New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1873-10-16
A STATE DEFAULTER.
HEAVY EMBEaZL EMENT BY THE TREASURY
CASHIER AT ALBANY.

THE POPULATIONS or CHARLES II. PHEiPs-HIs
11IEFTs REcKoSED AT S900,0O0-nOw HE HOOD
WiNkED HIS AssoCIATEs-THE STATE NOT
LosER-PHRLPs TO BE ARRESTED AND TO BIZ
VIGOROUSLY PROSECUTED.
GENERAL PRESS DIsPATCHl
ALBANY. Oct. 1j.-Charles II. Phelps Cashier in
the Treasury Department of the State was arrested
IN jersey City, yesterday and brought here last
night at midnight, charged with robbng the State
treasury OF an amount Of money supposed TO reach
S"OO'ocO. Under an arrangement made by the Con
troiler and Treasurer the State deposits divided
between five or six Of the banks of this city. A
lew days ago the State Treasurer discovered that
the Cashier making larger deposits in one of
lhese banks than it entitled to, and at once in
sttnted an examination of his accounts, but with
ont suspectlng that any of the funds of the State
had been embezzled, entire confidence being placed
IN the Cashier by every one, and the system of
checks in the Controllers office being deemed an
absolute security against fraud. For years it has
been the custom of the banks to send TO the Con
trolleTs Office duplicate of the Treasurer's bank
book upon the first day of each month. These
books always passed through the hands of the gen
eral beokkeeper, George Seeley. The banks com
planning Of the labor involved, and Mr.. Phelps Civ
ing assurance that it entirely unnecessary, Mr.
Seeley dropped the duplicate set without the knowl
edge OF either the Controller or Treasurer This
left but a single set of books to be manipulated
'Ihe next step was to induce the general book
Keeper to accept in some instances, the statement of
the Cashier Of the balance in some Of the banks
without producing the bank books. This was sue
ccssfully accomplished during the last month, and
thus Mr.. Phelps escaped detection for a very short
time. He charged n large sum 10 the Mechan-
les and Farmers Bank which it's own statement
showed it did not have; and had Mr. Seeley made
the usual and proper examination the false entry
would then have been discovered. IL further APP
pears that Mr. Phelps obtained the cash upon some
OF the drafts RENTED to him by the County Treas
urers, though these drafts could not legally be
cashed without the Endorsement of the Treasurer
of his deputy. and any bank taking these drafts
upon the Endorsement of the Cashier only is liable
and Will be compelled to refund to the State.
The Treasurer began his examination by request
ing the various banks of deposit to furnish him with
a statement of their accounts. This threw Phelps
into despair, for he knew that the examination Of
these statements would reveal his operations. He
therefore fled from the State and wrote a note to
the Treasurer admitting that his accounts were
not entirely correct. Mr. Raines followed
him to Jersey City, and in the inter
view which took place last Friday, Mr.
Phelps claimed that ID allowed his liberty two
or three months lac could refund the entire amount
lie said he had used the money in speculations in
New-York City, but not i'll stocks, and would not
say definitely to what purpose he had applied it .
lie also admitted that he had accOmplices, but
would not give their names. He claimed that the
money was still largely under his control, and that
he would be able to refund say 100000 Of the
amount. He desired to be left alone, that
he might be able to obtain and restore
the money, and propositions also
made from legal sources to adjust the matter on
some basis of compromise. The Treasurer, however
would not assent to any arrangement which either
settled the oiense or permitted the offender to re-
main at large. He put detective on the track of
Phelps, obtained the necessary papers from Gov.
Dix, and had Phelps arrested and brought here.
The Treasurer has retained Henry X. Selden and
Samuel Hand, who viii at once proceed to a
thorough investigation of the case.
Phelps was appointed Cashier by Treasurer Raines
in the Spring of 1872 He had occupied position of
considerable trust in the Western Union Telegraph
office at Washington, and also with the Adams Tx
press Company. He was always considered trust
worthy by everybody knowing him.