On the day he decided to drop off the face of the Earth, Hamilton Schmidt was tormented -- by both the embarrassment the impending collapse of his company would bring and the feeling that he had been betrayed.
His nightmare had intensified with each day for months, though there was no public display of the pressure he was under.
But two letters he sent on the very day he vanished -- Tuesday, Sept. 14 -- reveal a man who no longer could maintain his walk on the tightwire.
"I feel my mental and physical health is in jeopardy," Mr. Schmidt wrote in a one-page letter to his company, the Charter Group Inc. "I have lost my desire and drive to lead. . . ."
In a second letter mailed that day to his sister, Susan Schmidt, Mr. Schmidt confided that he was anxious about problems in his life and needed to get away. But troubled as he was, Mr. Schmidt's thoughts also turned to the company-sponsored softball team.
The team had been a source of pleasure -- perhaps the only one -- in Mr. Schmidt's life for several months as he alone knew that his company, one of the region's largest independent insurance agencies, was sinking deeper and deeper into a financial abyss.
Surely, friends and associates say now, Mr. Schmidt, the 38-year-old chief executive, realized that his most secret plan would unleash investigations, a manhunt for himself, and considerable worry for the financial security of his workers and clients.
Still, in his Sept. 14 note to his sister, he asked her to wish the softball team well in a tournament in Pennsylvania that weekend.
"Softball was his No. 1 love," says John C. Kidd Jr., a former Charter Group salesman and vice president who worked with Mr. Schmidt from 1984 to 1991. "If he had run the company as well as his softball team, Charter would have been a totally different organization."
Indeed, the investigation into Mr. Schmidt's mysterious disappearance unmasked the perilous financial condition of the Towson-based insurance agency and caused consequences unimaginable six weeks ago.
Both the state attorney general's office and the Maryland Insurance Administration are poring over the company's books, Charter's insurance business was sold, the firm filed for bankruptcy protection and the employee pension fund is in jeopardy. Meanwhile, Charter is seeking nearly $1 million from Mr. Schmidt and wants court permission to question his sister and his mother.
At the heart of the mystery is why Mr. Schmidt, who in nearly two decades as an executive had earned a reputation for integrity, fled without a trace and left his company in shambles. "I don't know if there are words to describe my feelings -- surprise is not adequate," says Donald Reinhart, Charter's former chairman and chief executive. "After 18 years of knowing and working with him, I had no reason ever to question his ethics or his morality."
Hamilton August Schmidt hasn't been seen since 12:45 p.m. on Sept. 14, when an employee of Chesapeake Cadillac-Jaguar dropped him off at Pennsylvania Station. He had hitched the ride after dropping off his 1992 Cadillac DeVille for repairs to a power window.
The employee, Gregory Winebrenner, presumed that Mr. Schmidt would catch Amtrak, but did not actually see him board a train.
The last time his employees saw him was two weeks before that, on Sept. 1. Mr. Schmidt had phoned the office after that, saying he was taking some time off to prepare for a crucial business meeting with the company's chief creditor on Sept. 16 in Hartford, Conn.
Employees were not surprised. Mr. Schmidt frequently gave short notice when he would not come into the office -- most often complaining of feeling ill, causing many to describe him as a hypochondriac.
But when Mr. Schmidt missed the Sept. 16 business meeting, people became concerned and began asking questions about what was going on at Charter Group.
That meeting had been demanded by ITT Hartford Insurance Group, which had financed Charter's employee stock ownership plan, but had become increasingly alarmed after Charter was nearly two months late in making the quarterly payment on its $3.6 million loan.
Tom Creager, general manager of ITT Hartford's Baltimore regional office, was in Hawaii at the time. He received an urgent call from ITT Hartford's corporate headquarters at 2 in the morning. The message, he recalls, was that Mr. Schmidt has failed to show up and that the early indications are "we have a problem."
After Charter was informed, it held an emergency meeting on Saturday, Sept. 18, attended by members of the board of directors, company lawyers and its outside auditors, Wolpoff & Co. Working long hours over the next week, the auditors discovered that Charter Group had lost more than $600,000 in the first nine months of the 1993 fiscal year. Only Mr. Schmidt had known the severity of the financial troubles.
"Rather than come clean, Hamilton Schmidt . . . gave false financial reports," says James A. Vidmar Jr., Charter's bankruptcy lawyer.
The fall of Charter was more than Mr. Schmidt could bear or acknowledge to others.
Mr. Schmidt grew up in Baltimore County, graduating from Perry Hall High School, where he was class treasurer of the 10th grade. He graduated from Loyola College in 1976 with a degree in accounting and joined Charter, where he quickly became a rising star, impressing his bosses with his knack for selling insurance policies.
"He was a bright young man, very enthusiastic . . . who just wanted to learn," recalls Dennis Doyle, who worked at Charter from 1974 to 1990, the last seven years as president. "He was growing, and the company was growing. . . . It was a great opportunity which he took advantage of."
By 1990, Mr. Schmidt had become chairman, chief executive, president and controlling shareholder of Charter, which had emerged as one of the 100 largest independent insurance agencies in the United States.
In some ways, Mr. Schmidt had a modest lifestyle. He was divorced in 1983, and, at the time of his disappearance, he was living with his sister in a $139,000 two-story brick home on Forest Valley Road in the Parkville area, not far from where he grew up and attended high school.
But Mr. Schmidt, associates say, enjoyed the power and perks of his position as he rose through the company. He bought Arabian and thoroughbred horses, drove a Jaguar, then a Cadillac, and wore tailored suits. Once he popped a button on his shirt and immediately told a colleague that he had to go home to change.
Liked control of workers
At the office, Mr. Schmidt demanded complete control over workers.
A former Charter executive recalls an especially telling exchange with Mr. Schmidt. "He once said to me, 'I look at people like horses, and I want to put reins in their mouths so I can control them,' " the executive said. "Then Hamilton made a gesture of pulling on the reins."
If Mr. Schmidt had problems as a manager at work, another group of people saw a totally different side.
He developed a passion for softball and had Charter sponsor an adult slow-pitch team, recruiting some of the best players in Baltimore County.
The team, wearing light-gray uniforms with navy blue stripes and letters, won state championships in 1992 and 1993, and trophies of its success were collected in Mr. Schmidt's office.
"He had a heart of gold," says Brian Horn, a pitcher on the Charter Group team. "He would do anything for anybody."
The company now says he may have done too much.
It contends that Mr. Schmidt spent $45,000 in Charter money this year on travel, lodging and entertainment for the team -- including a trip to Disney World for the players and their families. And, in early October, two weeks after Mr. Schmidt disappeared, a courier showed up at Charter's headquarters with a $5,000 bill for balls and bats, recalls Mr. Vidmar, the bankruptcy lawyer.
But for Mr. Schmidt, softball was more than a game. "He felt it would be therapeutic for him," says Mark Schlenoff, Baltimore County director of the National Softball Association. "It gave him a real good respite from the rigors of the business community."
What Mr. Schlenoff and others didn't know was that Hamilton Schmidt faced more than the routine rigors of business.
Charter Group's problems were increasing. In the past two years, half a dozen top sales people -- the backbone of the company -- left. By this spring, the work force had dropped to 45, from more than 100 four years ago. It lost key clients, and revenue was falling sharply.
In effect, Charter was running out of cash to pay its bills. And, as chairman and chief executive, Hamilton Schmidt would have to answer for the financial problems.
As an independent insurance agency, Charter wrote policies for other insurance firms, such as The Travelers Companies, ITT Hartford and CNA Insurance. Charter received a commission but was required to send the balance of the money it collected to the insurance companies.
But as things grew more desperate, Mr. Schmidt began using the premiums to pay Charter's day-to-day operating expenses. He even borrowed $55,000 from an ex-girlfriend, telling her that he needed the money for his company.
Last week in U.S. Bankruptcy Court in Baltimore, Charter said that Mr. Schmidt "engaged in questionable financial dealings involving Charter Group's assets," including borrowing $110,000 in cash from the employee stock ownership plan in September 1992 and paying the plan back with almost worthless company-issued stock. It also contends that he owes $649,290 that he borrowed to buy stock in the company.
Mr. Schmidt kept the company's deterioration to himself. But he also felt betrayed. "I am sorry for the good people I leave behind who were loyal," he wrote in his Sept. 14 letter to Charter. "But the people who have taken from this agency, whether it be accounts or full paychecks for half jobs done, are too many."
The company's problems weighed heavily, although he kept up the appearance that all was well. "I have tried to carry the financial burdens on my back for several years but the enormous rent and debt service. . . . was too much," he wrote.
In August, Mr. Schmidt confided to one Charter executive that he was considering resigning. Mr. Schmidt told the executive, however, that he would need to leave town because he would be unable to bear the public failure.
The pressures mounted as a group of former workers pressed him about the health of the employee stock-ownership plan.
The final straw came after Charter was nearly two months late on its June 30th quarterly loan payment to ITT Hartford, which prompted him to be summoned to the Sept. 16 meeting in Connecticut.
Just before his disappearance, Mr. Schmidt made three withdrawals of $300 each from his bank account. The last was made at 8:58 a.m. on Sept. 13 at the Household Bank on Belair Road in Perry Hall.
The next day, at 1:45 p.m., service adviser Mr. Winebrenner dropped Mr. Schmidt off at the train station.
"He didn't seem nervous," recalls Mr. Winebrenner, who assumed that Mr. Schmidt would pick up his Cadillac the following day.
But Mr. Schmidt knew he would not be returning. He mailed one letter to his sister, the other to his company, saying that he was resigning, effective immediately. That letter, however, was not read until about a week later.
pTC "I don't think his personality allows him to admit defeat," said Patrick Murphy, who worked at Charter for 21 years until he resigned in February. "I don't think he would ever admit that he lost the company. That's a big game."
LETTER FROM HAMILTON SCHMIDT
On Sept. 14, Hamilton Schmidt sent a handwritten resignation letter to his company. The text:
I regret to inform the Board of Directors, officers and employees of Charter Group that I am resigning as Chairman, CEO and President effective immediately.
After investing almost 4 years of my life as CEO and a total of almost 20 years at Charter I feel my mental and physical health is in jeopardy. I have lost my desire and drive to lead which is my strength. I have tried to carry the financial burdens on my back for several years but the enormous rent and debt service, which included the Thompson and Jones purchase, that the company was left with was too much.
I am sorry for the good people I leave behind who were loyal. But the people who have taken from this agency whether it be accounts or full paychecks for half jobs done are too many.
I leave the remaining shares of my stock, after selling shares to the ESOP in 1990, 1991 and 1992 when the company could not afford to pay me my total compensation, to the company for repayment of the stock loan.
I am sorry this is written by hand but I had no one to type it.