New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1873-04-28
PHELPS, DODGE & Co.'S CASE.
THE COMPROMISE NEGOTIATIONS WITH THE
GOVERN MENT.

WASHINGTON, April 27.--The following is the cor
respondence, from the files Of the Treasury Depart
ment in relation to the of Phelps Dodge & Co:
lA-InelOurel
CUgTON-HoUsR NEw-YoRK
SURVEYORS OFFICE, Jan. 2, 1878
Hon. GEORGE g. boutwell,, Secretary Of ne Treasury
SIR herewith noose detailed report OF result Of
examination of the books and papers OF Phelps, Dodge
Co.. importers Of metals doing business In this city.
have endeayored to make this statement as inteigble
as possible the large involved 10 the suit that
has been instituted and the long and favorable standing
OF the house. must be my just hcaton for explaining at
length usual the exact character OF The fraud.
and the character and extent OF the proof
According TO ordinary modes OF reasoning house or
the wealth and standing of Phelps Dodge Go. wonld
be above the influences that induce the ordinary brood
OF importers TO commit fraud. That same wealth and
standing becomes almost mpenerable armor against
suspicion OF wrong doing and dyers the attention OK
the officers OF the Government preventing tn scrutiny
which they give to acs Of other and less favored
porters 1t would require more than mere suspicion 70
justify customs officer In questioning the truth OF the
declaration under oath OF member OF this firm before
the United States Consul that invoice Of merchandise
purchased by this house aud consigned 10 them IN
all respects true that represented the actual prices
paid with all charges thereon hat other different
inroce had been would be furnished ~ auy one.
IL would for the require almost positive
proof TO Justify suspicion that the members OF this
firm did not to the truth when they made entry
OF these goods and soemnly declared oath that 10
other or different invoice had been received by them
and that the invoice produced represented the true pur
chase price, and in all respects true. and that II
any other different invoice or account was received
by them they would immediately notify the Collector OF
that fact and the officer that should have the temeTy
to proceed without the most positive proof to charge
this OF any other house OF like standing With having
failed to comply with the law IN these most essential
particulars must expect to bring upon himself shower
OF deserved odlum.
Feeling keeny the requirements Of the situation,
proceeded with the investigation in this case with
great caution. but having in my possession certain
papers purporting 10 be copies Of invoices from the
manufacturers Of these goods giving the Sizes KINGS,
qualities with shipping marks, dates, aud number
Of packages, proceeded 10 compare them with the
CustOm-hOuse papers file aud found them TO agree IN
every case in the following particulars: In number OF
packages IN marks, in Sizes and kinds OF goods, In all
the subdivisions that distinguished the different sizes
and qualities under the different marks with the number
Of packages.
First establishing beyond all question the identity Of
the goods second that these papers we're different IN.
voices OF the goods. These invoices differed from
those in the Customhouse in the following particulars,
viz: prices paid the difference per package being
from three pence to four shngs sterling in emitting In
many the additional charge per package from the
Custom house invoice; in emitting from the Custom.
house or consular invoice the cost OF transportation from
Wales the place OF delivery 10 LiVerpool the pace Vi
shipment.
In other words the identity Of the goods being esab
sed and the genuineness OF these papers invoices
in the possession OF the firm being established this firm
had deliberately violated every provision OF the law Of
1863 now governing the invoicing and entering OF i'm
ported merchandise paying ad valorem duty BY dill
gently comparing these papers with their invoices e
they were found to be in the same handwriting Of their
house invoices, and had TO believe that
systematic fraud had been perpetrated.
therefore called Judge Noah Davis the then United
States Attorney my Office to 20 the papers with
me- and he fully c0ncurred in my belief that fraud had
been committed and assisted me in procuring
for the seizure Of their books and papers After pro-
curing the warrant, however, Judge Davis suggested
that he come to my office and send for the members OF
the firm and say them that If they would deliver such
books as might indicate he would not have the warrant
served. This pursued and they delivered
such books as asked for Upon examination OF their
invoice books exact fac siDe invoices Of those the
Customho were found, to which found attached
many instances other invoices similar i'll character TO
those hereinbefOre described
This certainly brought the knowledge of the fraudu-
lent transaction directly home 70 the members Of the
firm and each guided by the invoice price either
In selling the goods, making up the accounts, in
Quoting the financial transactions OF the house. The
that Phelps Dodge Co., in the Transaction OF their
enormous business, knew nothing OF the import
meaning OF the oath taken before the u s. Consul
Liverpool, knew and realized nothing OF the nature OF
the oath taken almost daily by some member Of the firm
enforced vigorously and reentesy against their less
n
New York Knowing and caring nothing for the Laws or
they have deliberately and systematically disregarded
and deed the law with intent TO deiauG the Govern
The total value Of the invoices examined amounted to
about and tbreequarters Of million OF dollars and
this amount is plainly and certainly forfeited TO the
United States by the statute Of 1865 not by any tech
deliberately and systematically stating the cost of their
goods below the purchase price by false invoice made
false conceivable reason but 10 lessen the duties TO
be paid to the United states.
alta uta
Forfeited for doing what the statute in express terms
forfeited they did defraud the United States
Forfeited because no explanation can be gwen or
motive found for systematically undertaking the cost
OF their goods and thus deraudng the United States,
except that they did intend to deaud the United States
II the petense that they acted IN ignorance
the law be made 70 serve, then the plea OF gno
may be nteposed in any case and the intent
never inferred any act and the first elements
OF reasoning set at naught III the search for
motive that will explain why they made the two sets VI
Inc items proven 10 these several invoices to be un
deryalued, when taken separately, amount 10 about
Tie percentage Of loss the whole is there
FORE small yet the mportaOns of the house very
and II the same or nearly the same percent
age fraud extends through their mporaons, other
than those included ia the statement, and which we
have positive proof the entire loss TO the must
have been some $4,000 or $1,000 per year perhaps more
elusive have the honor TO be, very respectfully your
obedient servant >, b. q. JAYNE, special Agent
OFFICE OF THE DIsTRIcrArToRSEY OF TIRE
UNITED STATES FOR THE SOUTHERN DISTRICT
Hon. E. c. BAs1ELD. Solicitor OF ne Treasury
SIR: herewith transmit an offer OF compromise maae
United states agt. themselves Tue suit is oroughtto
recover nSTnsy though the asts oIis e.s
Tho charge is for violations OF the nrst section VI TIC
The facts in the case re as follows: Acting upon In
formation received BY him. Special Agent Jayne apped
pSpers Of the defendant Ny after care
examination deemed proper case iIs or pe s issue ..
m herr Of he