New-York tribune., 1910-12-31
WISE TESTS POSTAL LAW
indictment Against Bankrupt for
Statements by Mail.
CREDIT MEN INTERESTED
Arrest of ]. r. Scheinberg May
Lead to New Procedure as to
Bankruptcy Frauds.

In his fight against fraudulent bank
ruptcies United States Attorney Henry a.
Wise has for the first time resorteo 10
prosecution of such bankrupts on the
charge that they used the mails In tnr-
therance of the scheme to defraud cred
itors
This new strategy will be directed against
all those who circulate through the malls
false statements concerning their financial
standing. with a view to obtaining larger
quantities of goods on credit.
The first Indictment on such charge was
secured by Mr. Wise yesterday against
Joseph r. Scheinberg, OF the firm OF "A. d
J. Scheinberg, jobbers in woollen goods. OF
No. 346 Canal street Joseph r. Scheinnerg
was arrested yesterday afternoon and ar
raigned before Judge Holt, who held him
in $1,000 bail William Rand, jr., repre-
scented the defendant.
The firm of A. & J. Scheinberg. of which
Abraham Scheinberg is the other memner,
was placed in involuntary bankruptcy on
November on petition of creditors. In the
course Of bankruptcy hearings the fact OF
false financial statements was brought out,
and United States Attorney Wise ordered
the investigation which brought about this
indictment Mr. Wise has been lighting
fraudulent bankruptcies through prosecu-
tons FOR perjury, but the difficulty OF Sc
curing conviction and the usually light pun
ishment fneted ont led him TO look about
for a new means by which to put an end
- the frequent frauds.
The indictment returned by the grand
,,.ry in this case made d general charge
Of using the United States mails TO defraud
by circulating statements Of the firm S
financial standing, In which the assets
were exaggerated by thousands and the
liabilities mnimized by thousands for the
purpose OF obtaining credit through COM
mercfaI agencies and from Wholesale
houses.
Although the firm Went into bankruptcy
on November :, with an Indebtedness estl-
mated at $4,000 and available assets Of
slSb19, the financial statement OF the firm 8
trial balance up to May 1, the indictment
charges, signed for the firm per J. H.
scheinberg and sent to Mr.. Merguando.
care r. q. Dun n Co, May 10 last, gave
the FIRMS assets az SOS. .256 aud its liabilities
at So, I24. leaving net surplus in business
of $50. .I2l. The indictment charged that this
statement was false aud fraudulent.
other firms named in the Indictment to
whom similar statements were sent were
Bradstreet's, Woods Drysoods Commercial
Agency and N. d Howell & Co.. Fl. & W.
II Lewis. Stursberg, ScheIl & Co, Arm
staedt & Co. and James Talcott wholesale
firms " hicn alleged that they granted credit
on the strength Of such statements.
The Indictment aroused great interest
among the members Of the Merchants Pro-
t,.cttve Association. Abram /. Elkus, OF
James. ScheIl SS Elkus, counsel for the as
sociarion. said last night that If the indict-
n,ent was sustained it might alter the en-
tire method of prosecution for alleged fraud
in bankruptcy.
IF the courts sustain this view OF the
law" Mr. Eikus said. lit Will open the
door to many federal prosecutions through
out the country, and such an extension OF
the scopa OF the postal laws is concededlS
of great benefit to the commercial COM
rnI,nity As practical matter L believe 1t
20 be easier 70 obtain successful results III
prosecuting under this statute than IN pros
ecuting in the state court, as past expert
enca has shown us the difficulty of comply
ing with ali the technical requirements OF
the law
IN the mean time it Is not aniiss TO sus-
gest to the credit men the necessity OF
l<eeping envelopes in which they receive
statements. as the National Association OF
Credit Men has advocated for some time
in view OF the possibility of such prosecu-
ton