The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-06-20
TAX PLOT FAILURE
TO SAVE $5O,OOO,OOO
Edwards Says U. s. Will Gain
Because of Corporation
Dishonesty.
AUDIT CO.'S BOOKS SEIZED
Accused Inspector Gives De-
tails Of Scheme to Cheat
Government.

William H. Edwards, collector of In
ternsl Revenue. estimated yesterday tina
the Government will save $4,000. 900 al
a result Of the discovery of a plot to en-
able corporations to evade paying a sub
stantial part of their income taxes
Books and records Of the Sterling Ac.
| counting and Audit Company were seized
on search warrant yesterday afternoon
at the Office at s6s Fifth avenue ant
taken to the Federal Building. wri,
was sued out to stay the search, but wal
Immediately vacated by Federal Judge
A. N. Hand.
The search warrant contained a lisi
OF twenty-five firms whose books and
records the agents OF the Internal Reve.
nue. department were empowered e
seize II found in the keeping of the &C.
counting company. It was the belief OF
Benjamin p. De witt, Assistant United
States Attorney. who caused the raid
that the firms who had their books ma
nipuleted by the Sterling Company de-
posted their true records in many cases
with the accounting company.
The Office of the Sterling Company had
been In possession of Government agents
since Wednesday afternoon when Morris
Rachmil a partner. and Morris Rosen-
blum, an Internal Revenue inspector
were arrested. Two other arrests were
made yesterday. Abraham Lincoln Sam
uelson, who with Rachml constituted the
Sterling Company, partnership, and
Bernhard M. Joffe, an accountant EN-.
ployed by the Arm. were the new defen-
dants They were arraigned before
United States Commissioner Samuel NJ.
Hitchcock. Samuelson was held in
$4,000 bail; Jofre in $1,000.
Extensive Search Made.
Mr.. De Witt said that ATTY Government
agents. among them being Internal Rev
enue inspectors and accountants and
men OF the Department OF Justice were
put to work in a hunt that has no ele-
ment OF secrecy about It when the case
was opened up by the first arrests. All
OF the firms with which that company
did business will be Investigated.
Mr.. De Witt said that on the basis
OF information obtained in a single day
he felt gratified In predicting that there
would be between twenty and thirty ar
rests within two weeks This informa-
ton was largely from Rosenblum, the
inspector, who gave the names Of a
number Of firms with whom he said.
Rachmil and Samuelson did business
after the manner attempted in the case
of the Coastwise Warehouses, Inc.
which led to the arrests. F. r. Page.
treasurer of the Coastwise company,
after being approached by samuelson
reported the incident to Collector Ed
wards and was asked to go through
with the negotiations.
Rosenblum has shown no intention of
fighting the case charged against him
that or conspiring to defraud the United
States by accepting a bride to influence
him as Government officer.
Rosenblum talked for hours yesterday
to Mr. De witt. Arthur A. Nichols and
Albert l.. Hopkins the two lat named
being inspectors in the Office of the Conn
missioner of Internal Revenue Nichols
and Hopkins have been in charge OF the
investigation OF the Sterling Company
since II was charged last October with
agreeing to reduce the income tax OF the
Coastwise Warehouses Company from
$4,000 to less than 81. 900 in considera-
ton OF a fee OF $1,000.
Mr.. De Witt charged that the
Sterling Company set out systematically
to enable corporations to balk the in
come tax law early in 1918 when II be-
came necessary to prepare returns for
the 1917 income tax assessment. The
income tax rates for the year prior to
lei were too small to make a systematic
campaign to defeat the law profitable
Rosenblum told a story OF sordid in
trigue in the underworld commercial
life OF New York in which some firms
whose credit IL classified as Al and
whose resources are reputed 10 he he
yond the five million mark did not re-
fuse TO have a part.