"George, that doesn't make sense."
"But it does. Look at it this way. Say that Percival has a hundred dollars in his own account. He transfers fifty dollars from this account to another account in his own name in another bank. The computer in Percy's bank obediently sends the fifty dollars to the second bank. The next step was Percival's Stroke of Genius. He programmed his own bank's computer to 'forget' to deduct that fifty dollars from his original account. Since the computer conveniently `forgets' that Percy even sent the funds, Percy is left with his original hundred dollars still intact, plus fifty more in his second account in the other bank."
George took a quick swallow of the Coke.
"Now you have to realize that this actually happened only to a few out of all the bank's fund transfers. Percy was smart enough to realize that the gimmicked trans-actions could just be a small percentage of the total number of transactions that the computer handled."
"But how did they balance the books?" Mary was a great believer in balance.
"That was the beauty of it. Since Percy programmed the computer to `forget' the gimmicked deals, the magnetic transfer slips covering those deals were never printed out. That meant that the printed records of the bank agreed with the computer records. According to both the printed and the computer records, the money never left Percival's bank."
"Now, wait a second, George. You mean that Percival just sneaked down into the computer room one night and told the machine to do all this?" Mary shared a certain awe of computers with the rest of the world.
"No, he had an accomplice, the head programmer. There were actually three separate accounts that had this special programming. The gimmicked transfers were from Percy's personal account, the programmer's personal account, and one of the bank's investment accounts."
George took a deep breath, tilted the plastic cup back to catch an elusive ice cube, and crunched the ice into satisfying fragments. "You see, Percy had created a separate portfolio for investments which only he managed. No one would notice the discrepancies but a portfolio manager, and Percy was the manager. By doing this he hoped to increase the bank's assets gradually, but dramatically, and thus boost his banking career."
Mary was beginning to look dazed.
"Now Percival was pretty smart. He had accounts in several other banks, and by shuffling funds between his own accounts he managed to create quite an increase in his personal fortune. Because banking is so anonymous today, he got away with it.
"If he'd really been an idealist, I never could have caught him. The business with the investment account was set up beautifully. A certain percentage of fund transfers failed to be deducted. Period. Yet, according to the books of other banks, everyone got the money. Basically, Percival had the philosopher's stone."
George swigged his Coke contentedly.
"But how did you find him out, considering the number of banks and bankers?"
"I just hooked into the IRS Data Link with a requirement to see the dossiers on any bankers whose assets had recently shown a marked increase. Percival knew that he had to pay taxes, since his additional savings would automatically be reported by the member bank computers. He knew that the IRS computer is pretty dumb. All it cares about is whether your taxes agree with your income. Unless you get an executive order, you can't pull a search like I did. He would have been safe, except…"
"Except what, George?"
"That the bureaucracy is so settled that the tiniest bit of inflation is more important than the biggest bank swindle in history."
George thought of James Boulin Chartwell, III, and his One Hundred Percent Pure mineral water and The Great American Economy. "What will happen to Percy?"
"I doubt if anything serious will. They may even have trouble getting the money he made by the system back. Legally, it doesn't qualify as counterfeiting, as no actual currency was involved. The bank laws refer to falsifying written books, and he never really laid a hand on anything, except a computer program, and currently, there's no law against, that. It wasn't tax evasion. He didn't steal or embezzle anyone's funds, because the funds he got didn't exist before he created them. It wasn't fraud since no one else can prove that they were defrauded of anything. All he really did was create excess credit. Most people want credit for doing as little as possible. He went a step further. He got credit for nothing."