New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1873-10-18
THE ALBANY DEFALCATION.
CASHIER PHLLpSS CRIME.


THE EMBEzzLEMESr FIRST DISCOVERED ny THE
STATE NEUTRALITY-SUSPICIOUS. STATEMENTS
CORRECTED.
lBY TELEGRAPH TO TIIE TRIBuNE.i
ALBANY, Oct. 1.-THE New York newspapers
Of oct 16 contain from article In The Bre"
ing Tunes Of this city, which represents that Deputy
Controller Gnan took first steps that led To tho de
lection Phcpss dcfacation. and that he entertained
suspicious of Phelps which Treasurer Ranes not ohS
did not share but took steps to investigate Among
other things the account says Even after Mr. Gaiah
had discovered that something was wrong PhcSs Boou
character STAYED INQUIRY off; for Mr. Gaan showing
Mr. Ralncs copy OF bis figures the treasurer Mas no
impressed with the unmpeacbabc charactor OF MI.
Phelps that he either omitted neglected TO investigate
his books" The facts are as follows:
First. Neither the Controller any OF his snbofdi
mates knew anything of the defalcatlon until IL was
announced by the Treasurer in person TO the COntfoef
on Saturday last, when he was Overwhelmed WIN SUI
prise Second: After the balances ut bank wore pro
cured bv Mr. Ranes he proceeded with his examination
in secret only announcing the result TO the Controller
under the promise of secrecy until the defauer could
be secured He never received suggestion OF suspicion
from Mr. Gaen and II the Controllers once knew OF
anything wrong in the bank accounts they never men
toned it, After discovery Of the defalcauon by MI
Raines and while it yet secret he procured from
all the officials their expressions OF entire confidence III
Mr.. Phelps. and found that they had no suspicious
arising from his prolonged absence. On the 4th Of DC
ober the general bookkeeper OF the Controllers Office
stated that It was possible FOR any cashier to conceal
ms defacation and that everything was safe beyond
question.
now THE MONEY WAS EMBEzzLED-A WARRANT
ISSUED FOR sHERwIN q CO.-How FAR THE
CONTROLLERS OFFICE is RESPONSIBLE.
lGENERAL PRESS DIsPArCH
ALBANY. Oct. 1.-THE State Treasurer has
received replies the County Treasurers, ana hhds
that the drafts they forwarded all correctly noted
in Pnelps's book and that there IS deficiency OF aoou
s35OOOO Some OF the drafts surreptitiously used by
Pbeps were ndorsed by him as cashier but large part
were regularly indorsed by Deputy Treasurer Paul or
the at 900 have been brought TO light payable To
Charles Hudson cashier. HudsOns name Oh the drafts
was written in by Phelps Charles Hudson, cashier Is
connected with the firm Of f. X. SherwiD & Co., New
York. The drafts should have been made payable to H.
Groesbeck cashier OF the Albany Commercial Bank and
deposited in that bank. BY making them payable TO
Hudson Phelps diverted them from their proper depos
itory and made them available 20 himself, probably
through Hudson. hudson had no right to indorse
drafts warrant the arrest of +. Il Sherwin Co.
has been issued.
The Erening Journal in an article the question OF
responsibility eOrrects the statement that the Con-
trollcrs Office until lately supplied with duplicate
pass-books showing balances deposit No such
books says have been IN use for years, II ever Com
parisons Of accounts were made monthly by the
Treasurer's officials and those Of the Controller.
Between these comparisons hundreds Of thousands of
dollars might be stolen through the Treasurers Office,
and no one in the Controllers office know IT. on the
LIST OF August the balances found correct Before
the Let OF septembes examination. II Is apparent that
twothrds Of the omOozzlement took place, and would
have been detected then If the general booRkeeper in
the Controller office had been supplied with duplicate
H.A Df.fa cd fha dana In tho
Mechanics and Farmers Bank to be s9O0OO more than
ID was.