cage was just the man to use it. He tacked together a shanty empire of insurance and business that involved at least seventy five companies, some of them as far away as the Panama Zone and the West Coast of Africa. He made boats, air conditioners, hand-purse alarms for frightened women, pregnancy testers, and a concoction to keep flies off of cows. And man, he lived it up. He got involved in a paternity suit in California. His expense voucher claim he spent $850 on a starlet. He chased all around over this country and made a side trip to Europe, scattering gifts to Powers models and other chicks as he went. He lavishly entertained and endowed those who were useful to him. What he didn’t do, few would venture to imagine. What he did do is now the subject of a House of Representatives investigation into what Rep. Marshall Bell calls “the greatest collapse in the history of the state,” which is going some. Cage is yet to be heard from. Cage pulled off the entire multimillion-dollar operation through a $10,000 corporation, and there is no evidence that even. that $10,000 ever reached the bank. The company, Jack Cage & Co., \(or, as it was’ called, acquired an. iron-clad management contract with three laborfinanced ICT companies under which Jacco took 15 percent of the insurance premiums and 20 percent of the stock sales in re turn for managing the operation. Between June 1, 1951, and Jan. 31, 1956, that agreement yielded BenJack Cage and his associates more than $7,000,000 from insurance premiums, more than $3,000,000 in stock commissions, and total gross income of more than $12,000,000but Jacco had a net loss for the period of $163,000. Total income taxes paid by Jacco for the entire period were less than $9,000. How so much money could be be lost, squandered, and otherwise removed from Cage’s corporation matrix is a question that will occupy auditors for years. Cage, using not only his own firm’s income but also portions of the stock income he would “owe” the ICT companies while he invested or speculated with it, lost a reported million dollars in one deal with Stewart Hopps alone. After he was forced out in January, 1956, the new management of ICT Insurance Co. had to absorb loss upon loss as it mushed about frantically searching for firms assests to stand on. Cage’s business methods are merely hinted at in his fabulous expense accounts. Jacco’s “travel and entertainment” accounts for three years, 1952 through 1955, total more than $750,000. Records are so inadequate no one will ever know where much of it went. When Cage was forced out, Jaco agreed to a complete audit at its own expense. The auditor, William Skiles of Dallas, C. P. A., and associates, worked into October on seven reports on the Ja