New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1914-01-28
FAKE BANKRUPTCIES
SAID TO TOTAL Is
Federal Prosecutor Gives
Description of Growth
of Such SWindleS.
SAME LAWYERS FOUND
IN MOST OF THEM
Loss to Merchants Is Enormous
Several Indictments May Be
Handed Down To-day.

The United States District Attorneys
Office and the United States Grand Jury
devoted the greater part OF yesterday to
considering evidence in the fraudulent
bankruptcy cases At the close of the
day no new indictments had been handed
down. though il is said that several.
which may be made known to-day. were
agreed upon In addition TO those voted
on Monday in the case of Jacob Stein
& Sons.
The new indictments. it is understood,
grow out of the case OF Samuels & Co,
whose failure has kept the affairs OF the
firm before the United States Court for
nearly two years. At the time Of the
failure OF this firm 1t WAS estimated by
counsel for some of the interests involved
that not more than two cents on the dol
lar would be paid. Now. thanks TO the
discoveries made by the District Attor-
neys Office there Will be substantial
dividend 1t is among the possibilities
that Co TO 20 cents on the dollar will be
realized.
In addition to the Stein and samue1s
cases. IT. Snowden Marshall United
States District Attorney. who returned
from Washington yesterday, ia authority
for the statement that a search Of the
bankruptcy files shows at least twenty
five crooked cases, in many OF which the
same lawyers appear. He is also author
ity for the statement that practically
every merchant in New York has felt the
sting Of crooked bankrupts, that the
annual loss to honset merchants. II II
could he tabuated, would be found TO be
enormous
Case. Goes Over.
The eleven persons who are now under
arrest in the Stein case were scheduled
TO appear before United States Commits
sioner John A. Shields for hearing yes
terday afternoon. They were on hand ac-
oompanied by battalion OF lawyers. but
on the request Of the government the
hearing was put over until tomorrow.
The Stein case was taken up by Mr..
Marshall Immediately upon his reaching
his Office. his action being FASTENED by
the refusal of Jacob Stein 10 be ex
amined by an assistant district attorneJ
unless he was accompanied by Leo
Iauterstein, the young lawyer Judge
Mayer had assigned TO advise him on
Monday when his case was taken before
that jurist Mr.. LauterBtein contended
that Judge Mayer had ruled he must be
present az any examination, and so ad-
vised Stein.
on this statement OF facts Mr.. Marshall
at once appeared before Judge Mayer,
who promptly declared that he had given
no such rule. He told Mr. Marshall that
he did not propose TO interfere with the
workings OF the prosecutors office, and
declared that Mr. Lautersteln had mis-
understood him. Stein however, had left
the building. He will probably be recalled
to-day.
Commenting on the Stein and crooked
bankruptcy cases generally, Mr.. Marshall
told a Tribune reporter yesterday that the
practice had grown up gradually since IT
was discovered that money could be made
bv using the bankruptcy law, and early
iuries had refused TO take serious view
of violations Of IT,
How SwindIe Is Worked.
"rhe general plan OF all the crooked
failures is the same" said Mr.. Marshall
though. Of course. there are variations.
The first step is TO present prosperous
business, with resources Of, say. $oOo'V"o
over and above all indebtedness. Mercan-
file agencies give such concerns good rat
ings. the stores present the appearance OF
y,rosperitv and everybody is told what
good fellows and excellent business men
tboss in control OF the business are. Then
in about six months. the firm goes up. In
the time that has elapsed the concern mas
obtained the $4,000 credit II was said 10
ba entitled 10. and owes that amount. but
the assets have disappeared. The BANK
runt has shed everything OF value. Inc
stun has gone 10 women relatives uhcies
and others related by blood or marriage
and friends. That is where we step H.
"Our search OF the records shows that
,here are probably twenty-five crooked
cases and that number OF lawyers WIN
hear watching. Mr.. Marshall said there
VAS nothing 10 show that any federai
oeHcial was in any way connected WIN
these swindles
Samuel Hirschenstein. who mas oeen
working on the Samuels case, had severSi
witnesses before him yesterday. Ihese
,old ~ the relations OF the firm with
mat If another firm in which one OF the
con,,e,s was a partner with Bessie Les
ser and with the transfer Of an autoho-
hue bv JACQUES Lesser TO Ray Samueis'
q wealthy relative, who lives on klVersiue
Drive This transfer was ~ paymen. oi
large sums OF money said 10 be 0"ihg her'
In consequence OF this failure the Mon
,rsai nawnbrol<ing house OF Aarondon
Rotbenberg went into bankruptcy, OWING