The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-02-13
SIX INVOLVED IN
FAKE BANKRUPTCY
Judge HOugh Discusses Intrica-
cies in Suit to Re-
cover Assets.
JEWELLER HID DIAMONDS
Mcrmelstcin's Confession Aids
r. S. Attorney Marshall
in Crusade.

Judge iIough. in the United states Cir
cult Court has discussed at length In a
decision in a bankruptcy case the methods
OF bankrupts and their attorneys In con-
cealins assets from creditors. His de-
clsion and his comments OF special in
tetest In view OF the crusade which United
States Attorney H. Snowden Marshall Is
wagng against corrupt business men and
lawyers who defraud creditors out Of
many millions of dollars yearly through
fake bankruptcies.
The suit, which was brought to recover
hidden assets of Harry II. Mernelstein
that were sold, was begun 10y Alan Fox.
as trustee, against Mermelstein, Morris
Furman, Herman J. Dietz, Isaac Levin
son. Samuel II. Levinson and Samuel
Blurnberg, an attorney. Judge Hough
found that Mermelsteiu. VINO was a
jeweller in Grand street. had secreted dia-
monds and other jewelry amounting 10
$4,000. before II petition In involuntary
bankruptcy was filed against him.
Judge Hough also found that Mermel-
stein, being threatened with arrest In
civil proceeding, gave $4,000 secretly to
Morris Furinan with which tn buy of the
claims OF the I.evnsons and Dietz against
him amounting in all to about $1,000.
Furman did his dealing with Samuel
Blumborg. an attorney for the three
claimants He held also that Bumberg
gave the Lcv!nsons 400 bietz $500 and
kept the balance for himself. He has
ordered the men who got the money to
make restitution to the trustee for Mer-
ulelstein,
Interest TO Jewellers.
The case is OF peculiar interest TO the
1ewelry trade. because there have been
many Instances ot the disappearance OF
assets under somewhat similar circum-
stances w. c. Armstrong OF Pnilbn.
Beekman Menken q Griscum discovered
the facts and as attorney for the trustee
brought the successful quit and also
brought about n confession from Mermel-
stein which proved OF great value to the
United States Attorney in connection with
his bankruptcy investigation.
Judge Hough calls attention to a man
named Wolf Rosenberg to whom Mernel-
stein had confided the fact of the hidden
1evelry.
"Niel melste!n told the truth COM
mented Judge Hough. "wh,n he said that
Rosenber- double crossed him. for after
the bankrupt had thought To dispose OF
much If not all OF the secreted 1cw.ity
to or through Rosenberg the latter told
one George Barnett what Vas going on.
Barnett knew Levinson and -ot h..l,
Biumberg and Rosenberg into MS office.
The ilrst plan evidently was TO catch
Mermelsttin in the act o. dealing with
Ruseub.rs and then take away from him
.Dy force apparently his concealed prop
arty The details of this scheme and It's
1rustra;ion are not clear, but that Il led
10 the application for an order for the ar
rest Of Merm.lstein is plain enough.
Gave Barnett Jewrlry.
at is equally certain" continues the
n arf. "A !. To
trayal Of Mermestein 10 the extent of
handing over TO Barnett small quantity
of jewelry which he had obtained from
Aerm. lstein and Barnett gave the same
20 Levinson. The connection OF Barnett
with this matter is curious. He was not
ID creditor and ne has said he VAS tryns
- help Leviusun through with his de al
Judge Ho.eu then tells of the next step.
which was to trighten Mermelstein into
giving up a certain dmtslnt of property.
The group conveyed a certain amount OF
Information to the receiver and made ati
dav!ts on which an order Of arrest was
issued on a Friday night, but was not
10 be served until Monday morning.
"Mermels tein and mis- Wife" continues
JUDGE Houcn. "knrW that an arrest OroI
was likely to 20 out against the bankrupt
Immediately. and however unreliable Mer-
melstein Is I believe his story OF terror,
largely because he is the kind of person
VINO would yield easily 10 hysterlcal
fright"
Judge Hough points out that negotia-
lions were begun to Kill the arrest pro-
ceedings and that Furman was sent APP
parently as a representative OF relatives
~ buy up the claims of the l.evinsons and
Of Dietz.
"Furman on the witness stand" says
Judge Hough, appeared wholly unaware
of any moral obliquy In what he did,
though he knew perfectly we'll that he
tn
30 silence too active creditors. But he
was very much alive TO amy difficulties
that might come his way ny reason OF
what he knew he was doing. In my judy
ment the money thus paid off was re-
Ceved under circumstances which TO any
man of reasonable intelligence were notice
Of the truths now apparent and admitted"