The New York herald., 1921-01-07

made q business OF furnishing. are re-
quired as a guarantee that the person
10 whom a withdrawal permit has been
granted viii not dispose or the liquor
obtained with IL for other than lawful
purposes. Malawista said according 10
Chief McQuillan. that he controlled
twenty applications for permits through
his operations.
The conspiracy with which Malawista
is charged is alleged to have existed
since the first Of last October. Accord
ing to the complaint, 1T was part of
such conspiracy that the defendant
should procure and cause TO be Issued
withdrawal permits for the Withdrawn
of LIQUOR from distilleries, warehouses
ana other places in fictitious names ana
by means of fictitious addresses on the
representation that the liquor obtained
by means of such permits should be sold
and dealt in for non-beverage purposes
exclusively."
Mccoy and Malawista. according to
the Federal officials, first met at the Of
flee of Director OConnor. In the course
of the acquaintance which developed the
bonding agent Is said to have advanced
Mccoy $500 to pay his expenses at
school OF dramatic art where he intended
studying after quitting the office OF the
prohibition director.
After McCoys arrest he telephoned
to Malawista and asked him to furnish
the $4,000 bail bond under which he was
sheld. Malawista did not appear with
sthe bond, and Mccoy. unable TO find any
zone who would furnish it. had to go to
the Tombs
Joel Rathbone vice-president of the
National Surety Company. Issued state
tn,ent last night in which he declared
that he was unable to say whether
4or no. Malawista Is one OF the COM
panys ten thousand agents. II he should
turn out to be one and is guilty of the
charge, of course he will be discharged
Immediately"
Katharyn Foody. another former
member OF OConnor's working force.
who was named in the conspiracy
charges with Mccoy on Wednesday. was
arcaignej yesterday and held in $1,000
b4. for a hearing Wednesday. She fur
nishei the bond and was released. Mrs.
Volberg Castillo. the other defendant
named, has not yet been arrested. The
hearing in the case of Edward Donegan.
''Beansy' Rosenfeld, Mrs. Mary e. Par
kins ard Regina Sassone. who were the
Sirs. of the alleged ring centring in
OConno-s office to be arrested. was
pcstpcned yesterday until Thursday. at
the request Of their counsel, William ].
Fallon.
Aside from the developments in the
alleged conspiracy, two of Director
O'Connor's inspectors were arrested on
charges Of having submitted fraudulent
expense accounts in connection with
their work. They are Fred f. Board
way OF Kingston and d. f. McManus of
Binghamton.
1t is alleged they fraudulently
charged the Government for sixty
three nights shelter in the Hotel An
sonia and other hotels. submitting false
vouchers as proof of their expenditures.
Mr.. O'Connor denied that these two
men were close friends of his. as had
been reported. He said, however, that
they were two of his most capable and
trusted inspectors. Boardway and Nc
Manus were arraigned before Commits
sioner Hitchcock and held in $500 bail
each for hearing next week.
Director O'Connor announced that the
suspension of liquor Withdrawals, which
was put into effect last Monday in order
that his Office might go over the appn-
cations on file to weed out the forged
permits. will be lifted Monday
He said, however, that he will begin
to-day to cut down on the number OF
wholesalers basic rermits When told
that Commissioner Kramer had been re-
ported from Washington as in favor OF
reducing the number Of permit holders
I have my way the cut in New York
vii be considerably more drastic than
that"
He said that on July Ct. when his
office shut down on the issue of whole
salers permits. there were LIZA on file.
These have been considerably reduced in
number since then and only $50 of these
permit holders have applied for renewals
for the ensuing six months.
This number, In turn, he expects to
reduce materially. Not only will the
permits of all persons be revoked who
have been discovered in violations of the
yolstead act but no permits will be
Issued to persons who are not citizens,
and they will be taken away from aliens
who now possess them. This step, Mr..
O'Conror said, win be taken under the
provisions of a State law which pro-
vides that no aliens shall engage in the
liquor traffic. The unexpected flood of
business with which his office had to
contend during the first months of its
activity made proper checking up OF
permit holders impossible, he said