The New York herald., 1922-03-07

| be hardly better than a rough CUES
into many millions. And New York,
being the center Of the country's
wholesale business, and also appar.
emily headquarters for the shrewdest
crooks who prey upon that business
tremendous amount OF the brunt of
that loss naturally falls upon New
York business.
! Bureaus Run Down Frauds.
| AS was stated yesterday, both the
| New York Credit Mems Association
| and the National Association of Credit
| Men maintain expensive investigating
| and prosecuting bureaus to run down
| these frauds. The Associated Adver-
tising Clubs Of the Wcrld also has its
bureau. The District Attorney OF
New York county has found it neces-
sary to create a special bureau to
handle commercial fraud cases. The
New York Board of Fire Underwriters
has appropriated 100000 to investi
gate arson and fraud. These examples
of the great expenditure directed
toward ending commercial frauds indi-
cate the vast scope Of the losses.
Ferdinand Pecora, Chief Assistant
District Attorney. III recent address
to the New York Credit Mems Asso-
citation divided frauds against COM
mercial houses into three general
classes, as follows:
First--Absolute swindles by or
ganized bands.
Second-"Buying for a bust or
| fraudulent bankruptcies.
Third--Incendiary fires and fake
burglaries.
Regardless of whether the indicted
men are convicted. one does not have
to look further than the case of Julius
| Schwartz and others in the news coll
i umns ,of to-day's issue Of THE New
York HERALD for shining illustration
of the first of these three general
i types Of frauds.
In that case thirteen men are ac-
cused of operating eighteen different
| establishments in eight different cities
for the purpose of defrauding New
York wholesale houses through mis-
representation of their credit. Whether
they are guilty is not essential to
this story. for il they are it is only a
large illustration of fraud frequently
perpetrated upon smaller proportions.
Ordinarily this form of fraud con-
sists OF band of swindlers going into
| distant city and opening an office
under name similar to that of some
established house in that city whose
credit can be readily learned through,
standard rating directories. Using that
name the crooks write to wholesaler
or number of wholesalers and order
as much goods as they think the credit
of the concern whose name is being
used would bear. The wholesaler finds
the rating OF. the concern he supposes
has sent the order to be sound and
Immediately forwards the goods.
Surprises for whoIesaIer.
When the time comes around to coll
/ lect for the bill OF merchandise the
! wholesaler Is mildly surprised when
the supposed purchaser does not remit
promptly; puzzled when he finds the
supposed purchaser Is not at the adj
dress given, but at another: roaring
mad when the supposed purchaser de-
! MES ever having ordered or received
| the goods. and out Of luck when he
! finds that the gang that did order the
goods occupied obscure quarters from
which they and the goods vanished
weeks before.
This system frequently is expanded
into opening a chain OF such swindling
houses in a number of cities, and one
house with actual credit is used as
reference until several thus have es-
tablished credit Then they recon-
mend each other tor as many whole
sale houses as they can interest and
merchandise literally is sent along in
floods. When the game has been
played as far as the creeks feel safe
all fold their tents in the several cities
and skip with the goods.
Perhaps ii would be hard to find a
better illustration OF this scrt of thing
than the famous case Of the seven
brothers Solomon, Syrian emigrants.
who were convicted little more than
two years ago of s150,000 swindle.
That amount OF loot was gathered
by the Syrian brothers through sys-
tematic conspiracy to defraud prac-
ticed over a period of three years.
The fraud consisted Of establishing
houses i'm numerous cities and deceiy-
ing wholesalers regarding their credit.
At the trial IL was shown that fire.
quently goods virtually were delivered
at the front door OF a Solomon hous..
and taken away for hiding out the
back door without even patisinF en-
route. When bankruptcies happcnci
In some Of the Solomon cases The
bankrupts we're clever enough 10 con-
ceai the frauds for long while BY
false statements regarding their
assets.
The fraudulent bankruptcy method
Is practiced much along the same l.nc
as the cases outlined above, except
that the dcfraudcr instead Of vanish
ing with the goods thus acquired hides
the merchandise and goes into bank
ruptcy. The receiver usually finds
virtually no assets at all, and the
books in such confused condition
that 1t Is impossible to make head or
tail out OF them.
The vanished goods are accounted
for falsely In numerous vave The