The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1910-08-14
BANK THIEVES ON INSIDE
Accountants Say Proper Adults Will Prevent DefaIcaons
by Employees

wall street.
Lack or laxity OF audits Of a banks
books. records. and resources Is the cause
OF embezzling. Most accountants do their
work thoroughly, and all ought to be put
under heavy bond for the faithful exc
cuuon of their task In England the
auditor is made responsible for losses
sustained In consequence Of his failure
to detect embezzlement, but here there
is no legal responsibility The number
and Importance Of these accounting com
panies have, In this country. been grow
ing rapidly In the past few years. and
the bank president or. directors can easi-
ly find a capable one. From the point
OF view OF the thorough accountant. such
defalcauon as that OF Wider's IS impos-
sible. But the question, backed up by the
fact remains: How did he manage to
steal a million or more?'
ADULTS Are Expensive.
Some banks do not have regular audlts.
In most cases. they are unwilling TO paw
the expense OF taking stock'-at the risk
Of an employee taking stock with differ
ent result. The cost OF an inquiry varies
greatly according TO the size Of the insti-
tuition. and may run up to 5000. or much
more for the largest institutions. Expert
accountants get SIS a day. and the as
slstants from 81 TO $40. or the Job may be
let at contract for fixed sum. One rea-
son sometimes offered for avoiding this
expense is that one examination has found
nothing wrong; then the penny-wise
pound-foolish officers say. I told you
So" and forego this safeguard until news
Of another theft put their suspicious on
edge.
Losses by hanks which run on this sys-
tenn are due 10 lack Of audits; laxity is
almost as dangerous Eternal and pains
taking vigilance must be the price OF
safety where pen and ink can make books
balance. and where engraved slips Of pa
per. instead OF gold bars or coin. repre-
sent the banks treasures. The account
ant. 10 make his work copper-rlveted. be-
sides seeing that ledgers and records IN
the complicated maze balance perfectly,
must count and check every note. bond.
share. or valuable paper in the vaults,
and do this without chance OF mistake
Where the resources run up into the tens
OF millions, this Is not an easy task Tn
less diligent care is exercised. the simplest
frauds may be put through by an en-
ploye. A case has been known where
clerk brought securities up a second time
from the vaults to the auditing room. and
so concealed his peculation; he took
100000 from the box which contained the
estate Of A. and which had already been
gone through. and in an hour brought
them up as part OF another estate. Here
there was culpable negligence in not
checking the numbers Of the securities.
or in not sending back the first box
sealed. Again. If the accountant is under
Job contract, and hurrying 70 finish. ne
may take the legend on the outside OF a
package as proof OF the actual presence
OF the securities and so open the way 10
as obvious a fraud as that Of the bunco
man on the street who gives a parcel Of
paper for a parcel OF greenbacl1s.
The Case OF AIvOrd.
Manipulation Of the books is at once too
complex matter TO explain to the lay
man and too simple 20 need explanation.
The plain fact is that the theft is made.
upon the banks system Of bookkeeping.
To take the case Of Alvord; his place as
note teller was a wire cage in the base
ment. where he handled all the incoming
mail, and all drafts and collection items.
He sent runners out to make these col
lections. and In this way handled an enor-
nous sum. The duties OF note teller usu-
ally are to make all discount collections OF
the bank and 20 collect the checks and
notes deposited with the bank for collec-
ton by out-of-town institutions. He also
handled the Clearing House sheet showing
the checks on other banks that were
taken by the First National. or kept the
record Of the Clearing House exchanges.
Besides this he prepared the showing of
cash exchanges-the money received ana
sent out by the bank-each week. giving It
TO the various agencies through which
such statments are made public.
He was implicitly trusted BY a show
OF great industry. reaching the office
every morning before any one else. he
won the commentator Of the banks Of
hcers. His defslcation plan was simple
all OF them are after the matter IS
out. As note teller. handling all the
incoming mail containing notes and
other cash items, he had access to the
banks vaults, and whenever he wanted
money he took H. The theft was COW
cred up by juggling his note books. so
that the deficit in the currency would
be balanced by the notes received. To
do this. he did not enter the notes the
same day that they came in. but held
them over to balance the deficit caused
by his stealings. His getting TO the
bank early in the morning was not from
any devotion to his employers interests.
but in order to have time to go through
the mail and hold out those notes needed
TO cover the exact amount Of his de-
hciency Had he been absent one day.
his tricks would have been found out.
How Coleman Did 1t.
George w. Coleman. who took nearly
100000 from the National City Bank of
losing most Of II to faro men
In New York, and who was arrested in
March OF this year. was a bookkeeper in
the bank. It appears that he kept
small account. but never had a pass
book. He would draw his personal
checks for sums mounting to 5000. $4,000 I
or 5000 on another bank and turn them
over 20 curb broker, whose manager
would issue the brokers' check for a
like amount. Coleman's checks would be I
deposited by the broker in the bank in
which he carried his account and would 4
be paid the next morning through the /
Clearing House Association. He /
checked off the clearing house items I'm !
The Cambridge bank. and undoubtedly /
distracted his own checks from the in
coming mail 1t appears also that Cole /
man stole through a system of kitinc /
checks with the hrnlrnr Rrlnrir,n. L.. |