New-York tribune., 1905-02-28
BANKRUPTCY DECISION CONFIRMED.
Penitentiary for Man Who Made False
Statement of Financial Standing.

To the Editor Of The Tribune
Sir: Members Of the bar who have been follow
ing the case greatly interested in the decision
OF the Court OF Appeals in the People agt.
Charles Kanter, handed down on February q
Kanter was convicted the charge of obtaining
property through making false statement in writ
ing signed by him TO his financial standing.
1t is not exaggeration to say that the confrma-
ton Of his conviction by the highest court IN our
State is the vital decision to the general
mercantile world that has been obtained from the
Court of Appeals in many years. The conviction
was obtained only after a long and bitt fight and
at great expense both to the county and to the
business men who pressed the charge Prior 10
Kanter's conviction IL was the constant boast of
bankruptcy promoters that there not in
States prison one man who had been convicted OF
a commercial crime OF that character. The present
District Attorneys Office deserves the credit of
securing the first conviction in years Of that char
acter.
The affrmance OF the decision by the Court OF
Appeals should go a long way toward preventing
the National Bankruptcy act from being perverted
into instrument Of fraud and larceny Until
recently. OF the favorite methods of obtaining
affuence easily to so through bankruptcy
after establishing credit in the particular
that Kanter and his partner employed. The idea
in essence is follows:
The prospective bankrupt secures a high financial
standing in the business community by giving to
a commercial agency like Dun's or Bradstreet's Cor
Kanter did, directly to the merchants who sold
him goods a statement showing a condition OF
assets and above liabilities that would eutitle
him to a large credit. After securing the desired
standing and remaining in business perhaps for
year so, merchandise is purchased ndiscri1ni-
nately, and sold just indscrimnately sometimes
at ruinous rates; the accounts receivable are
pledged and the proceeds disappear, the proposed
bankrupt never intending to the b:ls for goods
purchased.
The moneys obtained in this way disappear In
mysterious manner into various channels so that
ii becomes hercuean task 10 trace them TO
their hiding places Under pressure of accunu-
lating debts and creditors. the bankrupt (vvho in
reality has been insolvent for long pertod) is
thrown into a willing bankruptcy, from which,
usually after a few spasmodic efforts of enter
prising creditors to bring him account. he
emerges discharged. and shortly after re-engages
in business with his first real capital the strength
Of his i'll gotten gains
This method under present bankruptcy law
has been used with impunity until recently when
determined creditors united to secure the conviction
Of men who committed such crimes Kanter is the
unfortunate victim OF this energy and will in
all probability have time TO reflect upon his mis-
deeds in the next five years that is to spend in
the State pententiary.
The afirmance Of the conviction puts heart into
the credit men Of the large wholesale mercan tile
houses who desire the real enforcement OF the
Bankruptcy Law, and gives sometl Ing of an en-
couragement TO those unfortunate members of the
bar who have sometimes 20 enforce their clients
rights through administration in bankruptcy.
The conviction OF Kanter has already been fol-
lowed By the indictment Of other fraudulent bank
rupts and the rules laid down in the Kanter case
viii be the guiding principles in these new cases
IN the case OF the People agt. Louis Levin.
pending, the principle of the Kanter ex-
tended step further. In that case a signed
statement given commercial agency. In
the light of the Court OF Appeals decision. made
several years ago, that such a statement in
legal effect the a statement such as was
given by Kanter, undoubtedly the courts will hold
that this is not new extension of the principle OF
law
Just at this time when there is talk Of the repeal
Of the bankruptcy law, IL is gratifying find that
the courts of the State of New-York have come TO
recognize that the crime of larceny through com
merCial fraud is a serious For years there
has been a prejudice against punishment for this
sort of crime, the feeling being that IL resulted in
using the criminal courts club for the cOllec-
ton OF debts Undoubtedly the criminal admins
tration of law is subject TO abuse, but in hands
of z District Attorney like the occupying
the office the discretion to prosecute only such
crimes as presented in good faith will not be
abused.
Too little attention has been paid in recent years
to the increasing crime OF fraudulent insolvency.
There are many other crimes OF equal Importance
ard doubtless seriously affecting the whole moral
tone OF the community. In some respects,
pared with larger crimes. the crime Of fraudulent
insolvency Is a petty one; but the whole tone OF
business is lowered when there is feeling of prac-
tics immunity from punishment IN such cases
the Kanter case. JULIUS HENRY COHEN.
New-York City. Feb Is. 1905.