TAXES: Cheated and Deceived

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In Manhattan, the trial of Henry Lustig had barely begun when the sky started caving in on the dour little owner of Manhattan's twelve glittery Longchamps restaurants. Unexpectedly, two of his four co-defendants pleaded guilty to conspiring with Lustig to defraud the U.S. of $2,872,766 in taxes on wartime profits.

Brothers Wallace and Martin Platt, Longchamps bookkeeper and office manager, not only pleaded guilty but turned Government witnesses. Wallace Platt took the stand to tell exactly how the huge job of cheating had been done. Said he: Longchamps kept two sets of books, juggled one set by understating sales and overstating purchases, used the faked figures in filing 1940-44 tax returns, siphoned the money, along with tips taken from hat-check girls, into a safety deposit box.

Lustig's counsel, Lloyd Paul Stryker, admitted to the jury that his client had been "delinquent." Nevertheless, he had a defense: Lustig, said he, had voluntarily confessed his delinquency, had paid the Treasury $1,800,000 as a compromise settlement. In return he had been promised immunity from criminal prosecution. But, said Stryker, "high Government officials cheated and deceived Henry Lustig!" What officials? Why, "the boss" was Henry Morgenthau Jr., Treasury Secretary when the Lustig investigation began. Before the trial ends, some weeks hence, Stryker promised to call Morgenthau as a witness.