Burlington weekly free press. [volume] (Burlington, Vt.) 1866-1928, 1902-07-17
USED CUSTOMERS MONEY.
Taking of Testimony Resumed in
Knott & Closson Case.
Firm Lost Nearly 500, 900 in TRANSACT
lions in Cotton, While Senior Mem.
Der Drew Out $28, 900 in Cash
Orders Not Carried Out.

The hearing on the discharge Of the
bankrupt firm Of Knott & Closson, which
was partially completed last fall, was re
sumed Monday morning at the office OF
j. j. Enright, the trustee of the defunct
concern.
! E. Il. Knott and G. l.. Closson were not
present. affidavits being presented to show
that Mr. Knott is sick and unable to take
a trip from New York to Burlington r. s.
Pratt. the expert bookkeeper, who ex-
amined the books after the failure, was
present and his testimony was taken. The
hearing is before Referee George w. Deb
erville and the attorneys present were C.
c. Fits of Brattleboro. r. w. Taft and
! Henry Ballard
| Mr.. Pratt was engaged for 10 weeks upon
the books of Knott & Closson and he Is
considered one of the most important wit
nesses In the hearing During his test-
mony he said that Knott e. Closson had
no cash book and that he had to make UP
his sheets from the daily record of trans
actions, from bank pass books slips, etc.
Did you find the customers transact
tons to tally with the bankers transac-
tions?" asked Attorney Fits.
NO" replied Mr.. Pratt.
| did the discrepancy appear to be slight
or was It a mutual one?"
| 1T was mutual one"
"Wcre they different in the transactions
of diffcrenet Individuals"
"1'hey were different every time. They
could not he accounted for by clerical err
ror or in any other way"
Can you give an estimate of the per-
centage of orders that were carried out
''rhe orders for stocks were largely car
ried out but they made no pref ence to car
ry out cotton orders after July l."
Were the customers long or short on
cotton"
| "1hey were long"
| To-, Nt,,,, l. Hl,x 4
figures which showed that during the part
nership of Knott & Closson the former put
in $1,000 and withdrew s32 90 and the latter
put in s2t39 % and withdrew s6So6so Their
books showed that they deposited with
/ Bachc d Co., s223. so and drew out $780,
| 905. 40.
What became of the difference in those
amounts" asked Mr.. Fits.
at was lost in speculation" replied Mr..
Pratt.
It was shown that in 1899 the firm lost
So go on January cotton.
"Wcre the transactions whereby this
| loss occurred their own or were thcy for
customers ?"
"Thcv were their own. They had no or
ders from customers for such dealings"
Whose money did they put UP for
margins"
'They put up their customers money"
At this point Attorney Fits concluded
!
| iournment was taken until afternoon.
THE AFTERNOON SESSION.
At the afternoon session Attorney Fits
announced that there were a few addition
al questions that he wished to ask Mr..
Pratt. but nothing of any public interest
was brought out.
Attorney Taft began the interrogation
at this point His first inquiries were rela-
| t,~ct, fol tnt,n
which appeared on the account of j. J. En-
right but were not of an important nature.
| Gould You tell from the books the
standing of the firm with Its customers
and the houses with which it dealt?"
| 1T could have been done"
"Did YOU ind anything on the cash ac-
count chat was not correct?"
"Evctything that appeared was correct"
Could rnd did you trace all the money
that came into the concern, both from the
customers and houses
"I did"
Did YOU trace from the books and
papers what become of the money!
II did
"pid you trace any money that was not
properly accounted for?"
II did not"
Did YOU find that any money was drawn
from the firm by either partner that was
not properly entered?'
| "No sir"
"Wcrc there any transactions of the
house that ION had reason to believe were
not entered on the books?'
"rherc were not
did you notice any failure to keep books
of account"
| There were certain books that are usual
| ~ kept by such firms that We're not kept
| by Knott & Closson but their standing
could he determined at any time by one
familiar with the business"
| did they have clerks enough to keep the
books properly"
AN ordinary firm doing the amount of
| business they were would have at least
half a dozen clerks"
| "Wcre there any books in your opinion
that Knott & Cosson should have kept
that they did not havoc
"Thoy should have had cash book and
a statement"
"Were the books kept as they should
have bcen?"
The ledger was kept as it should have
been. The cash book was not kept at all.
"Can an insufficient office force be attri-
butod to the failure to keep books
1T would have contributed to such a
failure"
AT the time the firm failed each custom
er's account and each brokers' account
was correct?'
| "Yes sir
At this point Mr.. Fits asked the witness
if tine entries on the books which were
called correct did not represent fictitious
transactions and Mr.. Pratt replied that
they were not transacting their customers
orders
Trustee Enright asked If the main
| cause of the failure of the concern was
due to failure to keep books. Mr.. Pratt re-
Piled that the main cause OF bankruptcy
proceedings was because Knott n tlosson
did not execute the orders Of their CUSTOM