The Montgomery advertiser., 1908-01-10
CARTER LOSES
 THE $4OO,OOO Government Wins Its
 Contention. RETAINS THE SECURITIES FeSSr Army Officer Who Served Time. Judge Kohisaat of Chicago Decides Case sf Fraud in Which Greene and D Gaynor Were In-
 terested.

Chicago, Jan. 9-Judge Kohlsaat in the United States Circuit Court render ed a decision this afternoon in favor of the Government, in the suit against Capt. Oberlin M. Carter, former Unit ed States army engineer, charged with having defrauded the government to the extent of $700,000 through conspir- acy with contractors Greene and Gay- nor.
 The court ruled that Carter was not entitled to the $400,000 in unregistered railroad bonds and other securities traced by the Government to safety deposit vaults in various parts of the country.
 Under the decision the Government will retain these securities and the fa- nous case, which resulted in the con- viction of Captain Carter and of Greene and Gaynor, and the imposing of pen itentiary sentences, is brought to a close.
 Funds of Captain Carter, which the Government claims were proceeds of Carter's collusion with Greene and Gaynor. are those held by suit pend ing In the Federal court of New York. West Virginia, Georgia and Illinois. By agreement of all these the suits were consolidated and tried before Judge Kohlsaat of the United States Circuit Court in Chicago about a year ago. 1t is the claim of Carter that the funds in question were given him by his father-in-law, the late Robert F. Westcott of New York.
 The case grew out of the construc- ton of certain rivef and harbor im- provements on the coast of Georgia. The government prosecutors contended that the army officer and the contrac- tors defrauded the government in the. sum of s2,225.000 and that one-third of this amount or about $780, 1000, went to Captain Carter. Special assistant to the United States Attorney General, Marion Erwin. was assigned to the prosecution of the cases and after sew Carter in various states was traced and lseixed. The hearing before Judge Kohlsaat extended over several weeks and scores of witnesses were examined.
 Judge Kohisaat fin his opinion, said;
 Tt must be borne in mind that the transactions in this suit covered a pe- riod from December 1891 to 1897, du- ring which years a number of contracts were let. and that even though Carter was not in actual conspiracy with the contractors yet if he knew of the vast profits and the prices allowed them on the earlier work, it was his duty to in- vestigate thoroughly the situation and bo0 SO " tudI tuC 6ufCEulAiCHt tLnSFSAI- ter paid no more than what was fair and just. Even negligence under such would have amounted to fraud.
 If, therefore. Carter was icognizant of the fact that the contractors were reaping abnormal profits from the 1892 work and that Westcott was interested in that profit and was turning it over to him under any kind of a cover as his share of said profit, he was false to his trust and should be held liable to make good to the government all the funds of his fraudulent act"
 without passing directly upon the question as to whether Carter had &C., tual knowledge and connived at this raid upon the government. the facts brought out are such that he must. as a conclusion of law, be held charge able with a knowledge of what was be- ing done in the premises.
 'This fact alone makes 1t clear that the government is entitled to a decree awarding to 1t each and every of said pieces of property held by the receiver, which shall be found to have been pur- chased directly or indirectly with money received by Westcott or any one else or in any way arising from funds made up as pronts realized by the contractors under the contracts in the suit"
 Westcott, mentioned in the opinion. was Carter's ther-in-law. charged by the government with having made tn- vestment of funds sent to him by Car ter. which funds. 1t was alleged, were mart of the funds diverted by Carter and the contractors Greene and Gay