The New York herald., 1869-11-14
THE DRAWBACK FRAUDS.
LIG HT AT L A S 7
First Hearing Before Commits
sioner Osborn.
History Of the Frauds by Judge
Pierrepont.
--~~~~~~~-~~~~~S~-~-~--
Important Testimony - The
Documents.
=. L. BLATCHFORD IMPLICATED.

At last the full glare OF daylight is being sheI
upon the transactions OF certain designing men,
who under the plea OF 'drawbacxs," have de-
frauded the revenue Of the government out Of
immense sums Of money. The judicial investigation
was begun yesterday before United States Commits
siOner Osborn. The examination for the present, is
confined to asingle case, In which the Treasury
robbed OF $5,37b. This was case arising under the
Internal Revenue laws imposing an excise duty on
to55acc6 petroleum ana other articles The
frauds under the tariff law, and the modus ope.
yundt OF which was described in Yesterdays HERALD
numerous though they undoubtedly are, are still
held back, but further inquiry and more thorough
research will, it is feared, develop an amount OF
ingenious scoundresm seldom heretofore known
ana hardly thought OF by the people.
1t was stated In the HERALD yesterday that with
the complicated machinery OF numerous ''checks ana
balances" In the Treasury Department. where every
CLAIM against the government has to pass through
30 many Offices and through the hands OF SO many
clerks for examination and certihcatlon, II was
almost impossible that such fraudulent demands
could have been successful, unless these very
government officers were elther partceps crfn1tns
to the transaction or were in the employ Of the
rogues and paid BY them for their connvance. 1t is
nnlucky for the persons implicated and unfortunate
for the credit ana reputation OF the civil service Of
the government thatIthe evidence gwen so far indi-
Gates that such the case, aud that officials both
here and at Washington were deeply concerned In
the profits OF the frauds. As the investigation now
progressing before Commissioner Osborn Is Edhed
to one single CASE IT would be improper TO reer at
length to the dealings Of parties heretofore indicted
and now under bail, such as Wimster, Reisenberger
and Laidlaw, whose names, SO far, have not been
mentioned In the proceedings. But it may be Of
interest TO many readers TO know
now THESE FRAUDS WERE DISCOVERED.
In truth they were not discovered at all. The
whole scheme was so cunnngly devised and SO
Bhrewdy carried out that not the least breath OF
suspicion was aroused no earthly douot was awak-
ened IN the minds of the authorities, ana all be-
lieved that everything was straight as bee line and
correct as we'll IN all particulars. Had all the par
ties TO the fraud kept their mouths shut and held
their tongues the dust OF ages might have quietly
settled and rested undisturbed upon the documents
In the pgeon holes'' OF the archives at Washington
and In this city, But envy aud dlscontent are human
passions and is the thirst for revenge, and it was
this THAI brought to light the whole conspiracy And
1t came about in this wse:-
MIR. Francis a. Howard held prominent position
in the office OF the Commissioner of Internal Rev.
enue at Washington, and was especially in charge
OF the branch having to adjudicate upon claims for
drawback allowances. His .check, - the initials OF
his name, "F. A. H.,n was all potent with the Com
missioner and when Mr.. Howard presented certi-
fcate to Mr.. Rollins thus adornsd with his important
monogram the latter signed 1t, and 1t passed into
the oce OF the Fih Auditor Of the Treasury for the
issuing OF the necessary papers on WHICH sae war
granted. Now 1t happened that Mr.. Howard, some
time after the transactions complained or resigned
banker at No. 10 Wall street, and took up his resi-
dence In Brooklyn. In the fall OF 1888 rumors
OF fraudulent applications for drawback money
coming to the ears OF the Revenue Commissioner he
cast ABOUT for suitable person to make thorough
inquiry into the manner Of doing business IN the
New YORK federal Offices in regard to TINS drawback
money. Remembering the '1althfuf' ana "trled'
services OF Mr.. Howard while IN ONCE at Washing
appointment. Now, there was man by the name
OF Relsenberger, who knew all about the drawback
frauds, and who knew Mr.. Howard also. As soon as
he heard OF the atter's appointment ne acquainted
Mr.. Tracy, the United states. Attorney for the
eastern district, with the fact Of Mr.. Howards con-
nection; and. once the trap lifted, the whole secret
new out and the Caldwell Brothers, Howard, VIM
ster Reisenberger and others were duly indicted by
which Indictment Mr.. Howard Is still under bail IN
the sum OF $1,000. And thus It was that the
frauds were betrayed, yet not discovered.
BEFORE COMMISSIONER OSBORN YESTERDAY
Yesterday afternoon, shortly past ono O'Clock,
the United States District Court room In the build
ing on Chambers street. The 1act OF the commence
TO but lew only some OF the parties implicated and
their attorneys were present. The United States
were represented by the District Attorney, Judge
attorney, and for the defence appeared General
William Anthon and Judge Quackenbos. General
Anthon asked for separate hearing IN the case
against X. MullIgan and the proceedings began.
OPENING OF JUDGE PIERREPoNT.
On rising, the District Attorney SAID tuat ne would
rst state to the Commissioner the full and ma
ture Of the case facilitate better understanding
Of IL, not only to the Commissioner but to all since
to the public. The cases are very numerous, tnvolv-
ing vast amount OF money; hence their high i'm
the Custom House In this city and all from the Trea-
sury Department at Washington, which were neces-
complained Of. These cases had arisen as follows:-
In 1865 and PRIOR thereto o party paid in
eum and tobacco and obaned carcats RelU
from the Revenue Collector that the tax
was paid; he then proceeded to the Custom House
and obtained evidence that the goods on which the
tax had thus been paid were shipped TO q foreign
port; these documents were then sent to the Treas
nry Department. at Washington, where the whole of
the tax SO paid on goods shipped abroad was re-
funded. This was the internal revenue drawback,
which Ia different and distinct from the draw back
allowed on goods imported and afterwards again
exported. The case now before the Commissioner
would illustrate the whole as all the others are just
turf OF the goods In most OF the certificates OF the
Revenue Collector OF the amount OF tax paid the
sum named was changed after 1t was given by the
Collectors so in one case the sum OF Ss3, originally
stated in the certificate, was altered TO $500.
,nrmof 4. b. Caldwell & Co. were Custom House
brokers. The certificate IN this case was correct
that nil the other papers necessary under the law
and the rules TO be presented 10 the Custom House
were ferged ana written IN tne omce OF Caldwell,
were sworn to before himself, sgned by pretended
exporter u fictitious person, and afterwards
attested by notary, before whom no one appeared
to take the required oath or to acknowledge the
signature. These papers were then sent 10 the
Drawback Bureau OF the Custom House; for II is
required to pass them through that once before
action Is had at Washington, There II Is neccs-
sary that the bead OF that bureau should
certify that the goods mentioned were
actually shipped and are entered on the outward
bound manifest OF the vessel named, and which
manifest Is fc IN the Statlsticai Bureau OF the
Intua ha NIL rL LnrAf fl
statements In the application ior drawDacK with
Ms manifest as to the cargo. date OF sailing name
OF the snip and the place Of destination, ana then
ahe chief OF The Drawback Bureau puls upon the
ccrR1cae his initials, and under Or by the side OF
mem nc stampa, In red Ink, the Words, "On out.
Maru mahHest' which serves for his certificate.
lne papers then go to the CASHIERS department,
~here ice ol ,tweniy cents Is paid Tor the certli.
hts initials the face or the do,,men which then
wanders INTO the hands Of the Collector who. with
Sll tne above evidences Of correctness before him,