Evening star., 1933-04-30
BANKRUPTCY RACKETEERS
ROB BUSINESS OF MILLIONS
Red Ink on Ledgers Means Money in
Pockets of Wreckers- Goods Bought
on Credit Are Dumped Quickly.

| fre1gnt agent at the railroad station as
his new partners, at their suggestion.
He left his wife to tell funny stories
about the amateur grocery men to the
neighbors and went to visit friends in
nearby city for q week, also at their
suggestion.
When he came back, the option had
expired and the two young strangers,
downcast, admitted that they were fail
ures as storekeepers. They left him
slightly dazed at the sudden acquisition
Of $500. Then came the first of the
month and bills totaling nearly $1,000
| poured in from the various wholesale
houses with which the store owner was
accustomed to deal. Frenzied investiga-
ton disclosed that the two young
wastrels" had ordered goods over the
storekeeper's forged signature. had In.
tercepted the shipments at the railroad
etation, and had carted them away to
Philadelphia, where they were sold at
from 80 to 40 per cent Of their whole
sale value. So another country store
keeper went bankrupt.
Creditors Become Suspicious.
Often, Of course, creditors become
suspicious before the bankruptcy rack
eteers have had opportunity to hide
away all Of their purchases. Then the
racketeers must think fast.
Such was the case in a recent "crook-
! ed bust" Of a Philadelphia silk shop
! The racketeers found themselves in
danger Of discovery by a group of credi-
tors while many valuable bolts of silk
were still on hand. So they sawed a
hole through the roof of their shop and
ran to the police shouting robbery. But
the police found that the hole had been
sawed from the inside. and that it was
not big enough to permit the passage of
the bolts of silk, anyhow-and all three
racketeers landed in jail
Days of depression have been great
days for bankruptcy experts" Reputa-
BILE business men, franctic at the
thought of ending their life work in
the bankruptcy courts, fall an easy
prey. Usually, whether he Is admitted
into the inner circle of the gang or not,
the former owner Is retained as the
nominal head of the firm. Then, when
the collapse comes. he Is faced with the
| unattractive alternative of enduring
searching investigations which may OF
may not absolve him Of blame, or of
disappearing. as the racketeers usually
advise. More than one suicide has been
traced to the activities Of these COM
mercial scavengers
Angels" of commercial racketeering
ventures are the most elusive members
Of the gangs.
One Prosperity" Rafferty,, registered
at Newark club as Jerome j. Rafferty,,
amazed his social associates with an
apparently inexhaustible income. But
an obServant Government agent
chanced to note that whenever certain
groups of bankruptcy experts made
killing Prosperity" threw a party and
increased his bank account. Finally
members of one of the racketeering
gangs "squealed" and Prosperity" Raff-
erty left his Newark club for a cell In
Atlanta.
For Prosperity" was the financial
hacker of several groups Of bankruptcy
racketeers and found it profitable. Like
every angel caught backing his illegal
business, Prosperity" refused to talk
and went to jail to serve his term with
a sizable fortune waiting for him at his
bank. Such cases, however, are rare,
indeed
Police and U. S. Cooperate.
To fight these vultures of business,
close cooperation has been established
in the metropolitan sections Of the
country between police and Federal
agents. Many uniformed patrolman,
pacing lonely beat along the water
front, notices once-deSerted ware
house teeming with activity by night.
reports that fact to the Federal agents
and so participates in surprising a ring
of bankruptcy thieves in the middle of
their credit sprint" and in recovering
huge stores of goods that otherwise
would be lost to creditors.
Usually bad-business racketeers sell
their loot and disappear, but when
they construct a case they hope to
carry successfully through the bank
r11ntcv courts expert boOkkeeDerS are
hired to juggle figures and present to
the court a financial statement rife
with concealed assets. Three fake cred
itors appear before a judge, petition
him to appoint fourth fake creditor
and the former front" as the two re-
ceivers for the defunct firm. The court,
unless the case looks suspicious. often
concurs. for creditors are the first to
be considered in bankruptcy proceed
ings. But when the ring meets for the
'pay-off," all four creditors are there.
along with the former front, for their
share in the proceeds.
Under the present bankruptcy laws.
which do not provide for a completely
adequate examination of the bankrupt
before his petition is accented, racket
eers often have little dificulty in ex-
planning away their lack of assets.
The voluminous legislation now
pending before Congress to revise the
bankruptcy laws has one amendment
providing for adequate examination OF
the bankrupt before the petition is
granted Business suffers too much from
bad debts incurred during the natural
course of credit selling to permit these
vultures of the credit system and the
bankruptcy courts to feed of those who
have fallen.