That statement by Robert Lester was indeed the truth. Leo had arrived in Hawaii with a scheme to get in with the Paymaster section and siphon off funds that way; however, the Army had transitioned that section out of the Quartermaster Corps in 1920 before he could get assigned to work there. That had only stopped him temporarily, as he had quickly figured out that although there was a huge amount of paperwork associated with Army supplies there was not much accountability. Records were easily falsified and then just as easily lost within the myriad pathways that the paperwork was passed along within the Quartermaster Corps. He had tested this idea, taking ten Model 1901 .38 caliber revolvers back to his barracks room one day, wrapping them up in a blanket and stashing them in a trunk. He waited, wondering how long it would take before someone at least asked a question about them, but no one ever did. In fact, his section had been inspected three days later and the missing revolvers were not noticed at all. His falsified paperwork indicating they were sent to a specific field unit was not questioned or verified and he had received a meritorious day of leave as a reward for the good inspection.
A few more tests, including one that involved a Liberty truck, all proved successful, and Leo had been doing small deals on the side ever since then. His problem, as Robert had pointed out, was that he was not doing very well, mostly because Leo lacked the connections out on the island.
That changed with their new criminal partnership and they began a brisk business of diverting supplies out of the Quartermaster Corps and onto trucks driven by Robert and a few of his hand-picked drivers. These men, mostly new to the unit, never really understood that they were involved in a criminal enterprise and none of them were charged when the whole thing came to an end one day. Surprisingly perhaps, that did not happen while Leo was still in the Army. He was discharged in late 1920, his service over although his partnership with Lester was still intact. Leo had contemplated staying in so that he could continue to provide supplies for their scheme, but then had decided he could make an even bigger impact if he was working on the outside. Recruiting another man with a criminal bent to take his insider position, Leo mustered out and formed the Kilauea Mercantile Company. He rented a small building out in Hilo and even paid for a new sign to be painted for the front.
The idea for this new iteration of their enterprise has come from Leo. Although they had not been caught so far, there had been a few awkward moments when an especially observant fellow soldier or officer had asked about where certain items had been shipped. After a few instances like this, Leo realized that the issue really was that there was no official requisition form that indicated a request for particular items. In other words, why did these fifty bandoliers leave the warehouse if no one ever asked for them to be sent anywhere? No one ever seemed to question where they were going or why, there just needed to be a requisition form that made sense on the surface. Leo solved this problem by forming his company, whose abbreviation KMC mirrored that of the shorthand unit designation for the Kilauea Military Camp which was also located in Hilo. This allowed their new inside person to fill out requisitions to KMC and the supplies could even be loaded onto trucks going to Hilo and dropped off at Leo’s shop there. It was an elegant solution and business was going at a brisk pace in early 1921.
Then one day in June of that year, a man stating that he was a city official from Hilo came into the small office that Leo kept at the front of his KMC building in Hilo. This official, a small, compact native named Akamai, stated that he was checking into a report that military supplies were being sold out of Leo’s business. This man, who was actually a police officer with the territory, had an informant who was involved in the transfer of the goods from KMC to ships at the docks. Akamai did not tell Leo that, stating instead that he was just doing a check to ensure that everything was on the “up and up,” as the city did not want any hassle with the Army. Leo, his voice just a little squeaky and nervous sounding, assured him that it was and that he even had the records to prove it. That statement proved to be a mistake, as Akamai asked to see those files. Leo stammered a few times and then stated they were at another location. In his most reasonable voice, Akamai then asked if Leo could bring them down to his office the next morning just so he could verify them, and he received a promise to do so in reply.
Once Akamai left his office, the remainder of the day had been a whirlwind of anxiety for both of the men involved in the scheme. They knew that the fake requisitions were not going to hold up under scrutiny, as the actual KMC military unit could easily be contacted to check on receipt of the supplies. Instead, Leo and Robert had spent the entire night writing up and back-dating transfer orders from the base to Kilauea Mercantile Company and forging the signatures of several of the fort’s quartermaster officers onto those forms as authorization. Those authorization signatures were required whenever military supplies were transferred to a civilian company, so falsifying the documents was the only way to make the whole thing look legitimate. Exhausted by the whole ordeal, Leo had drank a last cup of coffee in his office and then walked down to the small city office building looking pale and tired. After a brief review of the documents by Akamai, two of the quartermaster officers whose signatures had been forged stepped out from behind the door of a small closet, which spelled the end for Leo. He did stick to the criminal code, refusing to give any answers to questions after Akamai arrested him, but the military police took care of Robert Lester that same day. Leo was a civilian and as such faced prosecution by the territory of Hawaii. His initial arrest records indicate a charge of embezzlement; however, it was for forgery that he was actually convicted. After a very short stint in a local Hawaii jail, Leo Humbert was transferred to Alcatraz.