Perry H. Bacon, the former local E. F. Hutton & Co. office manager who was involved in the massive Hutton check-kiting scheme, was paid $600,000 "in separation and bonus compensation," when he left the brokerage firm, court documents show.
Bacon is one of several E. F. Hutton executives who left the company after being implicated in the massive check-kiting scheme that lead Hutton to plead guilty to 2,000 felony charges last May.
Hutton has never disclosed that it gave severance payments to any employes involved in the illegal actions. Former attorney general Griffin Bell, who investigated the incident for Hutton, recommended that Bacon and the five other managers each be fined a minimum of $25,000 and a maximum of $50,000.
How a fine of Bacon affected the $600,000 settlement could not be learned yesterday.
Hutton executives refused to comment on the payments, which were disclosed in an affidavit filed by Bacon's estranged wife Susan, 30, in a lawsuit for separation from Bacon, 39. She accused him of adultery in the case, which Superior Court records show ended in an out-of-court settlement last month.
The settlement terms were not disclosed. The Bacons, who were married in 1978 and have two children, declined to comment on any aspect of the matter. Bacon's lawyer, Mark B. Sandground, said his client has been looking into new career possibilities.
In November 1981, while Bacon was vice president in charge of Hutton's Alexandria branch, the office checking account at United Virginia Bank was overdrawn by an average of $9 million a day, according to documents made public in congressional investigations of the Hutton affair. Interest earned by the overdrafting accounted for as much as 70 percent of the office's gross income, of which Bacon received 10 percent. The interest income credited to the branch in one month, January 1982, was $124,000.
Susan Bacon said in the affidavit that her husband told her he earned $400,000 last year and approximately $2.2 million in eight years of employment. He was manager of the Hutton branch at 1825 I St. NW when he left the firm early this year.
Bell said in a report last September that the overdrafting at six Hutton branches, including Alexandria, was "so excessive and egregious as to warrant sanctions," and that the conduct of the managers "was such that no reasonable person could have believed that this conduct was proper."
In December, the Virginia Corporation Commission accepted an "offer of compromise and settlement" from Hutton. The resulting order noted that "Hutton has permitted Bacon to resign all of his positions." Bacon's lawyer, Sandground, said he knows of "no action" by District securities regulators.
Bacon testified before the House Judiciary subcommittee on crime in August that while no one at Hutton told him to overdraw checking accounts to make money, "it never occurred to me there was anything wrong with it." The check kiting, he said, implemented Hutton policy as he perceived it from meetings, executive memos, and "oral communications."
Documents disclosed in investigations of the Hutton affair show that Steven R. Bralove, another local Hutton manager who had condemned Bacon's "excessive overdrafting," told him in an early 1982 memo that it "shows a blatant disregard for the consequences of your actions."
In a reply memo six weeks later, Bacon defended his overdrafts on the ground that they "are encouraged by the firm and are, in fact, identical to what the firm practices on a national basis. Specifically, we will from time to time draw down not only deposits plus anticipated deposits, but also bogus deposits." The memo added:
"I know of at least a dozen managers at E. F. Hutton -- who along with . . . Tom Morley [Thomas Morley, then first vice president and money mobilizer] who . . . taught me the system -- who do precisely the same thing."
Almost three years later, in preparing to testify before a federal grand jury, Bralove found the memo in his files. His lawyer gave it to Hutton, which passed it to the Justice Department.
The Justice Department used the memo as a lever to obtain the Hutton guilty pleas, Business Week reported last Feb. 24. Assistant Attorney General Stephen S. Trott, head of the Criminal Division, told the magazine: "It was a smoking gun memo, a confession memo, one of their own people damn near confessing to every element of the crime. It was the kind of thing that a jury could understand. It really tipped the balance in the case."