U.S. Senate Investigates Veterans Bureau Chief for Fraud Summary

  • Last updated on November 11, 2022

Charles R. Forbes, a World War I hero who had campaigned for U.S. president Warren G. Harding, was chosen by Harding to manage the Veterans Bureau. A Senate investigation revealed Forbes had been looting the bureau. He was found guilty of defrauding the U.S. government and sentenced to two years in prison. The Forbes debacle was the first in a long line of scandals that plagued the Harding administration.

Summary of Event

Rumors of misconduct in the U.S. Veterans Bureau began to circulate in Washington, D.C., in the fall of 1922. War veterans in the U.S. Congress demanded a formal inquiry. President Warren G. Harding heard from friends about the suspicious activities of Veterans Bureau director Charles R. Forbes, but Harding refused to believe accusations about his poker-playing buddy. The general public would not know the dimensions of the scandal until a U.S. Senate committee began public hearings in October, 1923. [kw]Fraud, U.S. Senate Investigates Veterans Bureau Chief for (Mar. 2, 1923) Harding, Warren G. Forbes, Charles R. Veterans’ Bureau[Veterans Bureau] Harding, Warren G. Forbes, Charles R. []Veterans Bureau[Veterans Bureau] [g]United States;Mar. 2, 1923: U.S. Senate Investigates Veterans’ Bureau Chief for Fraud[00300] [c]Corruption;Mar. 2, 1923: U.S. Senate Investigates Veterans’ Bureau Chief for Fraud[00300] [c]Government;Mar. 2, 1923: U.S. Senate Investigates Veterans’ Bureau Chief for Fraud[00300] [c]Politics;Mar. 2, 1923: U.S. Senate Investigates Veterans’ Bureau Chief for Fraud[00300] [c]Law and the courts;Mar. 2, 1923: U.S. Senate Investigates Veterans’ Bureau Chief for Fraud[00300] Harding, Florence Mortimer, Elias Sawyer, Charles E.

Harding had first met Forbes when the newly elected senator from Ohio and his wife took a ten-day trip to Hawaii in February, 1915. Forbes, in charge of construction at the Pearl Harbor naval base, showed the two the sights of Hawaii. Forbes visited them later in Washington, became a particular favorite of Florence Harding, joined Warren Harding’s poker parties, and played an active role in the 1920 presidential Presidential campaigns, U.S.;1920 Presidential campaigns, U.S.;Warren G. Harding[Harding] campaign. Forbes proudly described his wartime service during World World War I[World War 01] War I. A major in the Signal Corps, he was awarded a Croix de Guerre from the French government, a Distinguished Service Medal by the United States, and promoted to lieutenant colonel. He never mentioned that two months after enlisting as a private in 1900 he was absent without leave (AWOL), was caught, then reinstated, and received a good-conduct discharge at the rank of sergeant in 1907.

First Lady Harding chose as her special project to take care of her “boys,” wounded war veterans, and pressured Harding to put Forbes in charge of veterans’ affairs. She also insisted that her personal physician, homeopath Charles E. Sawyer, become the White House doctor; Harding gave him the rank of brigadier general in the Army Medical Corps Reserve and appointed him chairman of the Federal Hospitalization Board.

Forbes was sworn in as chairman of the Bureau of War Risk Insurance on April 21, 1921, and took over as head of the Veterans Bureau when Congress created the bureau in August to consolidate agencies concerned with veterans. Unsatisfied with powers Congress had granted, Forbes persuaded the president to issue executive orders on April 29, 1922, transferring control of a $35.6 million hospital construction fund from the Treasury Department to him and shifting management of warehouses at Perryville, Maryland, which stored supplies for all federal hospitals from the Public Health Service to his bureau.

Sawyer, who had never liked or trusted Forbes, complained to Harding that when he left town in May, Forbes got the Hospitalization Board to approve construction of unneeded hospitals. After visiting the Perryville warehouses on October 14, Sawyer alerted Harding to strange shipments of goods leaving the facilities. Harding did not believe him. That same month, the American Legion called for Sawyer’s dismissal from office for delaying hospital construction, while lavishly praising Forbes. However, as stories of misconduct multiplied, legion posts supported the December demand by the Disabled American Veterans for an investigation.

By January, 1923, enough evidence reached Harding to finally persuade him that Forbes had betrayed his trust. He called Forbes to the White House and demanded his resignation. After an angry confrontation, Harding agreed to let Forbes depart for Europe and resign from there; the resignation arrived February 15. The administration announced a major reorganization of the Veterans Bureau on January 31. The chief counsel of the bureau resigned the next day and committed suicide on March 12.

Demands for a full investigation were now unstoppable. After the Senate authorized a probe of the Veterans Bureau on March 2, the lead counsel of the committee carefully gathered evidence for nine months before starting public hearings on October 22. The first witness on the following day was Elias Mortimer, a lobbyist for various businesses who was hardly unbiased. Angered by an affair between Forbes and Mortimer’s wife that destroyed his marriage, Mortimer was eager for revenge. Having been an enthusiastic participant in Forbes’s nefarious activities, he knew all the details. He described a trip he and his wife had taken with Forbes in June, 1922, at Mortimer’s expense, to select sites for new hospitals. His account of continual wild parties replete with liquor and gambling delighted reporters but shocked the public in Prohibition Prohibition era America.

As they approached Chicago, Forbes complained of needing money and requested $5,000. Mortimer called Forbes into the bathroom of Forbes’s Chicago hotel suite and handed over ten $500 bills on behalf of the president of a construction company who hoped to win hospital building contracts. Only contractors who “lent” Forbes money successfully bid on hospital construction contracts. Mortimer also provided examples of Forbes profiting from bureau purchases of land during that trip, including having the bureau pay $105,000 for a vineyard in California that had cost its owner less than $20,000, in return for a $25,000 kickback.

Forbes’s management of the Perryville medical warehouses provided yet another tale of massive corruption. On November 14, 1922, Forbes had convinced Harding’s coordinator of the federal budget to approve a three-page list of what Forbes claimed were damaged goods to be sold for whatever price Forbes could get. A plot had been prepared and swung into immediate action. On November 15, Forbes added two additional unapproved lists and signed a contract selling new supplies at a small fraction of cost. That same day fifteen empty freight cars arrived at Perryville and left the next day fully loaded with brand new sheets, towels, gauze, and other hospital materials. Forbes sold new hospital bedsheets for 20 cents that Veterans Bureau hospitals were currently purchasing for about $1 each. An often repeated estimate claims Forbes sold for less than $600,000 supplies that were valued at between $5 and $7 million. How much he received in kickbacks is unknown.

Mortimer’s three weeks of testimony, replete with unsavory details that reporters and the public eagerly followed, were high points of the nine-week hearings. After the hearings ended in December, the Senate referred the evidence to the Department of Justice.

Forbes, along with the contracting company president who provided the notorious $5,000 “loan,” went on trial in Chicago in November, 1924, accused of conspiring to defraud the U.S. government. Once again, Mortimer was the star witness, continuing his vendetta with Forbes. The $5,000 payment and the lucrative contracts the construction company subsequently received were central to the prosecution’s case. On January 30, 1925, after nine weeks of testimony and argument, the jury took five hours to find both Mortimer and Forbes guilty. On February 2, the judge sentenced the two felons to two years in prison and fined them $10,000 each. Forbes appealed his sentence, reaching the U.S. Supreme Court and delaying incarceration at Leavenworth Penitentiary until March 21, 1926. He was paroled on November 26, 1927, after serving twenty months in prison. Forbes died on April 10, 1952, at Walter Reed Army Medical Center in Washington, D.C., and was buried at Arlington National Cemetery.

Impact

The Veterans Bureau affair was the first scandal of the Harding administration to become public knowledge and the only scandal that did so while Harding was still alive. Other scandals involving corruption in the Departments of the Interior and Justice, and enforcement of Prohibition, would erupt after his death. The scandals are frequently lumped together under the name Teapot Harding, Warren G. [p]Harding, Warren G.;and Teapot Dome scandal[Teapot Dome scandal] Teapot Dome scandal Dome, which involved the illegal sale of naval reserve oil, even though the other cases of corruption had nothing to do with oil. The scandals destroyed Harding’s reputation and led to his being deemed one of the worst U.S. presidents. Harding, Warren G. Forbes, Charles R. Veterans’ Bureau[Veterans Bureau]

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Anthony, Carl Sferrazza. Florence Harding: The First Lady of the Jazz Age and the Death of America’s Most Scandalous President. New York: William Morrow, 1998. Uses newly available manuscript sources to depict Florence Harding’s powerful influence on her husband.
  • citation-type="booksimple"

    xlink:type="simple">Dean, John W. Warren G. Harding. New York: Henry Holt, 2004. A brief biography that defends Harding as a better president than his negative popular reputation implies.
  • citation-type="booksimple"

    xlink:type="simple">Murray, Robert K. The Harding Era: Warren G. Harding and His Administration. Edited by Katherine Spiers. Newton, Conn.: American Political Biography Press, 2000. Originally published in 1969, this work refutes reports that Harding was a major player in the scandals of his administration and attempts to resurrect his reputation.
  • citation-type="booksimple"

    xlink:type="simple">Russell, Francis. The Shadow of Blooming Grove: Warren G. Harding in His Times. New York: McGraw-Hill, 1968. A colorful biography of Harding, stressing the personal and political scandals of his life and career.
  • citation-type="booksimple"

    xlink:type="simple">Schultz, Jeffrey D. Presidential Scandals. Washington, D.C.: CQ Press, 2000. The general examination of scandals involving the presidents and their administrations includes a brief account of the Veterans Bureau affair.

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