The Express.
London, England, 1864-12-12 00:00:00

THE UNITY BANK FRAUDS.

The case in which Joseph Wakefield Tem and
Thomas Burch, the manager and secretary to the labs Unity
Bank, are charged with having knowingly prepared and
published a false statement of the affairs of the Unity Joint
Stock Bank, with intent to defraud the members and share-
holders of that bank, was resumed at the Mansion-house
cc Saturday, before the Lord Mayor. The defendants sur-
rendered to their bail, and were accompanied by Detective
Sergeants Moss and Webb, by whom they were appro.
heeded.

Mr. Lewis, jun., again appeared to prosecute on the part
of the committee of liquidators of the Unity Bank. Mr.
Sleigh, instructed by Mr. Watson, of Cannomstreet, ap-
peared for Teny ; and Mr. Metcalfe, instructed by Mr.
Wontner, jun., appeared for Burch. Mr. Humphreys ap-
peared on the part of the directors, who bad been sub-
perused to give any information and assistance that might
be required.
The first witness called was Julius Loweethall, who said
be was in no business at present, and lived at No. 15, Bishops.
gate-street Be was formerly a customer at the Unity
Bank, and in 1860 and 1861 hie drafts on that bank were
returned dishonoured. In 1861 an arrangement was made
between him and Mr. Terry with reference to those drafts.
The amount of his liabilities to the bank was from 6,000/.
to 7,0001., which included onntiogent liabilities. The
arrangement made was that the amount of the dishonoured
bills should beset aside, and that be should continue to pay
10 per cent. on them, and that the bills should be renewed.
Half of the 10 per cent, was to go to the reduction of the
principal, and that any other bills that the tank discounted
should pay the same rote, and be dealt with in the same
way. He told Mr. Terry that if he were pressed be should
be obliged to stop. Ile was able to procure renewals from
the acceptors who were bad only for • short time. Mr.
Terry told him be must have the amount represented, merely
for regularity's sake, and that wit, ess must draw on some-
body else, and that the bills would be readily discounted ;
it did not matter who it was so that it had his name to it.
Be told Terry bridal not know anyone whom he could draw
upon, but he would ask Mr. 'rotundas, who was not in busi-
ness &taut time, and who might do so, as he wee under some
obligation to bin, ; but he told Terry it was only to repre-
sent the amount, and for no other purpose. Nothing was
said about humid's position. Mr. Terry knew hoosides'
position. He and Mr. Terry had bad conversations in re.
'pea to it, and it was understood that Mr. homelike was not
to be considered liable. 'roulades at that time wee worth
nothing. He got rousides' acceptances for about 5,0001.,
which represented the amount of dishonoured bills, and the
bills were sent to the bank, and witness received
back the old bills. He reduced his account by
the ten per cent. about 1,0001. When in the Unity
Bank went over to the London and Middlesex, be bad
• discount account with the latter bank. They closed
year after, and he owed them about 4,0001. It was not the
same debt transferred. He believed after be began to dis-
count at the London and Middlesex he reduced his debt to
the Unity about SUIN. He paid the money to Mr. Terry.
He bad not yet paid soy dividend. He was making a pre-
paid of Bd. or 9d. in the pound. He had been bankrupt
since October. The Unity Bank had received de. in the
pound before be was bankrupt
By Mr. Sleigh—At the time he paid in the first bills be
was in a genuine way of business, and the bills were bills he
himself received from his customers. About 7,0001. was
running, ludo( that :0100/., or about, was paid. If be bad
been premed at that time he must have stopped immediately,
sod he could not have made any better arrangement for the
bank. He thought it was better for the bank that he should
go on instead of stopping. The dividends paid by the ac-
ceptors with his dividend amounted to more than 1,700/.
The dividend of de. amounted to 700/.

By Mr. Lewis—The 3s. in the pound ems paid to the
liquidators. He considered the bank had received more by
the mrsopment than if he had stopped. The Unity liqui-
dators did not make him bankrupt.

Mr. Aldennau Mechi was then o•Iled into the witness-
box, and said his name was John Joseph Mechi. In the year
1856 he was the chairman of the Unity Bank. He was
governor, and the name was changed to chairman. The
Ant two ye..is he received 500!. a year as governor. He
•ever received anything as director while he was governor.
He thought he received something u director since that !
time, but be could not say positively what it was. The
two defendants were engaged, he thought, at the commence-
ment of the bank. Burch was cashier. Mr. George Cham-
bers was at that time manager to the bank. Testimonials
of the very hightat character were received, and from
the first the Letitia of the board towards the defendants
was one of great emu:deuce. Mr. Terry had been seventeen
years in Jones Loyd's, and Burch for twelve years in the Lon-
don and Westminster. Mr. Chambers retired in
August, 18n, and be (Mr. Alderman Mechi) re-
commended Terry to the directors as • manager, be-
cause he thowlit he was a proper man. and he had
great faith in his abilities, and he was appointed manager.
Mr. Chambers had been 2.14 years with Barnett, Hoare, and
Co. At that time the hulk certainly could not pay 20a.
and return the whole of the capital, because it was lost,
of which the shareholders were perfectly aware. When it
war found that losses were made that the directors were not
aware off a meetirg wan called to investigate tbo affairs, and
the result was the displacement of Mr. Chambers as an
inefficient manager. The bank could pay its deposits, and
was solvent as recorded its depositor..
Mr. Lewis—And was it solvent as regarded its pro-
prietary
Mr. Alderman Mechi considered it the bank could pay its
depositors it was solvent.. . . . . . .

Lewis asked him whether he knew a bank that did
not pay its depositors?
Mr. Alderinsu Mechi said he knew of several. The Royal
British did not. (Laughter.) When Mr. Terry was
appointed tbere were rules made for the management of
the banks, and entered in the minute book. In December.
1860, a SOLI of 38.000/. was written off as totally lost, after
taking coulisti's opinion whether it could be properly does,
together with the opinion and consent of the shareholders.
Nothing was ever coucealed from or misrepresented to
the shareholders by the directors. The writing off of the
sum waa approved of and confirmed at a general meeting,
and the report of the meeting and what had been done
was taken deem by a shorthand writer and sent to all the
shareholders, so that those Dot present might have an
opportunity of knowing what bad been doge. The next
balance4beet was tilted the 29th of June, 1861,which showed
• profit of 4,0:166. 2s. Id., and it was proposed to pay a
dividend of 12a. 61. per share, and the balance to be
carried over to the neat half year.
Mr. Lewis .irked what means were taken to know that
profit was real:y made ?
Mr. Alderumo Mechi said it was the duty of the manager
and secretary to make a true report, aa they were directed,
of the valtuttioo of every ssut, without colouring or rnie-
representation, and the directors believed that was done
when Diet tialancc-slieet was presented. The directors in-
structed the Mei...lanes to lay before the auditors, who
were appointed by the shareholders, the bills and accounts,
and all they ought to see, and keep nothing back, and they
thought their orders were implicitly obeyed.
Mr. Lewis— Did you take any means of obtaining the list
of past doe bills sod debts to the bank?

Alderni,a Meti said there was a book containing the
amounts, but that was left entirely to the manager. Phe
directors knew nothing of nine-tenths of their customers
persooally, and therefore had to trust entirely to the manager
and eecretar7 :is to the means of their customers. The ba-
lance-sheet giveu tothe directors as a true transcript of
the state of lb., atria*. The regular amounts and various
subjects were Liiil h,fore the directors every week, hut they
had no books !Aid before them to test the truth of the
belaoos•eheet. It was the duty of the manager to me the
accounts were correct. They took no other means to test
the truth of the 'Alsace-sheets beyond referring them to the
auditors. The directors did not interfere with the books,
or making out the balance sheet.
By the Lord Mayor--The halancealteet was takeu from
the manager and secretary without making any inquiries,
believing It to 1* correct.
Mr. Leiri. —Beta eon the halaaceabeet of June,
and that of done, 1,;:!, did you believe the Lank to hare
improved in condition?

Yr. Alderman Merbi said he believed just what waa
stated in the balance-sheet and report. The balance-sheet
of June, 1562, *bowed a profit of 3,2151. He thought it
was a correct statement of the account's, and bad no idea
at that time that the bank was in diflicultiee. The balance-
sheet was handed to the directors as it appeared in the
minute books, which was the same as the one which was
pubhshed, and, haring full coefidthoe in the defendants, no
steps whet...at were taken to ascertain its authenticity.
The only balance-sheet he saw warn a copy of the one circu-
lated among the shareholders. The manuscript balance-
sheet in Borcl's handwriting was the one produced to him.
Mr. Lewis produced another balance-shat in manwwript,
which had bei-o before produced, and which contained the
items whial. wire included in the gross in the one is circu-
lation.

Mr. .Aldermen Merhi said that wu ales in Burch's writ-
ing, but he hi,rl never seen it before. At the time the
batmce-sheet was preaentml be had no knowledge it was in.
accurate. Thu direct ems to the defendants were imperative,
to give a true statement. He had at that time no know-
ledge of the sate if the bank as it had since beep disco-
verel. That was the Lot holance-sheet that area presented.
The lvink .I.iirtly afterwards amnlomated. He did not
know of the real state of the affairs till shout twelve
months._

Mr. Alderman Mali here volunteered a statement that
be held alien-, eateh were more than one-sixth of
the whole capital. All his brother dilatators were very large
shareholder., end his loss was exceedingly heavy. A great
portion of th-oe.harte were purchased by him for the benefit
of the look at 1. nitinrl period of its existence. At the
time of the failure cf the Royal British Bank there was a
run no the I .od he bought bisshars. at the price they
were worth by the books, which was more than the market
price, to give the shareholders confidence. He also stated
that be took a lose from the 6+,4 to purchase the shares,
and gave ample activity in addition to all the share; and
told the shaieboklers at the seat meeting all the circunia
'tenors, mid ',attired the thanks of the directors. At that
time be little knew what the bank would come to.
In some" to Mr. Lewis, Mr. Aldermau Mecbi said be
never was aware that Terry had given Bosysid a release
from his debt in December, 1861. On the 31st December,
1861, he was pretreat at a board meeting. There was no
entry in the minute book on that date of a loan to Bunyard.
He was presto-, and signed the minute., sod he did
Dot on that day asoctioa a loan to Baayard. Than wan

TILE EX.

two lam granted on that day. Melcould net recollect
what the custom was with regard to the renewal of loans.
He theeght if it were a renewal it ought to have bees
beforethe committee. Bunyard's account wasoue which ElealVl
cautioned Mr. Terry continually about. and he was always
assured that there was ample security. Upon reference
to the books, Mr. Alderman Mechi said, if it had been a re-
Dural, it ought to have been laid before the board. He had
no knowledge of the aseiroment of Jae: H. Wood, or of
the assignment and release of Pules for 5,00 W.
was an account upon which they had cau-
tioned the defendant Terry, and his was an ac-
count which, with Bunyard's and Lowenthall'a,
was a source of anxiety, and Terry continually assured
them they were good accounts, and with regard to Merle,
Terry assured him he was a good customer. He would say.
however, in justice to Mr. Terry, that he had told him that
Perle's stock had been sold off at a great sacrifice, and be
bad become bankrupt, and he thought he would pay 124.6 d.
in the
The Mayor asked how much had been paid.
Mr. Alderman Mechi said be thought is.
By Mr. Lewis—Lowentliall's was another amount which
caused the bank much anxiety, and upon which the direc-
tors continually cautioned the defendants. He bad no idea
that lronside's acceptances bad been substituted for other
bills that were worthless. He had no knowledge that hou-
nds's bills were struck out of the book to avoid presen•
tation.

The Lord Mayor (to Mr. Alderman Mechi)—You appear
to have found capital for your customers instead of their
supplying you. (Laughter.)
Examination continued—Hall's account was also one upon
which Testy was continually cautioned. and he spoke to
Terry from time to time about those bills.
Mr. Lewis —Hadyou any knowledge that forged bills and
bills that bad been dishonoured years ago formed portions
of the item of 207,0001. represented as good assets ?
Mr. Alderman Mschi said be had not the slightest suspi•
cion of such a thing. There was a book, ash article book,
which ought to contain bills and chequesthat were in transit,
or that were too late for the clearing, and cheques that
were in suspense for a few days. It was the duty of the
secretary to read over the items each week to the directors
at the board meeting.
Mr. Lewis drew the alderman's attention to a cheque of
Sterne's for 1,0951., which appeared daily in that book for
twelve months ; and . . . .

Mr. Mums; Mechi said that item had not been read to
the directors. It might have escaped the notice of the di-
rectors once as a cheque, but not for a twelve-
month. It ought not to have appeared in the
book for twelve months. It was against all the
rules of the bank. The first time he saw the entry was
when Mr. Howell pointed it out to him. When he saw the
item in the balaoce-sheet of 38.0001. as cash in band, he
bad ao knowledge that it contained MOW!. that was made
up of past dne bills. He should never have imagined or
suspected such a thing. An order to make a statement of
debts, good, bad, and doubtful, was given, but he could not
say to whom it was given. He remembered such a book
was prepared.
Mr. Alderman Multi hare observed that if he had brown
the true state of affairs he should have wound up the bank
or dismissed the manager years before. In continuation of
hie evidence he said the book prodtped was one that was
prepared. It was from no authority of his that the
debt of Bunyard did not appear in it, nor did he give any
authority to omit the debt of Sterne or that of LowenthalL
They ought all to have appeared in that book. A debt of
Harris's and G. B. Woods were also omitted without the
authority of the directors. He was present at a meeting
of liquidators at which the resolution to prosecute the
defendants au passed, and he and all the director, present
refrained from voting.
By Mr. Sleigh—The directors pve it to be understood
that they took no part in it. With regard to the bad debts,
be believed that Terry was really in some cases deceived,
He believed with regard to Buoyard's and some of the other
debts be had been deceived in the value of the securities,
and had made as error of judgment. The directors
knew of the existence of the debt bat when the
business of the bank went over, the directors believed the
amounts were paid. They knew Perle had failed. He
did Dot know at the time that Lowenthal!, and the others
who had bees mentioned, bad failed. The cash and other
books were laid on the table at the meetings. The
loan book was always produced before the committee. A
weekly report was made to the directors of the state of the
bank. All the letters that came in and all that went out
were examined. The making loans, the securities to be
taken, the discounting of the bills, were all discussed by the
board. The bills foe discount were brought before them.
The past due bills ought to have been laid before the board;
but there were some not. If the past due bills had been
brought before them they would not have continued to
sanction the discount of fresh bills on the same persons.
Mr. Sleigh—Did you not, from time to time, make a
thorough investigation of the affairs of the bank !
Mr. Alderman Machi—Certainly not.
' Mr. Sleigh—You said you relied entirely upon the inte-
grity of the manager!
Mr. Alderman Mechi—Yea.

Mr. Sleigh then read a portion of a speech made by the
alderman, in which he mid they did not trust to the
manager ; that once a month, one of the directors, taking
It in turas, counted the cash themselves, and every bill dis-
counted and loan was examined.

Mr. Alderman Medi said that was quite right.
Mr. Sleigh thee read a portion of Deputy Bower's speech,
w►ich was alluded to on the last occasion, in which the
observation, " We have stuck like leeches to the batik,"
occurred, and the alderman said he was present and heard
eh! speech.

In 000tinnatioo Mr. Alderman Illechi said he could say
positively that he had never before seen the manuscript
balance sheet in detail which had been produced by Mr.
Lewis. He might have seen the detailed balance sheet of
Mr. Sykes. the manager of the weal broach.
By the Lord Mayor—He was not aware that the sum of
2K.onot. included items relative to bills that had long since
been drshoooured, and foreign sometimes and bills of per-
sons that ware hopelessly insolvent. When these irregu-
lanties were discovered he asked Burch why the attention
of the directors had not been dawn to them before, aid he
said he did not like to do so. That was on the 9th of July,
IA4, and it was not until that day he knew the true state of
affairs. He had discovered the defalcations that very day.
The case was then again adjourned, the defendants being
again admitted to bail.