New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1873-10-17
The ALBANY DEFALCATION.
THOROUGH REVIEW OF THE CASE.

PHELPS THE DEFAULTING CASHIER, ARRAIGHED BE-
FORE AN ALBANY POLICE COURT A POSTPONE
hENr TILL SATURDAY - OTHER CULPRITs To BE
ARRESTED - EXAMINING THE TREAsURERs Ac-
CoUNTs-THE ENTERTAINMENT UNDER S3O,OOO-
WHO is TO BLAME - METHOD OF KEEPING
ACCOUNTS AND DEPOsITING STATE FUNDs-ANrE-
CEDENTs OF THE PRISONER.
IFRoa THE SPECIAL CORRESPONDENT OF THE TRIBUNE
ALBANY, Oct 16.-Chas. Ii. Phelps, the default
Ing Cashier OF the Treasury Department arraigned
In the Police Court here before Justice Mcnamara, at
10 o'clock this morning when his counsel F. A. Chap
man of NewYork announced that he appeared for the
prisoner, and asked to the papers which his
client was arrested Mr.. Moak, DistrictAttorney OF
Albany, who appeared for the people, furnished Mr.
Chapman with copy Of the complaint. and simulta
neously Justice Mcnamara informed him that the
prisoner arrested for stealing draft OF the value OF
$4,000. Having read the papers, Chapman announced
mat he was ready 20 proceed with the examination
Some delay occasoned by the non-appearance Of
Mr.. Raines the State Treasurer, whom the District
Attorney desired to have present before the examina
ton began. At length Mr.. Raines came into Court
and, after short conversation with the Dis
trctAttorney, sworn as witness Before
any questions put 10 him, Mr. moak
stated the Court that the draft for the theft OF which
the prisoner was arrested. had not yet arrived In
Albany. and as it was the first item Of evidence on be-
half OF the people IL essential that It should be in
court before the examination began. II draft
sent to the Teasurers Office by the County Treasurer OF
Dutchess County and appropriated by the prisoner to
his own use. He could not tell when It would reach
Albany, possibly tonight, and perhaps not till tomor
row, but in any event, 1t would be impossible TO
with the examination without II, and he therefore
asked for q postpOnemcnt.
Mr. Chapman said his client had come here 10
r charge OF grand larceny. He was ready for exam
nation and IL the District Attorney had proof OF the
charge he demanded the release OF his client He as
sured the Court that the charge OF grand larceny could
not be sustained The Justice asked counsel he CUES
toned the good faith OF the DstricAttorney in apply
ing for pospouement, TO which Mr.. Chapman replied
that he did not but at the same time he dd not believe
that the District-Attorney or the complainant in
this imagined for one moment that the charge
OF grand larceny could be sustained. The Justice said
that II appeared to him that the application made
in good faith for the purpose Of obtaining evidence and
he did how he could deny motion for reason
able postponement Some discussion then took place
between the prisoners counsel and the DstrcAttorney
what constituted legal grand larceny, and what
mere breach OF trust, the DstrctAttorney main
tanning that II, before the time the draft
came into the prisoners hands he had formed the de-
sign Al stealing Incorporating It, II was just az
much larceny as though he in no way connected
with the Treasurers Office Mr. Chapman argued to the
contrary, aud said that the illustrations cited by the
were Only hppCdolt w NdstH Va w
tanning money under false pretenses whereas his client
was the man into whose hands all drafts sent to the
Treasury Department legally came. He had a right to
their custody and he had Incorporated any one
Of them could at the most be only breach OF trust
He then went into eulogy OF the previous good char
acer Of his CLIENT and renewed his demand for an m-
mediate examination or a discharge.
The Justice said he had already practically decided
the question Of postponement in the affirmative and all
Tba Oh or
bad character OF the prisoner not before nm, but
since had alluded to. be thought he was justified
in saying that the prisoner. whose business was IN
Albany, had fed from the city and was obliged
to be brought back here from another State
on requisiton from the Governor. He thought
this was prma facie evidence that he had been
guilty OF some misdeed, and the Court had
right 10 take IL into consideration when a demand
was made for his immediate discharge because the Dis
trctAorney was not ready with his proof. The appl-
cation for q postponement would be granted, and 1t
only remained for counsel TO agree II they could upon
day for the hearing Mr. Moak asked Till Monday next,
and Mr. Chapman wanted 10 90 on Tomorrow but the
Court decided 10 postpone till Saturday morning next
The prisoner who appeared much detected through
out the proceedings then remanded to JAIL ana the
crowd that had thronged the courtroom dispersed
The discussion developed the fact that the prisoners
defense is 10 be that he Is only guilty OF breach OF
trust Indeed stated TO Mr Raines when first taken
into custody that his counsel had advised him that such
was the fact II is very doubtful whether the examna'
ton Will proceed on Saturday, as the Dstrict-
Attorney has a large number OF witnesses to
summon from New-YOrk, and also desires,
an Is thought TO delay the examination until he
secures the arrest of some of Phepss confederates
II is runored that when the examination does take
place Phelps Will take the stand aud make fi state
meut Of all his transactions with the state luhus noV
sparing any OF his accompces OF hesa'ng If need be-
10 inculpate more or less remotely the Republican
financial Ring Of Albany
THE EXAMINATION OF THE TREASURES OFFICE.
VIM. r.. Warren, the accountant. arrived from New
York last night and began an examination OF the Treas
urer's Department this morning The inquiry is made
NJ tho raouest NJ Mr. Raines who desired not
connected with the Department TO make thorough in
yesgaon OF the accounts and state to the public the
facts as he finds them. 1t will not require much time
as the dispatches received to-day from the county treas
urer confirm the statement made by Phelps when first
arrested that he had correctly entered on the receipt
book all the drafts that had come into his hands Mr
Ranes Yesterday telegraphed to all the county treasu
in rhe state nonrng the dates OF all drafts sent by
them n the Treasurers Office, and the replies received
TODAY correspond in every instance with the entries
made by Phelps in the receipt book The statement
arst made therefore, with regard to the amount OF the
embelzement will turn out TO be correct IL VIII ial
short of $4,000.
It has been ascertained to the satisfaction OF the
Treasurer that there forgery OF his name or that
OF his deputy ndorsers of any of the drafts but that
they were cashed on strength of the simple ndorse
ment OF Phelps as cashier, which was contrary 10 the
express provisions Of the statute and therefore makes
the liability of the banks that cashed them undouDed
The drafts probaby all went through the hands Of pr
v banker or anancers before reaching the bank that
paid them and thus the latter put of their guard
Who these private bankers were is not fully ascer
tanned al present, but q large portion OF the
drafts are known TO have gone through the
banking firm OF F. b. sherwin Co., Ma ~
broadway. where they we're Endorsed by " Chas Hud-