The New Orleans daily Democrat. [volume] (New Orleans, La.) 1877-1880, 1879-02-21

Arrest OF Simon j. Flatow- S0met hing.
About the Manner In which the
Ring worked

from the fact that Simon J. Flatow was ar
rested yesterday. for violation OF the Internal
revenue laws, ut the instance of the speeiaI
agents OIL the government It would appear that
the investigation OF the tobacco frauds ia draw
Ing 10 q close. and that the net which has been
thrown around the ring has been drawn close
and is gradually being pulled in
Flatow is one OF the largest dealers In leaf
tobacco In the city. and Is regarded By the gov
eminent agents as
THE HEAD or THE RING
which IL Is charged. has for SO long a time been
engaged In defraudiDg the government of the
Internal revenue tax. It Is said that he was
what might be termed the treae urer of the ring.
receiving regularly stipulated amount OF
money from each manufacturer and using II
lor the purpose Of quietiDg and satis wing the
government officials.
These frauds began several years ago DURING
or Just before Coekrem's administration Of the
Internal revenue Office. At that time that is
When the frauds began, the packages Of tob 4cco
we're stamped by the inspector with a STENCIL
ne ne Inscription being mereIy statement that
the tax bad been paid. with the name
In those days the ine pect0r was boupbt. and
stamped tWies or more times the amount Of to-
paeoo LOT Which he received the tax, and taking
t0r q eonaldeIatfon for his dishonest act ona-
nan or less OF the amount which, he manufac-
turer saved. and of which the government was
defrauded. Investigations BY the e0yernnant
led TO the discovery Of The trick and tbe sei1nrt,
Of factories In various portions ~ The cnnntre
and several In this city. including the one OF
the nominal owner. The factory wBs closed
and both brothers, II IL said we're finaneially
WTlrescked Be that as II may. however, simon j.
HIatoW shortly after SOU hC and obtained po-
sitlon in the office OF Internal Revenue Collee-
tor Cockrem.
The government finding that the stencil
stamp was no security for he collection of the
tax and was certain indi alton That it had been
paid; coneeived The idea OF the system Of colleo~
tlon by the sale OF stamps now In use.
The manufacturers then cast about for
NEW METHOD OF EvADtNe THE TAX,
and devised one In which, however. the CO.
operation Of the leaf dealer that is. the tobacco
necessary. This was. however, secured by pay-
Ing TO the dealer a few csn's more per hound
f9 for ,"srooked Tobacco, thtn they would for
straight. and selling 10 the tail dealers the
manufactured tobacco at few cents less per
pound than the market price. They would thus
save between fifteen and twenty cents uer
pound as the tax on tobacco is twenty four
cents per pound.
The law provides that the dealer In leaf to-
Tor the purpose. the date OF reeeirt Of every
hogshead OF tobacco, the planter Uf VIII m he
teeelyed or purchased 1t. aud the date OF sale
70. with t6e name. OF the purchasing manufac-
turer The manufacturer is also r.unired to
keep book, In which is to be recorded all pur-.
9 chases q tobacco made by him. and the dlspo-
1n consideration of the extra price paid. The
1921 dealer would make no eutry In his book
keep, of either the purchase Of The tobacco from
tne planter or Its sale / the HaBufacurer, and
thus that Individual was enabled ~ omit the
entry In his books, and the government was
thereby kept as much in ignorance of the exist
ence OF the crooked tobieeo" or that II had
been worked up. as II it LAD never been raised,
The law further provides thai tobacco put up.
10 packages shall be stamped and that whom
the aeRsRes are en- pity the stamp shall be de-
stroyed by the dealer. In consider alton of the
rebate In price the dealer returned to the mann
Iacturer the package with the stamp intact
Ihe package was refllied and again put ON the,
market and this was done over and over again
until the stamp wore out.
In short time Rtte' the inauguration of this.
nethod Simon j. Flatow left the internal
.eVenue Office and went into business az a leaf
lealer, and In addition to the charge OF being
ne head OF the ring 1t l. alleged that he was one
II inc dealers who aided the NAM ufacturers and
legleoted to make entries Of receipts and sales
lhls 1s the ohense for which he was yesterday
ARRESTED
IN warrant Issued by United States Com MID
Toner Lane. He was brought before that off,
er and placed under 5000 bonds 10 apnegr
tnu answer On Tuesday next, at II O'Clock
IL may be remarked In conclusion that the
anne Of the tobacco men could not have been
5orked Without the connivancs OF the povarn-
1ent 0ff1ctas, and that they wore blind h IL
,ithout being paid for 1t no sane man will ba-
eve; Dut the amounts paid aud the guilty re-
lp,ents are subjects for further Investigation
nd developments will. no doubt come In time