Kansas City journal. [volume] (Kansas City, Mo.) 1897-1928, 1898-03-23
COLOSSAL FRAUD PERFORATED By
GOVERNMENT CLERKS.
ST. PAUL BANKS HARD HIT.
HAVE FILED A CLAIM At WASHING
TON FOR REIMBURSEMENT.
Enormous Ovcrissues Of Pay Checks
for Work Done on the Upper
Mississippi River-Checks
Were Discounted by
Various Banks.

Washington, March 2e.-Information has
reached the government. through 4 NUMBER
OF banks at St. Paul, that during the past
year and more these and other nearby
banks have been made the victims OF colos-
sal frauds through suspected collision OF
government clerks connected with the COM
mission having in charge the improvements
On the upper Mississippi river. Fun de-
tails of the affair have not yet reached the
government. but the statements submitted
by the banks indicate that SGOO.GOO or more
has been procured from them through
fraudulent time checks for services never
performed. Copies Of some of these time
checks are said to be signed by ). III.
Southall, chief clerk of the United States
engineers Office at st. Paul., and are dated
at different times during the year 1881
Others. it is understood, are dated in 1886.
How the banks came to be imposed upon
to the extent indicated, and why the checks
have been withheld until this time cannot
be even conjectured. 1t is understood mat
the banks will make a claim for reimburse
ment, but the law is said here to be clearly
against this contention. The government
will begin a searching investigation at once
into the whole matter.
ST. Paul. Mimi, March 22.-Just how
great the loss through the government
time check fraud may prove to be cannot
be known until an examination OF the
books of the engineering department has
shown which checks are good and which
false. About three weeks ago the local
banks. which first became Interested
through some Hartford. Conn. holders OF
the paper. began an investigation and De-
came satisfied that the amount of checks
out was far i'll excess of the money appro-
priated by the government to carry on lhe
work of the upper Mississippi river. AFTER
several interviews with So.thall. in which
it is claimed that he tried TO prove that
there was nothing in the claims. 1t is said
that he finally admitted that fully % per
cent of the checks that are now outStand-
ing are worthless.
To protect themselves, the banks at once
took the stand that the government. hav-
ing adopted a scheme for the payment of
the workmen employed by it that enabled
an employee to defraud the banks and other
innocent purchasers of the paper. should
of the claims of the bank for the pay
ment of the entire amount of the checks
was made in Washington. with the result
that the matter became public.
]. H. Southall has been employed by the
government for a period of more than fif-
teen years up to six months ago: At that
of the engineering department. in this city.
being succeeded by j.. D.. .Dushane.
1t was given out at the time that south
all retired from the position of clerk that
he had made considerable money in a
speculation i'll corn. and that he Intended
in the future to devote his entire time to
IL StoCh Iid Z III LIZ I'M liz
was acting as clerk, were to keep the time
as turned in by the foreman, of the pay
that was due the workmen. and in time
to pay off in these time checks. The time
checks were often bought up in large
numbers by Spectators. cashed by banks
ana held until the government was pre-
pared to meet the bills, when Southall
would receive a remittance direct from
Washington and would then deposit the
money in his own name and take up the
checks with his individual checks. BY
doing this for a period of fifteen years.
his signature became perfectly well known
to all the banks in this vicinity. and his
credit, with the government back of the
paper that he issued. was considered as
good as a government bond.
OF the $500. 900 or 800. 900 worth of time
checks known to be outstanding. probably
less than one-fourth was held by banks.
and some of this was held by them for in
dividuals. Two local banks which failed
fifteen months ago hold over 10000 and
nearly as much more was held by a Hart
ford, Conn.,. bank. One man in Wisconsin.
whose name could not be learned to-day.
had bought S64. 900 worth of these checks.
and $4,000 more had been taken as a good
personal investment by a ST. IA capital
list. In smaller amounts the time checks
are understood to be held all over the coun-
try. and it will be some time before the
full amount can he learned.
]. H. Southall Is tonight at his home in
s.. Anthony park. under charge of a de-
%tective. although it is stated that he has
not been formally arrested.