Memphis daily appeal. [volume] (Memphis, Tenn.) 1847-1886, 1873-04-28
PHELPS, DODGE & co.
Synopsis Of Correspondence between the
Firm and Government Officials
Details Of StapendOus
Frauds.
How the SWindIes were Perpetrated,
and How the Firm Proposed to
'sHOOdOs" the Authorities.
A Few thousand Dollars Finally Ae-
eepted by the Government, and
Phelps, Dodge & Co. Smile
in their Sleeves.

eepted Dy the Government, and
Phelps, Dodge & Co. Smile
in their Sleeves.
WASHINGTON, April 27.-The treas.
ury department publishes the core
spOndence relative to the case of Phelps,
Dodge & Co. 1t appears therefrom that
on January Sd last Special Agent Jayne
reported to Secretary Boutwell, as the
result Ofhis examination OF the books OF
the said firm that the firm had
deliberately violated every provision
of the law of 1853 governing the in
voicing and entering of imported mer-
chandise, and the payment of dd Uo-
forum duty. The total value of the in
voices examined amounted one mill
ion seven hundred and fifty thousand
dollars, which under the law is
plainly forfeited to the United States.
Not by any technical construction, OF
tar-felched Interpretation, but by delib-
erately and systematically stealing, by
putting the cost of the goods below the
purchase price, by false invoice, made
false for no considerable reason but to
lessen the duties. The items proved in
these several invoices to be undervalued,
when taken separately, amount to about
tSo hundred and seventy-five thousand
dollars. The per centage of duties on
the whole amount is therefore small I;
yet, says Jayne, importatiOns of
the house are very extensive, and
if the same or nearly the same per-
centage of fraud extends through their
impOrtations, other than those included
in the statement and on which we have
positive proof, the entire loss to the rev.
enue must have been some ten or fifteen
thousand dollars per year, perhaps more.
United States District-Attorney Bliss,
under date of January I'd, writes to
Solicitor of the Treasury Banfield, trans
mitting the offer of compromise made
by Phelps, Dodge & Co. Davis says the
investigation showed that defendants
committed two apparently distinct spe-
cies of fraud. One consisted in
invoicing tin shipped from Liverpool at
prices paid for it in Wales, of which un-
LIBERALIZATION there is no means of know
ing the amount; while another species
of fraud consisted in a trifling underval-
uatiOn of some single item or class OF
items in an invoice, in which most OF
the items were correct. There is no ac-
tual evidence of fraud, says Bliss, in
either class prior to January, 1871. The
books, neither before nor since,
contain any evidence of fraud,
but it is found that the men,
oranda and duplicate invoices, il
these ever existed, for importations
prior to about January, 1871, have
been destroyed. The informer asserts
that the fraud extended over several
years, and there is considerable indirect
proof that this is so in the similarity
of rates and standard items before and
since January, 1871, the invoices show
ing the same prices before 1871 in the
classes of goods shown to be undervalued
since that time. OF the invoices entered
early in 1871 which are tainted with
fraud the items in which undervaIua-
tiOns occur amount to two hundred and
seventy-One thousand and seventeen
dollars and twenty-thTee cents; while
the amount of undervaluation is
six thousand six hundred and fifty-eight
dollars and seventy-eight cents. The
total amount of the duties lost to the
government was one thousand six hund-
red and sixty-fOur dollars and sixty
eight cents. The total importations of
the defendants are about six million dol
lars a year. While the investigation
was going on various proposals of COM
promise were made, but none such that
the collector deemed it worth while to
hold out hope that they would be ac-
cepted. Mr.. Bliss, after a careful exam
inatiOn, however, recommends the ae-
ceptance of the compromise now offered.
Heis influenced to this course by the fact
that the nominal amount claimed is so
enormous, in comparison with the
amount of differentiation and fraud,
that it will be difficult to obtain a YER
diet for the amount claimed. The small
ness of the fraud also makes the amount
offered adequate, perhaps, to the extraor-
dinary punishment for the Ofense
committed. The proposition enclosed
by Bliss is from the attorneys of Phelps,
Dodge Il Co.; and while protesting tnat
no fraudulent intention had ever
been entertained by the firm to-
ward the revenue, offered the
secretary of the treasury two hum
dred and sixty thousand dollars in cur
rency, on the sole ground that there may
have been acts in connection with the
entry of importations in violation of the
statutes. Mr.. Jayne, also, on January
9th, recommended the acceptance of
this offer. A second proposition offers
the same amount, as a compromise of
all violations of the revenue laws, and
a settlement of all duties, penalties and
forfeitures between the first of January,
1868, and the same date of 1873. This
proposition was verbally rejected
by Mr.. Baingeld, and was subsequently
withdrawn. Mr.. Bliss, on February Sth,
encloses to Bainfield as a third proposal
from the attorneys of Phelps, Dodge &
Co., offering to compromise all viola
tions of the revenue laws for the sum of
S271, or %. This settlement is recon-
mended by both Bliss and Jayne. Mr..
Bainfeld, on February 18th, writes the
attorneys of Phelps, Dodge & Co., that
the first proposition was rejected because
accompanied by assertions of innocence
of all intent to defraud the revenue, and
the second he declined to recommend
because it contained a condition that
the sum offered should be full
satisfaction for all violations of laws be-
tween January l, 1868, and January l,
1873, no facts being submitted to justify
the secretary of the treasury giving 50
broad release. The third proposition
is open to the same objection, and Balm
field declines to recommend it. On
February 18th, however, Bainfield
writes Secretary Boutwell, that he is in
elined to accept the last proposition
upon the understanding and condition
that the release to be given
shall cover only such alleged frauds
as have been called to the notice
of the treasury department by the
special agent. James NJ. Boutwell, on
the same day authorized Bainfield to
make q settlement in accordance with
terms of his letter. This proposition
was accordingly transmitted to District
Attorney Bliss, who on the fourth Of
March replied that the matters in dis
pute had been finally settled for the sum
of two hundred and seventy-one thou
sand seventeen dollars and twenty-three
cents. The final settlement is ac-
eonpanied by letters from Mr.. jayne to
Al.