Delaware gazette and state journal. (Wilmington, Del.) 1883-1902, 1893-03-02


smith, is an embezzer to the extent of
S55,900 of the banks money.
Smith made full confession of his guilt
in the office Of Levi G. Bird and in the
presence of President Winchester. His
explanations were that the peCulatiuns
had extended over period of II years
The method of ENLIGHTENMENT is fully ex-
planned in Mr.. Winchester's statement
which follows. Smith added that he had
a very expensive family and that the
money was spent on them.
subsequently Teller Smith surrendered
himself to United States Marshal MahaGly
Smiths embezZlement is the largest, BY
long odds, on record in the banking and
business history of Wilmington.
The announcement has caused the great
est sensation in the city. Smith was always
held in great esteem there being not
breath of suspicion against him from any
direction
Over year ago Cashier Armstrong Of
the First National Bank resigned and
Smith was offered the position. This lie
declined. 1t was surprise to everyone.
HOW THE DISCOVERY WAS MADE.
The discovery of the defalcaton is due
to President Winchester who had been ell
denvoring for a month past, to obtain
balance sheet from Smith, bnt the latter
kept postponing this work, upon various
pretexts. Then Bank Examiner George
w. stone became an actor in the drama.
On February list that official in the
usual course OF his duties called at the
First National. His presence and the cause
of it was thoroughly understood. It was
simply the annual examination of the
banks accounts which Mr.. Stone as gov
eminent bank examiner is sworn to
make. This was on Monday. February
LIST. On the following Friday, after two
days critical scrutinizing of the lcdgers he
n hall eli If In To-
dividual ledger be struck off. The result
was the first definite clue to a shortage
which at length developed TO the large
figures given. Everything pointed to but
one direction and that was to the incrimi-
nation of +. I. Il. Smith
Mr.. stones STATEMENT.
Examiner stones personal statement is
as follows:
"The examination of the First National
Bank has just been completed, and there
is no doubt whatever that il is fully able 60
meet its obligations TO its depoSitors with
out any Inconvenience. The loss through
the defalcation of the teller will fall en-
tirely upon the stockholders. 1t will re-
duce the surplus and undivided profits less
than one-half, but the solvency of the
bank will not be in any way affected as
the amount of the surplus will still remain
about $4,000, and the capital will remain
intact
THE ARREST ORDERED.
Upon the above and under a charge of
embezzlement preferred by James r. Win
chester, the president of the bank, 7. I.
e. Smith was given into the hands of
United States Marshal Mahaffy.
1t was arranged that the prisoner be
given a hearing Friday morning.
THE PRESIDENTS STATEMENT.
James 7. Winchester, president of the
First National Bank, makes the following
statement ..-.--
up. I. L. Smith, the paying teller of the
First National Bank of this city, is now
under arrest charged with embe22ling
so5, 800 from the bank.
The deficiency covers false entries eX-
tending over about 10 years.
Smith, in addition to acting as paving
teller, also did the posting in the ledger, in
which the individual accounts are kent.
He kept on his desk a spindle, which
added as a file for the checks which he
paid that day, and also as a canceling ME.
dunn. These checks, after being thus can
celled, were charged up in the individual
cash book against the respective accounts
by another clerk.
"They were then posted by Smith under
proper headings in the ledger These
checks were then put away in boxes in the
vault, waiting for the balancing of the
pass books.
smith, to take this money, adopted the
following method:
"lte went into the vault and took out
one Of these dead checks and putting il on
the spindle, taking care that the spindle
passed through the old cancellation hole
would take corresponding amount of
cash from his cash drawers.
The check would then pass amidst other
bona fide checks to the clerks who charged
up these items. Smith would then neglect
to post the entry OF the false check. The
ledger folio would then show identical
figures with the customers pass book, thus
making the ledger of individual accounts
show the proper balance due customers.
THE bank keeps another ledger called
the general ledger. This shows the general
condition of tile bank.
"lts capital, surplus, gross, amount of
deposits due individuals, its general re
sources, DC
This special account of individual
deposits is a debit of the banks and is
charged daily with the total amount Of
deposit made and credited with the total
amount of checks paid. These two
amounts are taken from the individual
cash book before referred to. This cash
book, as before shown, would represent
more checks paid by the bank by the
amount of this dead check.
This over-credited many times repeated
and extending over many years would
have the effect of reducing the debit item
of deposit by tine total amount of these
embezzled amounts
THE bank has q capital of $500, 900. and a
surplus and undivided profits of 1927 900.
This shortage will be charged against
this surplus fund, leaving the bank with a
capital of 5000 600 and surplus of S1l 900.
"Smithis under bond of $4,000 taken
out in the American Surety Company of
New York.
r Al
course, reduce the amount OF defalcation."
HELD IN $4,000 BAIL.
MIR. Smith was given hearing Friday
morning before Commissioner :. Rod
mond Smith.
The teller was represented by his counsel
Levi c. Bird. District Attorney Bcniah
| Watson prosecuted
The hearing was held in Judge Wales
chamber. President James L. Winchester
who preferred the charge against Smith
was present,
The charge was under the provisions of
section 300, United States Revised stat
utGs and identical with those made in the
recent case of Teller Noshell of the
Smyrna Bank, namely Of misappliCation
OF the funds of the bank and Of embezzlc-
ment. The punishment under this section
is not less than five nor more than 10
years imprisonment.
The hearing on Friday was very for
NAL. During tho reading Of the charge
Smith appeared very much distressed. He
said nothing at all Mr. Bird as counsel
merely waived u hearing and smith was
ordered held in $50 900 bail.
lie was given back into the custody of
the United States Marshal.
There seems to be some prospect Of his
obtaining bail rs his friends are hestiring
themselves vigorously to that end
This is tho fourth notable defnlCation in