The Tylenol Mafia (42 page)

Lewis and Mehta quickly lost track of one another, and their paths went in markedly different directions. Mehta moved to California, where he earned a
PharmD
at the University of California and then founded Mehta &
Isaly
, an investment research group that focused on companies in the pharmaceutical industry. He became a very wealthy man. James and LeAnn Lewis stayed in Kansas City, Missouri, living modestly in a small house on
Troost
Avenue.

On December 4, 1981, the Kansas City police showed up on the Lewises’ doorstep with a search warrant in hand. They were investigating James Lewis and George Rea as suspects in a possible credit card fraud scheme. Rea was a former Sheriff’s deputy who leased office space at the Lewises’ place of business. Rea later admitted to his involvement in the fraud, but Lewis has always maintained that he was not involved. In 1983, prosecutors granted Rea immunity to testify against Lewis, and Lewis was then convicted on six counts of credit card fraud.

While Kansas City authorities were working on getting a warrant to conduct a more thorough search of the Lewises’ Kansas City home
on December 5, 1981
, the couple
packed up their 1969 AMC Rambler and headed north. On December 10
^th
, they checked into the Surf Hotel on Chicago’s North Side. A week later, using the
names Robert and Nancy Richardson,
they moved into a $100-a-month
apartment at 549 West Belden Avenue on Chicago’s North Side.

In January 1982, James took a job with Chicago Tax Service, where he worked for about seven weeks. He then took a temporary job for one week in March as a word-processor operator at the A.G. Becker Investment Company. LeAnn had taken an accounting job at Lakeside Travel Agency in January, but by March 1982, she could see that the agency was in financial trouble. The company had been taken over a year earlier by Frederick Miller McCahey, an heir to the Miller Brewing fortune. LeAnn’s supervisor, Barbara
Vaitkus
, later testified that co-workers gossiped about McCahey having put other enterprises out of business.
Vaitkus
said she discovered evidence that McCahey had diverted company funds to pay his personal bills and was not properly depositing Lakeside’s receipts.

Lakeside Travel went bankrupt in April 1982, so LeAnn was out of a job. In that same month, the First National Bank of Chicago hired James as a temporary employee in its International Department. A senior vice president with First National Bank at that time was Neil Hartigan, who had been the lieutenant governor of Illinois from 1973 to 1977. While Lewis was working at the bank, Hartigan was in the midst of a successful election campaign to replace Tyrone Fahner as Illinois Attorney General.

 
On LeAnn’s last day at Lakeside Travel, she stamped a stack of blank envelopes with postage from a Pitney Bowes meter and a postmark date of April 15, 1982. The following week,
Vaitkus
issued 18 final paychecks that totaled about $8,000, including LeAnn’s check for $511.33. LeAnn cashed that check at a nearby currency exchange. The check ended up bouncing, and the currency exchange then sued LeAnn to recover the funds. All the other final paychecks from Lakeside also bounced.

A majority of the former Lakeside employees filed claims with the Wage Claim Division of the Illinois Department of Labor in an attempt to collect on the dishonored checks. Lewis volunteered his time to work as their advocate. In preparation for the coming wage claim hearing, Lewis gathered as much information as he could on Lakeside Travel. Barbara
Vaitkus
apparently told Lewis that McCahey was diverting company funds to pay personal bills and was not properly depositing receipts. She also gave Lewis one of McCahey’s account numbers, 84-49-597, at the Continental Illinois National Bank in Chicago. McCahey had opened that account on August 24, 1981, and closed it on May 10, 1982.

The wage hearing was held on August 3, 1982. Fredrick McCahey’s lawyer attended the hearing, but McCahey did not. Forty-five minutes after the hearing ended, the arbitrator ruled that because there was no money available to pay a claim, there was nothing he could do about the bounced checks. McCahey’s attorney left the hearing, and shortly thereafter McCahey himself arrived. Jim and LeAnn confronted him, and an argument developed between McCahey and the Lewises. The exchange ended with McCahey apparently threatening LeAnn.

Jim’s temporary job ended in August 1982, and the couple, now both unemployed, decided to move on. They spent a few days planning their next move, putting together a checklist that included such notations as “Look for Belden-type apartment in Manhattan,” “Plan production schedule,” and “Travel strategy for metropolitan area.” On September 3
^rd
, they purchased two one-way tickets for $221 on an Amtrak train to New York City, using the names Karen and William Wagner. On September 6, 1982, they checked into the Hotel Rutledge, a 12-story building on Lexington Avenue at 31
^st
Street in Manhattan, using the same aliases
they had used in Chicago, Robert and Nancy Richardson
. The Hotel Rutledge had opened in 1914 as a hotel for women. In 1982, it was a rundown boarding house. Some called it a fleabag hotel. The Lewises rented a room there for $95 per week.

Shortly after arriving in New York, LeAnn submitted her resume to the Robert Half Account-temps Agency. Abrams,
Benisch
, and Riker, a real estate company at 6 East 43
^rd
Street in Manhattan, soon hired her. Her first day on the new job was September 20, 1982. Every day, without fail, Jim walked to the real estate firm to meet LeAnn for lunch and again at the end of the workday to escort her home.

On Thursday, September 30
^th
, the nation learned about the Tylenol poisonings, and Lewis hatched a plan to draw attention to LeAnn’s former boss, Frederick Miller McCahey. One afternoon in early October, while LeAnn was at work, Jim wrote the Tylenol extortion letter demanding that J&J deposit $1 million into McCahey’s closed bank account at the Continental Bank. Court documents show that Lewis said his intent was “not to extort money, but to cause grief to [McCahey], to blow the whistle on him, and to spur a thorough and exhaustive investigation of his finances and fraudulent business dealings.”

Lewis wanted the extortion letter to appear authentic and threatening, but he could not bring himself to actually state that he had poisoned the Tylenol capsules. Nowhere in the letter did he include the word “Tylenol,” although he did write it on the envelope. The letter offered to stop the killings, but nowhere did it threaten to kill anyone or state that its author had killed anyone. However, Lewis concedes, “The double entendre does invite a lot of reading between the lines.” He mailed the letter to Johnson & Johnson in one of the envelopes postmarked April 15, 1982 that LeAnn had taken from Lakeside Travel the day before that firm went belly-up.

On October 6, 1982, the Director of Security at Johnson & Johnson distributed Lewis’s handwritten extortion note to the company’s Executive Committee. The extortion note read:

Gentlemen:

As you can see, it is easy to place cyanide (both potassium and sodium) into capsules sitting on store shelves. And since the cyanide is inside the gelatin, it is easy to get buyers to swallow the bitter pill. Another beauty is that cyanide operates quickly. It takes so very little. And there will be no time to take counter measures. If you don’t mind the publicity of these little capsules, then do nothing. So far, I have spent less than fifty dollars. And it takes me less than 10 minutes per bottle. If you want to stop the killing then wire $1 million to bank account 84-49-597 at Continental Illinois Bank, Chicago, Illinois. Don’t attempt to involve the FBI or local Chicago authorities with this letter. A couple of phone calls by me will undo anything you can possibly do.

It was immediately apparent that the authorities did not believe the extortion letter was relevant to the actual Tylenol poisonings. “It’s a long shot that this is the work of anything other than a kook,” said a law enforcement source in Washington who refused to be identified by name or department. “The killings were a very subtle and secretive crime, and it’s doubtful that would be topped off with the flagrant ignorance of [delivering] a payoff scheme with the identity attached to it,” the source added. “Our guess is it’s totally unrelated to whoever did the poisoning. These tag-a-longs happen all the time.”

Attorney General Tyrone Fahner downplayed the importance of the Tylenol extortion letter, saying, “It will not be relevant in solving the cyanide murders. It is a whole side issue ...a hoax.” Fahner said the disclosure of the letter was unfortunate because it sidetracked the investigators. He criticized local newspaper accounts of the extortion letter as being “based on more than the facts.” The extortion letter is not “relevant” to the hunt for the person who spiked the capsules with cyanide. “My suggestion to you [reporters],” said Fahner, “is the note received by Johnson & Johnson, and the Continental Bank records is leading to something else than solving [the poisonings].”

Lewis never intended to collect the $1 million dollars that the letter demanded. “The bank account that was named in it, I had no access to,” Lewis said later. “It was a closed bank account. I had no way of getting anything out of it - anymore than you do or anyone else,” he explained.

Lewis sent a letter to
The Chicago Tribune
in November 1982, charging McCahey with shady business practices. Lewis later said that the reason he wrote the extortion letter was to try to get attention focused on the soon-to-be insolvent Continental Illinois Bank. “If [the FBI] would have examined that bank account - if they would have pursued that - they would have found the fact that Continental was being raided,” Lewis said in 1992. “If I had been listened to, we may very well have not seen the savings and loan debacle.”

Regardless of whether Lewis’s overriding objective was to trigger an investigation of McCahey or expose extensive fraud at Continental Bank, there is no question that by 1982 massive fraud had been going on at the Continental Bank for the better part of a decade. In the mid-1970s, the management at Continental Bank had implemented a growth strategy focused on commercial lending, explicitly setting out to become one of the nation’s largest commercial lenders. By 1981, Continental Bank was the largest commercial and industrial lender in the United States. But late in 1981, problems related to the banks weakening balance sheet began to surface. The bank’s second quarter earnings fell 12 percent - a drop that CEO Roger Anderson explained was largely the result of backing interest rates the wrong way. Continental had bet that the rates would go down - instead, they went much higher as inflation heated up. The true problem, however, lay in the Bank’s risky lending practices. Several big loans, like the $200 million loan Continental gave to the near-bankrupt International Harvester company, headquartered in Melrose Park, Illinois, were causing an ever-weakening balance sheet at the bank.

In July 1982, Penn Square Bank in Oklahoma failed. Penn Square had generated billions of dollars in extremely speculative oil and gas exploration loans, many of which were nearly worthless, and Continental had purchased a monumental $1 billion in participations from Penn Square before the bank’s bad loans went south. Continental’s lending involvement with three of the largest corporate bankruptcies in 1982 helped turn the perceptions of the bank increasingly negative. Such perceptions were reinforced by the advent of the less-developed-country (LDC) debt crisis brought on by Mexico’s default in August of 1982. Continental had significant LDC exposure. Indeed, David Collins, the newly appointed McNeil chairman and J&J group company chairman,
  
had been dealing with this very same issue with J&J’s Mexican operating companies on September 30, 1982, when he learned about the Tylenol poisonings in Chicago.

In the spring of 1984, the situation at Continental rapidly deteriorated, and bank regulators worried that the crisis at Continental might envelop the entire banking system. In July 1984, the FDIC bailed out Continental by purchasing $4.5 billion in bad loans from the bank. It was the largest bank resolution in U.S. history, the genesis of today’s often quoted term “too big to fail,” and the beginning of the Federal Reserve’s policy of bailing out large banks when they become insolvent through fraudulent lending practices.

One of the Continental Bank directors who had fostered the bank’s irresponsible business practices was Paul J. Rizzo, the vice-chairman of IBM. Johnson & Johnson appointed Rizzo to its Board of Directors in October 1982. Rizzo was one of nine Continental Bank directors who the Federal Deposit Insurance Corporation (FDIC) fired in 1984 for sanctioning the reckless loans made in the 1970s that led to the Bank’s near collapse. Rizzo remained on Johnson & Johnson’s Board of Directors until 2007.

*****

David Collins described the dialogue between J&J executives after they received Lewis’s extortion letter. “Imagine our reaction,” said Collins. “We get this note that says send $1 million to a bank account number at Continental Bank in Illinois. We had to laugh. This guy’s
gotta
be an idiot. We’re still not convinced he did it.”

But that’s not what J&J’s “Tylenol Strategy Committee” said in the documents submitted into evidence in Lewis’s extortion trial in 1983. According to those court documents, J&J’s Tylenol Strategy Committee was concerned that the extortion letter was authentic, that it had been written by the person who had initially placed the cyanide in the Tylenol capsules, and that that person stood ready to do it again, unless his demands were met. This assertion conflicts completely with Collins’s characterization of the reaction of J&J executives to the extortion letter, of which Collins said, “We had to laugh. This guy’s
gotta
be an idiot.”