Atlanta Georgian. [volume] (Atlanta, Ga.) 1912-1939, 1914-02-01
Federal Attorneys Adduce Evil
dence to Show Huge Profits
Of Conspirators.
CHANGES IN LAW PLANNED
Even Robberies Faxed to ConceaI
Assets-Lawyers Assist in
Cooking Up Frauds.

NEW YORK, Jan. 31-United
States Attorney Marshalrs Office is
busy with plans to prosecute a ring
Of conspirators who have defrauded
creditors by bankruptcy proceedings.
The gang is alleged to have cleaned
up more than 100000 within year
The arrests of the last few days in
connection with the failure of Jacob
Stein & Sons is part of the result Of
the investigation. Evidence is being
gathered to show how the various
schemes worked and to bring about
the conviction of those engaged in the
wholesale frauds.
1t Is said that mercantile firms,
banks and creditors have been duped
and cheated by alleged bankrupts who
have concealed assets before filing
petitions in bankruptcy.
One Case Involves 100000.
In one case alone, being considered
by the Federal Grand Jury, in which
the members of the firm are charged
with conspiracy to dupe creditors by
making away with the firms assets,
100000 is involved. The company
failed little more than a year ago.
Assistant United States Attorney
Hershenstein has charge of this ac-
ton, as well as half dozen others
of similar nature. Banks lost about
500, 900 in this one failure.
1t was pointed out last night by a
lawyer working in behalf of creditors
of bankrupt charged with conspira-
cy that nine out of ten cases of com
mercial bankruptcy were faxed to get
away with assets which really be-
longed to creditors.
The United Staes Attorney has now
under consideration changes in the
bankruptcy law which will make the
workings of the alleged ring difficult
and impose heavier penalties for
conspiracv in cases where 1t has been
established.
ney said last night that there was a
ring of conspirators in this city that
has made more than 100000 out OF
fraudulent bankruptcy proceedings in
about year.
Easy to Choose Trustees.
This Government official said it was
evident that bankrupts found no diff
Guilty in having their own receivers
and trustees appointed. They also
find it easy to make terms with their
clients and creditors and at the same
time come out ahead.
1.-THE ways of the ring" said anoth-
er lawyer experienced in bankruptcy
proceedings, ARE as devious as the
ways of breaking into a house. OF
course, everything is fixed up in ad-
vance of the filing of the petition In
bankruptcy 1t is cooked up pro-
osition from the start. Usually the
men themselves who decide to seek
the protection of the Federal law
are not smart enough to arrange the
scheme, so they engage an enterpris-
ing lawyer who is more intelligent
than they to plan and carry out the
fraud.
Books Jussled.
1.-THE merchandise and books of the
company are so juggled that when the
petitioner is adjudged bankrupt
everything looks bona fide. They have
any number of schemes. almost al
ways engineered by clever lawyers
One plan is to send out $4,000 worth
of goods to someone who is acting az
a fence for the coming bankrupt
and to charge on the books $3.50 worth
of goods. Another Is to store them in
a warehouse under a false name until
the manufactured proceedings are
settled
They also sell merchandise for
cash and pay out the money to rela-
tives, who are always found to be ir-
responsible. One case came to my at
tention some time ago. A man went
to Baltimore with diamonds valued at
$40. 900 He said he had been robbed
on a sleeping car and afterward went
into bankruptcy. The whole thing was
disclosed later as a fake"
I Q00 DO hioo O Voop