Thomas F. Curnin, a partner in Cahill Gordon & Reindel, a law firm representing E.F. Hutton & Co., did not join Perry H. Bacon and Bacon's lawyer John J. Tigue Jr. in a March 1 meeting at the Justice Department. An article in Thursday's Business section incorrectly stated that Curnin attended the meeting.
E. F. Hutton & Co. disclosed yesterday that over the past month it has found and turned over to the government 18 documents that were covered by a federal grand jury subpoena three years ago.
The documents relate to the cash-management operations of the brokerage firm, which agreed to plead guilty May 2 to 2,000 criminal counts, pay a $2 million fine, and reimburse banks for their losses on what amounted to interest-free loans to Hutton on a vast scale.
After the guilty plea, some of the documents were obtained by the House Judiciary subcommittee on crime, and newspapers have carried reports on some of them.
Hutton, in a statement yesterday, said that promptly on discovering the 18 documents it sent them to the Justice Department, the House subcommittee, former attorney general Griffin B. Bell, and the Securities and Exchange Commission.
Hutton, which retained Bell to conduct an internal investigation, said that "the uncovering of these documents was a product of" his inquiry "and the recent publicity surrounding George L. Ball," president of Hutton from 1977 to 1982 and president and chief executive officer of Prudential-Bache Securities since then.
Robert Fomon, chairman and chief executive officer of the E. F. Hutton Group, the parent of the brokerage firm, said that "there appear to be good-faith explanations for the fact that the documents were only recently discovered. However, I have asked Judge Bell to broaden the scope of his inquiry to examine the circumstances surrounding the failure to produce all documents on a timely basis."
Attorney General Edwin Meese III, meanwhile, told a press conference yesterday that the Justice Department will review the case if evidence is developed that information was withheld from prosecutors "or was hidden." Asked if the case has been reopened, he said, "No comment."
Assistant Attorney General Stephen S. Trott said that it is "a very serious matter" for subpoenaed documents not to be produced. "We anticipate we will find out what the explanation is," he said in an interview.
In a related development, a lawyer for Perry H. Bacon, manager of one of Hutton's two branches in downtown Washington, denied a report that Bacon admitted having destroyed documents after the federal grand jury issued its subpoena in 1982.
Bacon and the lawyer, John J. Tighe of New York, attended a meeting with Justice Department prosecutors on March 1. Also present was Thomas F. Curnin, a partner in a Hutton law firm, Cahill, Gordon & Reindel.
The Los Angeles Times said in stories yesterday and Tuesday that in a memo dated 16 days after the meeting, Curnin wrote that Justice Department prosecutor Peter B. Clark "reported that Bacon, in the course of his last interview and in the presence of his lawyers, admitted he had destroyed documents after the subpoena had been issued because he did not want to produce certain materials."
Hutton, as previously reported, stated that Bacon said he has "neither destroyed, nor is aware of the destruction of, any potential evidence related to this matter." Yesterday, Tighe told The Washington Post that the allegation attributed to Curnin "is inaccurate and not so," adding that he was speaking "on behalf of myself and Mr. Bacon."
Curnin did not respond to calls.
The 18 documents, Hutton said, included three related ones written in the spring of 1981: an April 27 memo from Ball to all regional vice presidents and sales managers; a May 12 memo to Thomas P. Morley, who was in charge of money mobilization, from Tom Lillis, a first vice president and assistant controller, and a June 3 note from Ball to the regional sales managers and branch office managers.
In the April 27 memo, Hutton said, Ball noted the important role played by interest income at the Hutton offices that had turned in the best financial performances during the preceding month. He urged the field managers to seek Morley's advice "in maximizing the net interest income."
In the May 12 memo, Lillis cited the example of an office that had been earning $30,000 per month "just from overdrafting of the bank account," only to drop to $10,000 a month after the branch manager changed cashiers. Hutton said that "the objective of the memorandum was to emphasize the value of effective branch cashiers."
Hutton said that Ball wrote the June 3 note to reemphasize the objective, attaching copies of the May 12 memo. "A point well worth remembering and acting on," Ball wrote. Hutton emphasized that Ball was not "aware that any of the interest income generated during that period might have reflected improper banking practices or that Morley was aware of such improper practices."
Hutton said that all three documents were "first discovered by individuals in two offices when they were interviewed by Judge Bell's staff."
Ball, in a statement released by Prudential-Bache, said that the documents newly produced by Hutton "vindicates me and substantiates the position that I had no knowledge of any improper acts in Hutton's cash drawdown system. . . . I am confident that should Hutton find more documents, they, too, will substantiate my position.
"It is important to reiterate that cash drawdown/overdrafting per se is neither illegal nor sinister," Ball said. "As a Justice Department official said recently in the American Banker, 'There's a lot of misinformation being reported about overdrafting. . . . We were aware Ball may have known about the overdrafting. But overdrafting isn't a crime. The [Federal Reserve Board] allows it. They even issue guidelines.' What is at issue in the Hutton matter is the abuse of this standard business practice."