The New York herald., 1873-11-26
THE PHELPS DEFALCATIOR.
over $500. 900 stolen From the state.


ThfJoIowing Is the official synopsis, prepared for
the Ere'ta2g Journal, OF the final report made by
Mr.. Warren. who was called to examine the ac-
counts The State Treasurer after the abstraction
OF State money by Phelps was discovered IL ex-
hbi.s the exact amount OF money taken by Phelps,
the defaultlng clerk, the time at which the theit
was perpetrated and the false entries In the
Treasurers books made with view to cover up
the frauds. The report is very long one, and Is
illustrated by numerous tabular statements. 1t
Will be sent to the Legislature by the Governor at
the opening OF the session.
The whole amount taken by Phelps is s30l, III 80
The 3st OF July, 1873, was the last day when the
Treasurer's deposits and cash on hand belonging
to the general fund were shown TO agree with the
Comptrolers books. The whole amount distracted,
as above stated. was taken between that day ana
the 10th of October ls73 and it was done by with
and currency from deposit, and approDriating the
same, or, in oJher words,
STEALING 1T.
The amount stolen In the month OF August was
$780, 900. The residue, stolen in the month of
September, was $1O1,7 80. In the Treasurers
cash book were the following entries, purp0rtlng
to represent bank deposits, for which no c0rre-
spending credits can be found In the accounts OF
the State deposit banks:-
1873
August q cash book folio 49, 36............... $4,000
August $, cash book, folio 80 ACKNOWLEDGEMENTS" 5000
August 7, cash book, folio 56................ &c. S,sU
August 80 cash book, folio &C.. 60
Total. ....................... . 100000
The entries of these items OF pretended deposits
do not specify the banks in which they were
alleged TO be deposited nor were any such items
to be found in the bank ledger; but there Is an
entry in SAID ledger, folio 13l. under date OF Au-
gust 80, 1878, to the debit of the Mechanics and
responding credit is found in the passbook ac-
count OF that bank or any other OF the deposit
banks.
Mr.. Warren says:-"while the pass books have
always or usually been written up every month
and the cancelled checks returned to the Treas
urer, find that the very important d1ty OF exam
inng and comparing them has not been properly
performed, the person whose business 1t was and
who was relied upon by the Treasurer to attend to
1t, g. Ii. Phelps, having wholly neglected it or
failed to perform it in a proper manner for more
than year past fact which has been developed
by the examination and which has caused delay
OF more than two weeks in completing the same."
WHO STOLE THE MONEY!
The next question solved by Mr.. warren IS VINO
stole the money He states that Phelps, from the
time OF his appointment, had the entire charge OF
day. and kept the account OF rece1pts the cash &C
count and the bank account; that although theo-
retically subordinate to the Deputy Treasurer ne
exercised almost entire control OF all the cash
transactons that the absence of the Treasurer Tor
much the greater part Of the time, accord
oiice, and the absence Of the Deputy caused by
long and severe illness, afforded Phelps every OPP
S OF GasrGyng out MS PURPOSE na hav N
title OF cashier, to which he had no legal right he
began to endorse for deposit drafts in favor OF the
Treasurer, thus 81
) "Pay to E. A. GRoEsBEoK. Esq.
State Treasurer,
per c. II. PHELPS, Cashier.
Although this was objected to by both the Treas
urer and his deputy, the bank was notified not to
recognize such endorsements Having IN that way
cial Bank at Albany with his pretended official
signature, he ventured on the experiment of send
ing to New York drafts remitted to the Treasurer
In payment OF state taxes &c, endorsed in that
manner and successful, though they were
passed through house OF questionable repute.
Mr.. Warren concludes this part of his report
thus
In view of the foregoing it evident that the
the State but against his beneactor the treasurer who
had 50 implicitly trusted him. was Charles H Phelps;
the @ or ba Of the e
Suspicion of what was going on
In the course Of this examination Mr. Warren
discovered and pointed out several practices
Among them is that OF making temporary loans
and advances to various public officers and clerks
aries. TO use his words ''as has long been the
practice heretofore These advances and loans
he states to have amounted, on the 10th OF Oc'
Mr. Warren also referred to practice which has
existed for several years, and for which he con-
siders the State officers in no wise responsible
that OF using the moneys belonging to the several
state sinking funds for the current expenses OF
the government. 1t is proper to say that this
practice commenced years ago and The necessity
which occaSioned 1t resulted from the action Of the
Legislature, which, unwilling to incur the odium
of evying taxes in sufficient amount to meet ex-
travagant appropriations, authorized such tenn
porary use OF the moneys belonging to these sink
Ing funds. These deficient appropriations and
their consequences were pointed out in Comptroller
Hopkins last annual report, and the use of the
sinking fund moneys for sucn purposes was re-
ferred to and condemned in pointed terms by
Governor Dix, in his annual message as violation
OF the faith OF the State.
The Comptroller, since the last session OF the
Legislature, though having $400, 600 900 OF State
bonds TO redeem has, nevertheless, invested more
than So, 0O0 900 belonging to the sinking fund in
permanent securities and, before the end Of an
other year, hopes TO go very far toward the COM
pete correction Of this public wrong.
The Journal ays:-Although other Irregularities
in the Treasury Department are pointed out by
Mr.. Warren, they are not OF such nature, in the
opinion OF the Governor as to warrant the eXer-
else OF the power confded to him by the consttu-
ton, of removing the Treasurer from Office. He
Will, we have no doubt, take such notice. in his
message to the Legislature, OF these various ir-
reguarites to place the responsibility where 1t
belongs and lead to proper measures lot their cor
~