Charles Forbes Convicted of Veterans Bureau Fraud After Nine-Week Trial

After nine weeks of testimony in federal court in Chicago, a jury convicts Charles Forbes, the first director of the Veterans Bureau, of conspiracy to defraud the U.S. government, along with construction company president E.H. Mortimer. The conviction stems from a $5,000 bribe Forbes accepted from contractor J.W. Thompson at Chicago’s Drake Hotel to secure $17 million in veterans’ hospital construction contracts. On February 2, 1925, the judge sentences both men to two years in prison and fines them $10,000 each. A 1924 Senate investigation revealed Forbes looted more than $200 million from the Veterans Bureau through contract kickbacks and the sale of nearly $7 million worth of hospital supplies for only $600,000.

Forbes’s corruption scandal represents one of the first major revelations of the systemic graft plaguing Warren G. Harding’s administration, predating the full exposure of the Teapot Dome scandal. President Harding learned of Forbes’s theft in January 1923 and allegedly grabbed Forbes by the throat at the White House, shouting “You double-crossing bastard!” before forcing his resignation. Forbes fled to Europe before resigning on February 15, 1923, while in Paris. Charles F. Cramer, the bureau’s attorney who was implicated in the schemes, committed suicide. With a $500 million annual budget (equivalent to $7.6 billion in 2021) and 30,000 employees under his control, Forbes had extraordinary opportunity to siphon public funds intended for disabled World War I veterans into private pockets.

Forbes appeals his conviction to the U.S. Supreme Court, delaying his incarceration at Leavenworth Penitentiary until March 20, 1926. He serves 20 months before being paroled on November 26, 1927. During his imprisonment, the Associated Press reports that Forbes is “placed in charge of the prison’s construction work,” supervising the erection of new buildings—a darkly ironic assignment given his conviction for construction contract fraud. The Veterans Bureau scandal demonstrates the institutional corruption that flourished under Harding’s policy of appointing political cronies to positions controlling vast public resources, with veterans who sacrificed for their country becoming victims of the same kleptocratic networks they had fought against abroad.