The sun., 1908-06-07
COSTER FIRM A BUCKET SHOP
INDICTMENTS LIKELY ON REV.
ELATEONS IN BANKRUPTCY.
Both Costsrs Heavily indeb,ed to the 'Eiriii
on Their Joint. Aceount-Firm Was
On q Tight Place When II Took IN
Partner Knapp and HIS $50 .0O6-

Both Costefs Heavily tnuebted 70 uie Ftrip
Y on Their Joint. Account-Ftrm Was
s IN q Tight Place When IL Took IN
Partner Knapp and HIS SlS0 .0O6-
Following the suicide on April % of Charles
Coster, who was very web known socially
In New York. and the failure on the follow
ing day for s2.o0Q.Ooo Of .Coster. Knapp d
Co., OF the New York Stock Exchange, it
has been brought out In the bankruptcy
proceedings that for seven years the Arm
had been -bucketing' orders to buy and
sell stocks and~thst SECURITIES put up by,
customers as margin on their transactions
\ were turned over by Charles Coster to other
brokerage houses as cola teral for specula-
tion in stocks carried on by him. 1t 10 the
opinion OF those who have followed the
testimony closely that there Is a probability
that the investi ga ton. which will be con-
tinued on Tuesday, will be followed by in
dictments. District Attorney Jerome has
been Watching the proceedings. j. NJ.
y Knapp. the only other partner Of the firm II
the time OF the failure, .was in the opinion. OF,
8. Stanwood Menken; counsel far the rs
ceiver, entirely ignorant Of these illegal
dealings. ~. :, -.
w. B. Coster, brother Of the suicide. was
, member OF the firm until April. 1901
five years after the books show the first
evidences Of -bucketing." The lawyers
for the receiver have for several weeks
had private detectives hunting for
him TO serve papers requiring him
: to appear before United States Com
missioner Alexander before whom the
hearings have been taking place, TO give
I. his testimony in regard to the "buct eting'
and also about certain joint account that
he and his brother had with the firm. This
account at the time of the failure owed the
firm over So, 900, 900. OF which about IS 0OO, 900
4 is secured by collateral.
Henry Steers. Mr. Coster's brother-in-
: law, said last night that William b. Coster
10 at present in France. having sailed ten
days ago on the same steamship with Presf-
dent Woodward Of the Hanover National
Bank, and that his Paris address is the
Travellers Club. Mr., Woodward sailed on
the Lusitania on May 27I Mr.. Steers said
that Louis Werner. &he receiver, had been
informed of Mr.. Sester's whereabouts.
In the testimony given 30 far, which
includes that of Joseph Lawrence. the
confidential manager, whole salary at
one time was suddenly advanced from
$4,000 to So, 900, and several Of the clerks,
nothing was brought out to show that
he knew Of the -bucketing" Charles
Coster. however was accustomed at short
intervals to have figures concerning the
bucketing accounts and the joint account
prepared on a slip OF paper. This he looked
over in his private Office and then destroyed.
According to the testimony, W. B. Coster
spent most OF his time on the floor OF the
exchange. At the close of the session.
however, he used to 60 to his brothers
private room and consult with him.
The ignorance Of Mr.. Knapp of the affairs
Of the firm is indicated by his testimony.
When asked by Mr. Menken if-it were true
that you did hardly anything. in fact di d
nothing around the Office he replied:
VERY little except signing checks and
attending to different things that Mr..
Coster asked me to at diHerent times
He never went on the exchange TO tram
act orders and apparently his membership
4 was valuable only as enabling the firm to
savq OH commissions 10 other brokers.
Wheu asked What Mr.. Coster used to do
when he found him examining the books
In the hookkesper 's.oAge he answered:
~bir. Coster as a rule told me to go out OF
Z the cage and not bother anybody in it,"
did not his unwillngness to have you
look at the books create any suspicion In
your mind2" Mr.. Menken asked.
ANo. because they were generally so'busy
Z in the cage and the cage was so small
Later Mr. Knapp testified that he had
{ never examined the books to see how Cos
+ ter Knapp 4 Co. were secured on = certain
account and mad never made INQUIRIES.
He trusted to Coster implicitly.
nj
! the firm invested sl5O0o0 in it, Of which
all is now lost. /. When, me made this invest
mefft the joint account OF Charles and W.
Z B. Was indebted to the firm more than
5000 600 and the firms assets we're used
made by the firm subsequently we're carried
on this account. ~. 1903 q profit. eff saoe
COO made il Union Pacific was put on this
account. =.
The method used by Coster in bucketine
his orders yes to epter buying record Of
certain price and then order the clerk
! 10 enter on the opposite side OF the ledger
q selling record at the price. La
making his statements to customers he
never gave the name Of the broker from
whom the stock was bought sr 5 to whom
rules SG require aD fo him to do 50. IN regard g
thYse matters the following >tsstlnony
4 wax elected in the examination Of Joseph
LA&rence:
3. Did these entries convey to your mind
nothing suspicious? A. Not atall. Mr.. Coster
always made good. ..--.'-.r
2g @. 1t was an irregular transaction, was IL
not3 A. The way he did business wes.noae
OF my business
@. You knew 1t was an Irregular way Of
3 doing business? A. AS farsastL was con-
cerned I wouldn't do IT. - - =.
@. You had been In the ONCE for seven
years. and don you knew that suchentries
would convey TO your In ind that there was
+ somethingsr Irregular A. 1 don't know. l
+ think great many firms do t. 60
y O. Would t or would II not2 A. Not
from Wall Street point OF view.
y O. The Wall Street point Of view is not an
& Irregular one. Is IL? A. In a great many
ways It Is, because have not friend outside
I OF Wall Street who does not say 1t Is a. gam.
bling hell and a dishonest business Even
my father r-in-law has always told ME-
O. Is he in Wall Street. A. No. He has
always told me 1t is the crookedest place In
the world. -:1it-
This 10 the second time !within a: short
while that Wall Street methods have been
n .,,k tain a,