Newark evening star and Newark advertiser. [volume] (Newark, N.J.) 1909-1916, 1914-01-26
EXPECT TO |ND|CT
BANKRUPTCY CREW
United States District Attorney
Marshall on Trail of Bold
SwindIers.

NEW YORK, Jan. 26.-The bank
ruptcy ring, composed of lawyers anc
business men who have defraudeo
merchants, banks and other creditors
not only in this city, but in New
England, New Jersey and Pennsyl'
vania, is being smashed by United
States Attorney H. Snowden Mar
shall.
After long investigation of the
methods of the ring, with the aid OF
assistants, Federal agents. expert ac-
countants and detectives, the United
States attorney has a great mass OF
evidence, part of which he has laid
before a Federal grand jury. He has
also caused the arrest of several mer
supposed to be connected with the
conspiracy.
Plan to Get Confessions.
If confessions are obtained from
men who are suspected and are ex-
pected to weaken under examination
it Is believed that the grand jury may
indict several important men in the
ring this week after the return of the
United States attorney from Wash
ington, where he went on Saturday
night.
While the indictments will do much
to break up the activities of the ring
facts gathered for Mr.. Marshall will
enable him to put stop to fake re-
ceiverships. There are a great many
of these every year, and they result
in almost complete loss to the credi.
tors.
Lawyers who have filed complaints
with the United States attorney II
behalf of defrauded creditors sait
yesterday that a careful study hat
been under way for some time of {
great majority of the receivershiI
cases in the Federal Court here. Thi.
study has extended also to courts II
other Federal districts.
For instance, investigators have
noted the names of receivers ant
their attorneys, and also the names
of bankrupts and the attorneys fol
bankrupts. There are, of course, law.
yers who make legitimate specially
of bankruptcy business. A compari.
son, however, has been made of this
amount of assets and liabilities il
many instances with the amount or
the dollar paid to creditors.
After comparisons had been made
and studied carefully startling facts
appeared in the cases of several law.
yers and receivers, for almost invari
ably when these men appeared in G
case the assets of the bankrup
seemed to shrivel away to PRACTICAL,
nothing, SO that the creditors were
compelled to be content with a few
cents on the dollar.
Investigators Follow Trails.
In several cases there already haC
been complaints filed with the United
States attorney concerning the disap
pearance of assets and appeal foi
criminal investigation. Probing fur
| Their it was found that trails led tt
New Jersey, Pennsylvania and othe
| States. The investigators found tina
the members of the ring had allie
| throughout the country.
Investigation in New Jersey som
time ago disclosed the fact tina
many millions of dollars had beel
stolen from creditors through re
ceiverships. The inquiry here showe
that the amount stolen yearly Il
this city exceeded the millions O
Jersey loot In one case suppose
assets of almost 100000 vanished
Banks have been heavy sufferers.
Men who have studied the intricat
workings of the bankruptcy trus
think that the system was devise
by one keen mind after years of ex
perience in the bankruptcy courts
The tricks and devices to outwit tn
creditors, they believe, must be tn
result of long familiarity with bank
| ruptcy proceedings.
In the bankruptcy ring, it |
charged by the Investigators, ar
crooked bankrupts, crooked lawyers
crooked accountants, crooked receiv
erS and any number of crooked wit
| nesses, all ready to help in the hid
| ing of assets and the cheating o
Al Se,
rious schemes have been devised t
fit different lines of business.
| One scheme that has been used il
| this city, investigation shows, is t
| have accountants go over the book
| of a going concern and mark up tn
assets many times. On the basis o
| that statement 1t Is possible for tn
business man to get increased credit
| He orders as much as his credit will
stand, sometimes even more, 70
manufacturers are not always quicl
| in reporting to respective credi
agencies the total amount of
| buyers orders.
How the Scheme Operates.
The next step is for the buyer t,
ship great amount of goods ava,
to a fake purchaser and apparent,
take the note of this customer TO
three months. In other words, thu
man about to go into bankruptc,
FORCES q note to himself and putt
1t among the assets after having
probably sold the goods. The actua
money which he receives for tn,
goods he hides. sometimes probabl.
with his lawyer, under whose direc
ton he is working.
BY similar devices most of tn,
goods in a store are disposed of ant
then everything is in readiness fol
the filing of bankruptcy petition
The receiver is usually sought by
the bankrupt's attorney, as also Ii
the attorney for the receiver, so thai
there is always harmony in the work
of taking care of the assets.
Investigations that have been made
by Federal authorities show that
search for the makers of notes Otter
has proved fruitless. Often, too, the
names Of persons to whom the bank
runt saws he has shipped goods prove