The evening telegraph. [volume] (Philadelphia [Pa.]) 1864-1918, 1869-01-28
FOUNDING FRAUDS.
over Half Million in "Drnw bncil''
Obtained by the COnnIVaace of Gus tom
House Officials.

over Half Million in 'Drnw bacii''
Obtained by the COnnIVaace of Custom
House Officials.
The New YORK Tribune of this morning con-
tains the following;-
william J. Korn l.. N. Laidaw, and a clerk
i'm the Export Bureau OF the New York Custom
House. have been arrested by Dtputy United
States Marshal Nodme of the Eastern District,
Brooklyn, at tie instance of District Attorney
Tracy, under warrants issued by Judge Bene-
dict. The charge is that of delrauding the Gov
ernmpnt by procuring large sums of money
upon fraudulent claims for 'dra Rb1cSs,S pre-
seuted and passed at the office OF the Fittn
Auditor in the Treasury Department at Wash
ington. The frauds with which the accused are
charged extended through Il period of seven
months, from January to July. 1857. Tde
amount realized was nearly S600
The plan of these frauds VS., about as follows:
Under law which prevailed from 1862 until
FCbruary, 1868, there WAS a tax OF 3 per cent.
imposed upon ali domestic manuac.ures; bit
when the articles were exported, the amount
levied III taxes were refunded, In order to
secure the return o. the money, An exporter
hai to OBJ ain from the Internal Revenue Cot
lecor OF the district in which the goods were
manufactured a receipt showing that the
tax had been paid. Then he must OBJ
tam certificate from a Custom House
officer that the goods described III
the Collectors receipts had been exported. Tue
exporter, uIon exporting the eooIs. WAS re-
qulred TO give a bond that the goOts should not
be relanded within The United States. VITA the
CprtlhCate OF tnt superintendent OF EXP ltJi
showing that boad had neen given, the clam
v as presented to the Treasury Department and
the amount paid in tax rounded. The alIega-
tlons in this case are tha, the defendant, Kcrn.
with others whose names have not yet ap-
peared succeeded III obtaining the above stated
amount upon bogus eXOorts, and that Laid
law and the Custom House clerk also acted
in promoting the maud. Korn is held to
bail in the sum of $4,000 and the others
In lesser amounts. District Attorney Tracy mas
been a. Washington during the last 20 weeks.
and upon examination OF the records of the
Fifth Auditors office found that frauds of this
character had been peTOetrated during the past
tive years to an extent whcn Is perfectly alarm
iUg, the amount being estimated at not less than
$500,000. Warrants have been issued for the
arrest OF other parties alleged to have been con-
cerned in the trdudHleut transactions. and they
VIII undoubtedly soon be executed. When the
case comes before the Court further develop
ments may be eXpeC;ed-suCh as will open the
eyes OF the country to a new system of fraud,
gigantic in its proportions.
The NeR York Times says in this connec-
tion:-
The law in relation 20 drawbacks" may give
the reader some light OIL the subject not acces,
sible In any ordinary transaction. From the
year 1862 until February, 1863, there was tax
OF five per cent, imposed upon all goods of
domestic manufacture, which the manufacturer
was compelled to pay at the time OF the sale of
such goods The law, no gever, provided that
in case goods on which the Internal Revenue
tax had been paid should be exported, the tax
should be refunded to the person who exported
them. Claims for the retunding of this tax
on exported goods are known as "claims
for drawback and the mode Of collecting
them is as folio 6s:-The exporter obtains,
from the Internal Revenue Collector of the
district his goods may be in, II receipt setting
forth that the tax on the particular goods eX-
ported has been paid. He then obtains the
certificate of the Gus ON Hous officer that the
goods mentioned and described in the Collectors
receipt have been exp rted, giving the name of
the ships in which, and tho place to which,
they were exported. The exporter, no owever,
was required upon exporting merchandise, to
give a bond to the United States that the goods
should not be relanded within this country,
with the certificate that the tax had been paid,
the certificate of the Custom House officer that
the goods had been exported, and of the Super.
intendent OF Exports that the bond had been
given. The claim was then presented to the
Treasury Department and the amount refunded
In the case here described, all these forms
were represented by the parties implicated to
have been observed, and in this way 'Jraw-
backn money paid 10 the amount OF over half
a million dollars to various parties. The whole
extent of this business il not yet KNOWN bat
the persons already arrested are understood TO
be involved in transactions OF which the lens
are given. The names printed, although me
same as appear on the papers, are, except in