Interstate Hosiery Mills was started in 1932 by two brothers, Harold and Lawrence Greenwald. In a legal settlement, they received an unlimited license to produce a patented pointed toe stocking in a patent held by a company, Gotham Gold Toe Hosiery. Gotham marketed their product with a gold threaded toe so Interstate used a coral band around the top of the stocking. Interstate grew to be the largest hosiery finisher in the United States until the accounting discrepancy was uncovered in 1937.
The company operated until 1954 at which time Harold retired and Lawrence brokered an employment agreement with the purchaser of the assets, Burlington Industries. Lawrence went on to be president of Burlington's division, Patentex, and later founder and chairman of Hurst Performance Products, Inc., the company which invented the jaws of life, a patent which they gave to the public domain at no cost.
Interstate Hosiery Mills was a company involved in a case of
fraud
In law, fraud is intentional deception to secure unfair or unlawful gain, or to deprive a victim of a legal right. Fraud can violate civil law (e.g., a fraud victim may sue the fraud perpetrator to avoid the fraud or recover monetary compens ...
ulent
stock manipulation
In economics and finance, market manipulation is a type of market abuse where there is a deliberate attempt to interfere with the free and fair operation of the market; the most blatant of cases involve creating false or misleading appearances ...
in the 1930s. Raymond Marien was an accountant for Homes & Davis in charge of the accounting of Interstate Hosiery. He
inflated assets by $1.9 million, about 40% of the book value. He was exonerated for financial gain but was convicted of a minor check-cashing
forgery
Forgery is a white-collar crime that generally refers to the false making or material alteration of a legal instrument with the specific intent to defraud anyone (other than themself). Tampering with a certain legal instrument may be forbidd ...
.
The resulting scandal, among others, led to reform of
accounting
Accounting, also known as accountancy, is the measurement, processing, and communication of financial and non financial information about economic entities such as businesses and corporations. Accounting, which has been called the "languag ...
standards and increased SEC oversight.
References
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External links
The mill in Bloomfield, NJ.
Financial scandals