The evening telegraph. [volume] (Philadelphia [Pa.]) 1864-1918, 1869-11-12
DRAWBACK FRAUDS.
Corruption In the New York Custom-Hou.e--
Nearly One Million Dollars Invoived-Frnu-
dulent Clnims Recelved from WanhinRtnn.

dulent Cln1ns heCelVed from Washington.
The New York Times in an article exposing the
corruption in the custom House in that civ saws
The latest developments about the frauds were
made to the United states District Attorney by q
man named William j. korn, who was placed under
examination last winter for alleged pafticpation i'm
the frauds, together with William II. Whimstcr and
other parties, and who was subsequently indicted
by the Grand Jury. He first visited the Federal
building in Chambers street about two months ago
on which occasion he made fresh and startling dis
closures in regard to the frauds. charging certain
persons with being accessories, VINO had previously
escaped the slightest suspicion,
Among others he mentioned Samuel T. Blatchford
Romano Mulligan, X. B. Caldwell, James Caldwell
and -- Caldwell, the last three named being
brothers, as having taken conspicuous part In the
frauds. Ills statement was so clear and straight
forward that the District Attorney was Immediately
induced TO make demand on the Treasury Depart
ment at Washington for the documentary evidences
of guilt against the accused parties. The
Of Mr.. George a. Mercer, Of he account
ants division in the Treasury ONCE, being
in the shape of large number OF fraudulent draw.
back claims, on which the United States Govern
ment has been defrauded out of gIG0OOO and nm
ward. MIR. Blatchford's intials-S. 4. B.-wcre
found ON many OF the export certificates, sO-callcd
which accompanied the claims, and, it IS said bis
guilt will entirely depend on the genuineness of
The frauds Of which he is accused were perperated
during the years 1866, 1861 and 1863 and were con
nected with the frauds in which Whimster, Dckin-
son, Green, fremont, Wilson, and several others
figured as defendants. The name of the PRINCIPAL
offender in the recent charges has not been dis-
closed, he not having been appreheBdcd
Previous to giving a description of the manner I'm
which the drawback frauds were conducted ana
the part performed by the various alleged criminals
engaged in them, II may enlighten many readers who
are not commercial people to know what is meant
by drawback claims. About 1862 law was passed
imposing an internal revenue tax on articles manu-
Iactured, with provision that if any of the articles
were afterwards exported an amount should be paid
to the exporter equal TO the amount previously
paid as tax. This was called drawback" In
order to have q drawback claim recognized an eX-
porter is required in the first place, to procure
certificate from Collector OF Internal Revenue,
showing the amount of tax paid on the articles
which were to be exported After this was OBJ
tanned it was necessary TO make an affidavit
In regard to the goods Tor export, stating their
destination, the name or names Of the owner or
owners etc. When the export was made the eX-
porter applied to the Drawback Department
at the Custom House for q certificate, or
Outwarl-bound manifest, as II is designated.
certifying that the goods had been exported and
giving certain information about them and the
vessels which carried them. 1t was the duty of
clerk TO make out the manifest and TO attach his ini
tias or name to 1t as evidence Of ls genunoness, in
order thai might Subsequently be endorsed by one
Of the deputy collectors. Upon the Internal revenue
certificate the affidavit and the custOm-hOuSe mani
fest being procured, they went TO the auditors Office
at Washington, going from there TO the nted States
Treasurer, who issued check for the amount Of the
drawback claim.
The scheme for swmdng the Government by
means of fraudulent drawbacks was first cOncoctcd
in the fall OF 1866. William ii. Whimster aud ,je-
rome Reiserberger appear to have been the first
persons who conceived aud started the almost un-
parallced system of frauds. 1t is coniecturCd that
they were led to enter on their operations by the
easy and loose manner in which debenture claims
were Obtained. 1nc fraud consisted OF procuring
false certificate from the Custom House that the
goods enumerated in tho claim had been exported.
in the possession of the Government the whole
number being made out in such manner as to eX-
They are signed with the initials of Charles j.
Theriott and Samuel ". Blatchford, both of whom
clerks at the Custom House in 1856, G7 and IS,
one belonging to the Drawback Department and the
other to the Export Statistical Bureau. rheriot is
now under $40 600 bail to appear for trial for COM
picity in the frauds. lie was the principal Of the
swindlers in the Custom House, and was used by
them in the most heartless manner. His only recon-
pense for valuable services rendered to the conspra
tors by which they realized many hundred thousand
dollars was the patry sum of $3.50.
Besides manufacturing fraudulent Custom House
certificates, Whimster and his associates got forged
internal revenue certificates, besides having alda-
Wits verified by notary public in their hire without
taking the trouble to make oath before him. Some
of the internal revenue certificates were prepared
by subordinate revenue oniclas who were in colin
sion with the drawback sChemers. The articles
mentioned in the certificates were hypothecated, and
the names of the owners contained in them
sums of several thousand dollars one being as high
10000. In one instance the accused parties put in
q claim for drawback money on number of steam
cars, stating in their affidavit that the latter had
been exported in certain vessel II the cargo had
been real it would have been of sufficient weight to
have sunk the vessel. An audaCiOus man, named
Wilson, one of MINISTERS accomplices also pro
ceeded to file claim for the tax on a very large
quantity ofhypothecated petroleum Oil, claiming
that it had all been exported. Among
the n persons who oriHd tnrved by me
United States Treasury was lawyer named VIII
liam IL. Freer, who acted as claim agent at Wash
ingtOn. lie was allowed commission OF ten per
cent on all the moneys he collected from the Gov
ernment on the debenture claims; but not salts
fed with this amount, he quietly appropriated
the whole of the drawback money, finally
absconding to Europe with about SsO,O1O
in his possession. District Attorney Pierre
pOnt visited Collector Grnnel Yesterday
afternoon for the purpose of consulting with him in
relation to Mr.. BlatChfOrd's case. Several of the
fraudulent debenture certificates were compared
with the manifests in the Custom House, but the
goods named in the former were found 10 have no
representation on the manifest books leaving strong
suspicion OF BatchtOrd's cupability III the matter
The evidence in the case will be Immediately sub
itted to the Grand jury for their action. Korn
ana Wilson will be used as witnesses for the Gov