New-York tribune., 1910-07-18
MILLION LOSS TO STATE
Controller Tells of Stock Trans
fer Stamp Fraud.
POWERLESS AT PRESENT
Williams Says Condition VIII
Continue Until the Law is
Changed.
Ip,. ra,e1ranh 10 IT, Tribune. ]

Albany I,,Iv 17-At least 81. 100000
year is lost to the state through the II
lent use of stock transfer stamps. ne -
ganized system of defrauding the stat
pointed out in a statement to-day py -
Controller Williams. who declares tild' -.
dealers who engage in these illegltliiid's
transactions are experienced in trand ai-N'
most shrewd in protecting themselves "
this traffic. Efforts to obtain legal eEi
dence on which to base CONVICTIONS 10
failed. ,r
THE condition can and undoubtedly WIZ
continue" says rfr. Williams. unth ~
law is so changed as to enable the -
troller to obtain legal evidence upon :,
prosecutions can be successfully cohouc
Efforts to amend the law so as to give tiie
Controller power to break Up these prac'iIeo
failed at the last regular and extraoloiiiei'
sessions of the Legislature ,.,,
In statement to-day Controller VIII
Jams says
Certain statements have recently aRfs- az
peared in the press, more or les? tba col
describing existing conditions in t1e ~
lection of the stock transfer TAX py IL "
State Controller 1 deem 1t proper 10 Lrod; lIlaHo
an authoritative statement OF IneSe -, the
tions and of the course pursued py lo iS
Controller in the collection of thls ldA,i l,i,; ~
the hope of stimulating a helpful puplic
interest 60 tbs
state will be appreciated when II IS utlu1 ta.5e.
stood that during the last fiscal year td4es
amounting TO s5,95o. oiG 10 WeL9 ItocS
The Department was aware that thfough
improper practices considerable lie. rfeettbe fo tbe
state, but not until thorough investlsaff 81 Of
tion had been made was the ehoritty
these frauds apparent. At the 9utsee 9Ii,e at
was estimated that the state WAS ioSis
4l,e of a
In all cases of the collection OF +; tdA oy
the use of adhesive stamps strict reg r.
and yigilant supervision are neceSsdi - -
rreyenf the loss OF revenue through eVao1IlI
and fraud In my annual report 70 Ine
Legislature it was declared Jhat tne d l9i "a.
t9T occnrs from the resale and use or
stamps not properly cancelled, as Ieqelt ~ Io
bv law. and declared that the root Oh tle
evil must be reached.
REORGANIZATION Necessary
It was at once found necessary 10 re-
organize the force of examiners by employ
ing men with particular adaP{aoii!.lIS ,,itI if1
the work Because Of their taInlilaFtLy o ~ -. n
the intricate character of stock trailsaU lssa
fions A K Afford OF New YORK Clty;
was appointed chief of the bureau ana Pus
in full charge of the work HIS eAPetiTils ,Iinass
in the banking and brokerage pusH1fisS
prior to his appointment, and his aollity
as an organizer, peculiarly htted mn I'M Ioi ro
the duties of this new oflce; ana tle are
suits already obtained IN the "olh di0
largely due to his efforts ..,,ad
This traffic is carried on by so "a lltu
stamp dealers" severa! of whom haEe
heen in business since the advent OF tne
war tax, in 1895 and among whom are sex
eraI reported to have amassed large IoIt-
unes in the business. ., :. -
In order to carry on their operations II y
necessary for these dealers to have on manu-
a supply of cancelled stamps as Wen as ~
obtain good stamps at price Wh1ch VII WI
enable them TO dispose of them at a pront
Their stock of cancelled stamps is obtained
in several ways.
In the ordinary course of business be
tween brokerage houses the stamps repre-
sentng the tax are affixed to memoranda
of sale From time to time the brokerage
houses dispose of the memoranda TICKETS
which have accumulated in their offices
sometimes selling them to junk dealers
woh in turn sell them TO the stamp dealers
If the tickets are thrown out as waste pa
per they come into the possession of the
ianitors or porters of office buildings, VINO
also dispose of them junk or to the
stamp dealer. Numerous instances have
been brought to the attention of the Con-
troer. in which the brokers offices have
been broken into and the stamp tickets
stolen The agents of the stamp dealers
often approach the employees who have the
handling of these tickets in brokerage Of
fees, and after gaining their confidence
arrange with them to secure possession OF
these memoranda of sale.