The evening telegraph. [volume] (Philadelphia [Pa.]) 1864-1918, 1866-02-28
The DUBUQUE WHISKY FRAUDS.
Interesiing Chapter Of IntornaI Reveuu,
HlAd0ry.


Interss,iug Chapter of IntornSI Revenue
History.
In April, 1865, large amount OF liquor and
high-wints, the products OF distillerY at DID,
buque, Iowa, was seized under the Internal
Revenue Act. This was one of the first OF the
whisky iraudf, and created great sensation all
over the country. A tull report of the Commits
sioner of the Internal Revenue in the case has
lately been published.
The dlstillery was run by Messrs. j. A. Rhom.
berg & Co.. who, IRON the time OF its opening ln
1864, pressed it night and day I1tO a large pro
duct. The propnetors were taken aback by the
change of time, on which the tax OF 81 per
gallon was TO 90 into effect, difference OF one
month against ther interest and calculation.
They at once commenced a desperate game of
fraud upon the Government, which was manage1
so skiltully as TO involve unsuspectlng parties
to share in the ultimate perils and loss.
Paving duty on 1888 gallons highwines
during the period of uninterrupted operations,
the firm shipped to New York ea-ly In 1866 a
product OF alcohol and high-wines equal to
163 600 gallons OF high-wines, an excess ol $4,000
gallons over the amount on which duty was col
lected. One process, among others, by which
they maneuvred in the fraud, was to secure in
spection on certain number OF barrels OF high
wines, and aiterward emptying their contents
into the alcohol sull, rehlling the barrels with
other wines.
At the time of the seizure, the amount OF
whicn the Government had been derauded was
a little over 100000. The seizure OF the pro-
Perty by the revenue officers loqnd it in the
advances. There were seized IN store, or in
transtu at Chicago Buffalo, and New York,
1890 barrels of high-wines, and 1887 barrels OF
alcohol. the estimated value OF which was
1927, 600.
Messrs. sturges & Sons, bankers, and the
Dubuque Branch Bank, had made advances
uUon clear bills of lading OF $2G000 The total
interest of outside parties IN the proceedings
amounted TO 1919, 900. When the distillery was
seized, 1t was found to be fully stocked tor the
prosecution of large business, and with perish
tions from Washineton, kept the distillery rum
ming until the grain was all converted into
spirits amounting to 10000 gallons.
Out OF this act grew the most serious compli-
cations of all, for, pending the decision on the
seizures previously made, involving the whole
machinery and material, under the views that
the tax OF two dollars must be collected on every
gallon of high-wines made, the whole personal
property at Dubuque, then in the United States
Marshal's hands, was distrained for taxes. From
this embarrassment, the Department set to work
to unite the knot. The Department willingly
consulted the interests of the bankers and other
innocent parties.q
The strict letter ofSthe law, if carried out,
meant forfeiture OF all the property in the hands
of the Government. But certain complications
stood in the way. The spirits, under the first
seizure, had been released under bonds of in
demnity filed by the bankers interested May
%, at that time satisfactory to Com missioner
Lewis, aid sufficiently protecting the interests
OF the Government as related to the taxes due.
In egard TO the $4,000 gallons of spirits made
by the Government officers, the Commissioner
decided that it belonged to the Government, and
the latter being clearly the manufacturer, the
liability to tax did not exist.
The ordinary proceedings carried out would
have left the Government neavy loser, tor
sharing one-halt with the intormers, a sale in
the then depressed condition of the market
would have left large balance unpaid, and
Rhombere & Co. TOO entirely ruined for further
resort The end of the whole affair was the en-
tering into of bond, which has been fully COM
piled with, in which Mr. Sturges entered into
the following agreement
%, pay, the tax Que, further sum of S25, 900
In lieu of all penalties and forfeitures incurred by
Rhomberg, together with the costs and charges
accrung to the revenue officers for the SEIZURE the
United States to release and turn to them the
property under seizure to surrender and cancel the
bond of May %, to surrender free of tax the
produced since the SEIZURE, and also all moneys re-
ceived proceeds of the sale of the catte and to
assign TO them a bond gwen to the United States
by Rhomberg 6 Co. as dlstllers, said property to
be eased upon their fling bond conditioned
that they should pay the costs AFORESAID, and also
the OF S61 1855 tax, and $26 600 In lieu of penal
ties, follows $4,000 IN one month, and the
balance in two equal payments, one-hat in thu ee
months, and the other IN five months with interest
from the date OF sad bond"