The daily morning journal and courier., 1903-06-10
HELD FOR EMBEZZLEMENF
ARREST OF fl DISTRICT OF CO.,
 LUMBIA EMPLOYE.

James M. Watson, Jr., a Clerk in the
 Office of the Auditor Takes S6O,OOO to
 S70, 0,OOO-Commissi Demand Ex-
 pIanatiOn of How Such a sum Could
 be Extracted Without Earlier De-
 lection.
 Washington, June 9.-James M. Wat son, jr., clerk in the office of the audi tor for the District of Columbia and the son-in-laW of a wealthy retired railroad contractor, was arrested to-day on a charge of embezzlement of government funds. The amount is estimated at from $6O,OO0 to $75,GO0. The warrant makes the specific charge of embezzle- ment of $S,O09, which represents only portion of the alleged peculatiOns. Watson was not bonded and in case he or his relatives Several of whom are said to be wealthy) fail to make good the alleged losses Auditor J. T. Petty will be held responsible for the amount. The auditors bond is for $2O,0OO. The money alleged to have been embedded was part of the funds deposited in the office of the auditor by property owners who are willing to pay half or all costs of improvements abutting on their property, such as paving sidewalks, al- leys and streets.
 This embraces deposits by railroad companies, electric light companies, telephone companies, for crossing side- walks, for sewers and water mains, and is entirely separate from the other ac- counts This account is not subject to review by the treasury department, but is checked by the clerk in charge of the corresponding account in the district department, and he reported it correct as late as February, 1902.
 The depositors, it is said, have the right to recover from the district through suit. The auditors office is under the supervision of the board of commissioners of the District of Colum- bia. Auditor Petty has complete charge of the assessment and permit fund, de- posting the money In bank to his own credit. MT. Watson, it is alleged, has been entrusted with the deposits, and he returned the pass book in apparently proper condition in each instance. He has been an employe of the district for four years, and the alleged defalcations are supposed to have occurred through out most of this period. The discovery of the alleged shortage was made sev- .eral days ago, but was kept secret by the auditor in the hope of securing res- titution.
 The commissioners of the district were made acquainted with the condi- ton of affairs this morning, and at a special session demanded from Auditor Petty formal report on the matter and an explanation of the system by which such large sum of money could be abstracted without earlier detection. The system is said to have been inquir- ed into ten or twelve years ago, but no changes in methods resulted, Auditor Petty said to-day that the accounts has been manipulated in such clever man. ner that he was not certain of the exact situation until to-day.
 Watson was a joint publisher of a news bulletin issued in this city. In addition to running the paper he owned barber shop, which he has been try ing to sell recently. He was the pro- moter of patent medicine concern and the treasurer of what is known as the District Cooperative Association, which takes it's money from employees on de- posits and lends it out again. Many of the officeholders at the district building iare depositors in the association, turn ing the money over entirely to Watson and getting his personal receipt in tiny books resembling bank books. Several months ago Major Sylvester, the chief of police here, investigated Watson's record, and it is stated that he found that Watson was sent to the reform school, while in his minority, on a charge of forgery.