The New York herald., 1922-03-07

fact is that they really have been
hauled away by motor truck in dead
of night. But all the receiver can find
out is that some other creditor, the
same usually being a person in colll,-
sion with the bankrupt, has swoopea
down on the stock of goods for a debt
before the bankruptcy papers are file1,
or any one of a number of similar
excuses, which are known to be false
but which cannot be proved to be SO.
The swindling bankruptcy, needless
to say, is preceded by all the buying
the crooks falsely stated credit will
permit and from everybody he can
reach. 1t has been shown above how
that false impression Of solid credit
has been achieved. Many cases, how
ever. will testify to the fact that It is
frequently possible for such crook
to pull himself up by his own loot
straps, so to speak, without resorting
to the use Of the name OF some lesiti-
mate house. That is usually lengthy
process, but nevertheless effective.
The slow method consists of start
ing out in a modest way and issuing
financial statements which each year
show an increasingly fourishing bust
ness, regardless of what the actual
condition of the concerns business is.
Finally, after several years Of this,
statement is issued that shows an as
toundingly prosperous state of affairs
and upon the strength OF the faith
built up in this manner the buying
frV I.t1e.4 1ac fafi l,a
inflated credit is exhausted, and then
follows the bankruptcy court.
A unique and much quicker method
of establishing false credit than the
foregoing is that by which a couple of
fiy-by-nights recently cleaned up $780,
600 in seventeen days in New York
This scheme began with the deposit
OF several hundred dollars in a San
Francisco bank. The depositor then
came TO New York and joined his con-
federate and they opened offices to
deal in a certain line of merchandise.
The next step was to deposit with
New York bank two checks aggre-
eating 5000 or so drawn against the
deposit in the San Francisco bank.
The pair then started out to get busi-
ness. and gave as references always
the New York bank with which they
had made the deposit
Bad Checks Basis for Credit.
When the reference was investi-
gated by prospective customer the
bank obliged by saying that the new
concern was a depositor with good
heavy credit, but neglected to say, un-
fortunately, that this credit was all
theoretical in that il was based upon
two checks as yet uncollccted.
Naturally the checks are returned
marked insufficient funds,' Just as
the fal1ers had expected. That did not
bother them. They had made no at
tempt to check against the New York
deposit. so they explained to the bank
that there must be mistake some
where and asked them TO send the
checks through again with the assur-
ance that everything would come out
all right. The bank complied with the
request. 1t Is six days by mail to San
Francisco and six days back, and q
second trip OF the checks over that
route gave the crooks a minimum OF
twenty-four days. They used just
seventeen of those days and vanished
with the 100000.
The third class Of frauds against
merchandise ilouses-that is, incen-
diary fires and fake burglaries-does
not require a great deal of space. The
classification itself is sufficient TO show
that the scheme is TO obtain the rner-
chandise on credit. sell or hide the
goods for future sale and explain their
disappearance through an incendiary
fire or fake burglary after the goods
have been removed.
The fact that this phase OF CONNER
-cial frauds is dismissed in this article
with so brief reference does not mean
II Is not an important and menacing
aspect. but merely that the machinery
OF the trick is easily understood.
The extent Of this sort Of swindling
may be realized when It Is stated that
men in position TO know say GO per
cent. Of present day fire losses in New
York is due to incendiarism. and that
II Is this circumstance which has led
the underwriters TO the 500. 900 ap-
preparation mentioned in the begin
ming OF this article to take suitable
action.