on which I wish I might examine."

"Is this the one you mean?" the officer asked. The envelope he
indicated had been taken from Hoges when he was searched a few minutes
before.

"I think it is."

The policeman handed Penny the letter and he quickly examined it.

"This is the right one," she said in relief. "And it exonerates Amy
Coulter of any wrong doing."

The brief message read:

"Mr. Hoges: I shall be unable to accept the work which you offered me.
I am returning the money paid me as an advance fee."

Penny was jubilant at the way matters had ended. She had many
questions to ask Cron and Max Lynch but she decided to postpone them,
realizing that the men were not likely to reveal anything which could
be used as evidence against them.

As the four crooks were led away, the captain waited to compliment
Penny for her valuable assistance.

"Tell me, young lady," he commanded admiringly, "how did you know Mrs.
Dillon's pearls were hidden inside that clay figure?"

"I wasn't absolutely certain," Penny admitted. "But a number of things
made me suspicious. First, I recalled that the man who snatched the
necklace from Mrs. Dillon ran into this studio."

"Could you identify that man?"

"I think you already have him under arrest. I don't know his name, but
I feel certain he is the same person now that I have viewed him
closely."

"He ran into this studio you say?"

"Yes, and when I entered I found Hanley Cron modeling the Black Imp.
The possibility did not occur to me at the time, but now I know he must
have received the pearls from the actual thief, and molded them into
the wet clay."

"A very clever scheme."

"Yes, and it would have succeeded, save for one thing. Cron copied the
statue of Amy Coulter's Black Imp. We thought he intended to put it to
some commercial use, and took it from him."

"He permitted you to take it away?" the officer asked in surprise.

"It happened that a policeman came into the studio. I think he must
have been afraid to make a fuss."

"Undoubtedly. Then what happened?"

"I took the statue to my father's office. Max Lynch came to talk with
Dad and saw it. He hurried out of the office as if he had seen a
ghost."

"Of course he knew the pearls were hidden inside the statue," the
officer smiled. "He probably thought Mr. Nichols had discovered them
and suspected the plot."

"That's the way I figured it out," Penny nodded.

"Our house was watched. Then one day