In perhaps the largest and best-known political and financial scandal in Nevada history—State Treasurer Ed Malley and State Controller George Cole embezzled $516,322.16 from the state treasury in the 1920s. With the assistance of a cashier of the Carson Valley Bank, the two began to divert state funds for their own benefit in 1919. With this money, they invested in Tonopah mining stocks and Signal Hill Oil Company. The oil wells came up dry, so the money was lost.

Malley and Cole were elected to their state posts in 1914 and reelected in 1918. The two Democrats were longstanding political figures from Nye County, the political base of many politicians during the early 1900s. Malley was the Tonopah Chief of Police and constable before he was elected Nye County sheriff and assessor in 1910. Cole was elected to the state assembly from Nye County in 1904 and 1912.

The two were closely tied to George Wingfield, who served as their bondsman (guaranteeing their salaries and good behavior) and owned the Carson Valley Bank. The bank cashier who was their accomplice, H.C. Clapp, confessed and pled guilty when the crime came to light. He served time in the state prison.

Cole was defeated for reelection in 1926. Malley was reelected, and then disqualified when his bond was revoked in May 1927. In August 1927, Malley and Cole were tried and found guilty after only three hours of jury deliberation. Pat McCarran, later U.S. Senator and longtime Wingfield critic, unsuccessfully defended them. McCarran was also Nevada Signal Hill Oil Company's attorney.

As bondsman, Wingfield paid the state only $154,896.65—only part of the money embezzled. Governor Fred Balzar called a special session of the state legislature to impose a ten-year property tax to cover the balance of the stolen money.

Malley was a colorful political figure. While campaigning for reelection as sheriff in 1912, he was accidentally shot in the right arm when a shotgun got tangled in some overcoats in the car in which he was traveling and accidentally discharged. The arm was amputated.

Malley and Cole served four years in state prison. They were paroled in 1931 and later pardoned in 1935.