The daily dispatch. [volume] (Richmond [Va.]) 1850-1884, 1877-12-07

DISCOVERY OF A FRAUD PRACT1CED UPON
THE COMMONWEALTH SEVERAL YEARS
AGo-A sTARTLING COMMUNICATION
FROM THE SECOND AUDITOR-OLD BONDS
REFUNDED FRAUDULENTLY-A COMMIT
TEE OF INVESTIGATION ASKED FOB.
The following communication was sent
to the House OF Delegates yesterday:
SECOND AUDrToR's OFFICE.
RICHMOND, December 5, 1877.
To the Honorable the General Assembly OF
Virginia:
In the course OF an examination OF the
records and papers OF this Office for the
purpose OF testing the accuracy Of the fl nd
ing done under the funding act of March
80, 1871, and, when necessary, comparing
them with those Of the Treasurer's office, 1t
was ascertained recently that considera.
BILE number Of old coupon bonds which
were sent from this Office to that OF the
Treasurer, in the years running from 1855
to 1862, for conversion into registered bonds
under the act of March, 18, 1855, and thus
exchanged there, have been brought into
this Office since the passage Of the funding
act and funded under that act.
They were presented here FOR funding
clean and free from any mark OF cancell;l.
tion, though by the act authorizing the ex-
change the Treasurer was required to cam
eel such surrendered coupon bonds in O
prescribed form in the presence OF the Sec
ond Auditor, and to file and keep them in
his office.
Second. Several coupon bonds, issued
under the act of Cd March, 1866, and sent
into the office Of the Treasurer and eX-
changed there for other bonds, appear also
to have been taken from that office, pre-.
sented here, and funded: having no mark
upon them to indicate their character.
Third. Moreover, number OF coupon
bonds, which, since the passage of the
funding act, were sent from this office into
the Treasurer's Office to be funded, and fol
which new bonds were issued, have since
been presented in this office and funded
again. These bonds after having been once
funded were brought here second time fol
funding, and were also clean and free from
any mark OF cancellation upon them
though the act of March 80, 1871, under
which they were previously funded, re.
quired that the Treasurer should cancel and
file and keep all such bonds in his office.
1t is proper to remark here that in re
spect to these aforementioned bonds, as pass
ing from my Office to that OF the Treasurer
to be funded, there appears to have been NJ
omission Of duty on the part OF the funding
clerk in my office in failing to endorse ;
statement or mark OF 'funded" on sucl
bonds. ..-. ...t-.
The aggregate amount OF bonds thus i'm
properly refunded appears to be abou
$4,000; which, funded at two thirds o
their face-yalue, is some S23, 900 in new con
eol and peeler bonds (besides West Virgini'
certifcates), and increasing the public deb
by SO much.
There are circumstances connected Will
these transactions which plainly show tha
the bonds referred to were abstracted from
the Treasurer's office and refunded by on
or more parties quite familiar with the bust
ness and records Of both offices, and for
fraudulent purpose. These transactions al
appear to have occurred before the presen
Treasurer came into Office, except som
$4,000 brought in and funded since tina
period, though doubtless distracted, lik
the others, previously.
In explanation OF the delay on my par
in making and reporting these discoveries
I beg leave to say there was no reason t
suspect that any bonds once funded~or eH
changed could be abstracted and funde
again. -.....s -..~.e..
When the necessary clerical force in m
4 Office could be applied, after their curren
duties, to the examination Of the books an
papers, for the purpose OF proving tue nc
| curacy OF the work done, they were dill
gently engaged in that service. The FUND
ing OF forty million dollars Of stock, wit
the transfer and conversion Of half rs muc
more, was q work OF great magnitude.
That errors would occur was to be eS
pected. They did occur, but were ger
orally clerical errors, and by compario
with the Treasurer's office nearly all hay
been corrected.
When my attention was first called to tb
discovery made in relation to portion G
the bonds in question it was my purpose 9
once to report to the Governor the facts O
they appeared to exist. But .On refectio
and consultation it was thought best to pul
sue the examination until q more certai
result could be reached. This has bee
done; and, though not concluded, it
hoped that the aggregate mentioned ina
be reduced.
Under these circumstances | feel it m
duty to address this communication directl
to your honorable body, and respectfully
invite such action in the nature OF an inve
tigation into the matters referred to as ma
be Judged proper.
Most respectfully, your obedieDt servan
ASA ROGERS, Second Auditor.
THE DoUBLE-EUNDNG.
Not only were the s35, 900 in bonds aboy
referred to twice funded, but in order [
conceal himself the guilty party, or SON
confederate Of his, defaced q record b
skiliully extracting two leaves in one boo
and one in another. The books thus NUT
lated were the Second Auditors books
daily funding transactions.
In 1871 (after the passage OF the fundin
billy four extra clerks were employed in til
Second Auditors office to make the calcul;
tions and do the work OF funding, as n
quired by that bill. The pressure Of bus
ness upon them was often very great.
was the custom when stock was brought
the Second Auditors Office for funding b
made statement Of the bonds and intere!
with requisition to the Treasurer attache
to the old bonds. The Treasurer then il
sued the new stock, which was taken to tt
Auditors office and registered there an
delivered to the owner, he giving receil
for the same.
The Treasurer, upon receiving the ol
bond and-the order OF the Second Audito
issued the new bond, and he ought to ha,
cancelled the old bond. But the deyelol
ments in the Mayo investigation prove
that in the Treasurer's Office, at that tin
1S71J2-'3), the work OF cancelling got Il
behindhand. A Treasury empoye has IT
quenty stated to this writer that In tho
days there was nothing to prevent him fro
stealing and selling upon, the mark
81, 900, 900 in uncancelled bonds.
HOW TT OCCURRED.
Had these bonds been stamped "funded
in the Second Auditors Office, or had th'
been cancelled in the Treasurer's office upt
the issue of the new bond, this thing no
claiming the attention OF the General A