New-York daily tribune. [volume] (New-York [N.Y.]) 1842-1866, 1858-01-25
THE ALLEGED DEFALCATYON IN THE
FINANCE DRPAR TNENT.

respecting dedication in the Controller office met
on Saturday afternoon in the City Library. Messrs.
Genet and Bickford Of the Committee were present
AzARIAH c. FLAcG, the Controller, was the only
witness examined. He was Intercepted by M
GEsET the Chairman.
Q. During your term of Office has there been any
attempt any defalcations made by any persons IN
YOUR Department
A. There have been errors of all descriptions made
undoubtedly, but of defacations, by which suppose
Won mean the tax ing Of money &c. there is nothing
that occurs to me now; you ours is not aa Office
where money is Deposited but large portion of our
business simply requires fathfulness in keeping ac
counts and in making out stocks and bonds, aud such
things.
Q. l. there any person in your Office who has failed
faithfully to perform that duty
A. Ithnh there IL.
q. VIII you name them
a. You are all acquainted with the public rumor on
that subject. The person is j. B. Smith.
Q. Can You state any particular wherein he has
done so
cumstances which induced that examination were dis
closed by the failure of the Bowery Bank.
Q. Can you state those circumstances or the cause
ofitl
A. Well, memorandum was given to me by per-
son who had examined the Bowery Bank affairs for
believe, client, in connection with some money trans
actions with the Bank; il said TO that notes
had been discounted sent by Mr. Smith, and paid by
contractors who receiving large mens from the
Finance Department; the Receiver said he would
have objection to give me statement OF the affairs
OF the Bank the signing and discounting OF notes
there would not affect the Finance Department di
rectly either way the other, but would lead
to the supposton that these persons did not pay the
money on them unless there some considerations
of unaithfulness in the office, by granting facilities in
issuing bonds for the per cent contracts; the per-
son who keeps the books and makes out the memo
raudum on which payments are made could grant
facilities frequently by passing the whole amount that
was surveyed to be done instead Of ~ per cent.
Q. Do you know any particular case wherein he
has done this
A. have found cases wherein il appears to have
been done but could not relate them without making
memorandum from the books.
this i; How long Is SINCE 70" "'1 any
A. do not recolect, but it was some time after the
failure of the Bowery Bank; have memorandum
about notes which Will fix the date, but nave
not got il with me now.
Q. Could you state any other instance wherein he
| has misappled the funds of your office
A. There are several where we think, from
the examination we have made that amounts over
the 20 per cent certified to by him. and the con-
sequence was he relied upon to make computa-
lions from the quantity and TO keep the books tnat
were taken as the basis for issuing the bonds-for
instance that money was paid faster than the person
was entitled to 1t. -
O. Can YOU state whether he did this Intentionally,
| or through mistake
A. could not state; there is some little hesancy
about stating il too positively from the fact that
in the examination of the Fiftyseventh street con-
tract on which reported to the last Board OF Con-
cilmen there was suspicious circumstance in the
f1ct that in ayment about July August, where
certain wall was introduced that Mr.. COn0ver states
had been nte poated in the contract as he supposed
in the Street Commissioner Otfice-at the INTRODUCE
ton of that there was payment CT S6OOO or more
did not find the vouchers at the time reported to
the Common Council naturally supposed that the
vouchers if found, would disclose something wrong
about them; subsequently,, however, IN overhau,mS
the papers found the vouchers and saw that they
corrcsponded to the statement which MIR. Smith gave
me- and which used his in my report; the first I'M
he vouchers
of the file; we have had other cases where we could
not find the vouchers, and supposed they might be
taken off, because il found, they might disclose some
thing wrong, but when we found the vouchers they
also corresponded with the statements which he made
respecting them.
O. Could you state the time when you first appre-
hended that there anything gong wrong IN the
| department of Mr.. Smith
4. did not apprehend anything until the failure Of
| the Bowery Bank.
Q. Could you state any sum Of msDoy that has
A. We have not got far enough through that TO
make up any sum.
Q. Are there any other persons in your department
| on whom you have any suspicion
a. No, Sir.
E. 3: No. |; Mr. Smith still there
O. Have you discharged him
| A. cannot say that have; will tell you pre-
csely what | did, bis note, for instance, was dis
counted for amounts that could not conceive he had
any right to have; that H. could not conceive that
knowing he had not the ability to pay and therefore
| thought il was n very strong indication that some
thing wrong was going on; but knew nothing for
| certainty; and he said-Gs any man might say
under similar circumstances-hat that business
traI sacton which he could explain perfectly, ana az
| lis fatber.in.law had been building cottage III
Yonkers and he had been the managing man Tor
him did not know but it was barely possible that
there might have been some transactions OF that
kind which would Justify him. but still told nun
il was strict rule with me that no person 10 the
off, should have any money transactions Whatever
or receive money from those who were receiving large
amounts from time to time from the city, and therefore
desired him to give me the keys of his desk, and OF
the safe where he kept the books and told him that
should put the books and all the papers, vouchers ana
everything into the hands of Mr. Cady; and tlAt IN
com ecton with Mr.. Even, who had been measuring
up great many OF the jobs with view OF settling up
the amounts, | should have these various amounts
measured and computed, and should have tine matter
all examined and that he might remain there ana give
explanations but that he could no longer nave .ne
custody of any papers or books that consdereu ie
money transactions with the persons who seeneu 10
have paid those notes for him sufficient cauee of NE
| to suspect that there was something wrong anu "
Justify me in doing it, he has not been IN the once "
do anything since except to give some expiahatohsi
there several things which he has not explained 10
my satisfaction; have not yet discovered Voucne.'
and payers 10 satisfy that he did everything rSht,
and we think he might have done wrong though we
have not got to the bottom OF 1t yet; we are nov
posting up the books with a view OF getting at the
whole matter and it will take some time 10 DO tuat
Q. Could YOU do it in the mean time, if we would
| postpone this investigation till Friday next
A.. No, Sir, for we have very tedious process W.
| through. We have to measure up contracts WINCH
were commenced in 1859, 3 and a, from tue oesln
ming by surveyor. We have had them done anu .ha
that work is now going all the tine 10 nnI tao
quantities of work that has been done have 10 ooS
up the vouchers on the 20 per operation ana re-
compute every payment to whether there was not
81 600 too much on any payment. Taking the 9rsInl
profile as the basis, i would determine TnJed in
property owners or the city have been deraude9 10