The Birmingham age-herald., 1915-06-21
Government Mulcted Out Of $27,0O0,000 In Special Tax By Vi0lators-Will Sue For Amount
OVER 6OOO FRAUDS
 IN PAST TWO YEARS.
 SAYS THE REPORT
Since 1902 Over 200,000,O ,O0O Pounds of OleOmargarine Sold Fraudulently-Secre- tary Outlines Situation

Washington, June Follow viola defrauded the government out of at least s27. .0O0.0Oo due in stamps and spe- ciaI taxes was revealed tonight by Secretary McAdoo in a statement based on a preliminary report on sweeping investigation conducted by Commits sioner Osborn of the internal revenue board.
 Frauds committed long ago as 1902, immediately after the enactment of the law, have been uncovered. The commissioner began his inquiry some months ago and from time to time news of prosecutions has reached the public hut until tonight no inkling had been given of the investigation's scope or of It's extraordinary results.
 Unpaid taxes ageregating $S51.oco have been recovered and deposited in the treas ury with the prospect of further very large collections" Forty-two violators of the law have been convicted since January l, and 29 of these have been given prison sentences Fines aggregating s14S,000 have been assessed, in addition to the recoveries actually made, and the announcement de- clares that while fraudulent practices of this sort probably have been checked. the investigation will be continued and every law breaker brought to justice"
 The announcement shows that since 1902 more than 2o0,000,00O pounds of colored olecmargarine have been manufactured and fraudulently sold as uncolored.
 Frauds Uncovered
 Ut is believed" 1t says, "that a great proportion of this product reached con- sumers as butter. This amount represents more than twice the average yearly con sumption of both colored and uncolored oleomargarine by the people of the United States since the present law went into effect.
 Approximately 1S5o00,ooo pounds of this 200, ,0O0,00 pounds were sold by oleomar- garine manufacturers to dealers as uncol- ored oleomargarine, and then in many ca ses sold to the ultimate consumer as butter. The remaining 15,0000,o00 pounds were made by butter manufacturers and sold as butter without the payment of any tax.
 The law imposes tax of 10 cents a pound on coored oleomargarine and one quarter of q cent a pound on the uncol- ored product. In perpetrating these frauds the oleomargarine manufacturers have paid only the one-quarter cent when they should have paid 10 cents or in the case of butter manufacturers who sold the product as butter no tax was paid. When the tax on colored oleomargarine Is too high it is no concern of the treasury in connection with its duty to enforce the law"
 Over 5000 Pounds
 The announcement says that 5000 frauds have been detected in two years, and that as a consequence of the activity of the internal revenue bureau, aided by the department of justice receipts under the oleomargarine law in 1914 and 1915 have been "A per cent of the total collec- tions since. 1902. Total collections from 1902 to 1913 were s9,62s,665, while in 1914 and 1915 $3O41, GAO was collected.
 Violators of the law resorted to ingen- ious schemes to avoid payment of the tax. In many instances they purchased palm oil with which to color their product. im- ported it to their factories by circuitous routes and used it with other ingredients to mask 1t from detection. Butter manu- lecturers compounded 'ladle butter' with oleomargarine oil, coloring the resulting product and putting 1t on the market as butter.
 While there was a total of approxi-
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