FALSE PRETENCES ALLEGED

Evening Star, Issue 19613, 20 July 1927, Page 6

FALSE PRETENCES ALLEGED

CAMPBELL BROTHERS AID OTHERS CHARGED LOfiG LIST OF INBIOTKENTS SOME COMPLICATED TRANSACTIONS

A case which is arousing considerable interest in coiiimejcial circles was before Air J. R. Bartholomew, S.M., in the Police Court ibis morning, when charges of false pretences were brought against Alexander Campbell, manager; James Shaw Campbell, draper; f-nnmel Campbell, draper; Charles James Thomas Alexander Lowery, vainer; Frederick William Bainlicld, accountant; and Clifford Peel, salesman. Xlio first five defendants named were jointly charged as follows; On December 22, 1925, with intent to defraud, obtained from the Otago and Southland Finance Corporation, Ltd., £135 bv falsely representing that Robert Scott Grey bad purchased a new Deluge motor ear, valued at £650, and had paid a deposit of £215 on same. On February 15, 1926, with intent to defraud, obtained from the Otago and Southland Finance Corporation, Lid., tho sum of £515 by lalsely representing that James Shaw Campbell had purchased a new Star motor car, valued at £775, and had paid a deposit of £260. On February 15, 1926, with intent to defraud, obtained from tho Trailers’ Finance Coiporation, Lul., £515 by fa Isoly representing that Alexander Campbell had pnrchased_a new Star motor ear, rained at £775, and had paid a deposit of £260. On February 15, with intent to defraud, had obtained £565 from the Tinders’ Finance Ltd., by faiselv representing that Samuel Campbell had purchased a new Star motor ear. valued at £BSO, ami had paid a deposit ot £285. On -March 1, 1926, with intent to defraud, obtained from the Otago and Southland Finance Corporation £515 by falsely representing that Charles James Lowery had purchased a now Star motor ear, valued at £775, and had paid a deposit .ot £260. On March 20, 1920, with intent to defraud, obtained from tho Otago and Southland Finance Corporation, Ltd.. £660 by falsely representing that Walter Morels Lowe had purchased a new Star motor ear, valued at £495, and had paid a deposit of £165.

The same five defendants, together with Clifford Heel, were jointly charged that — On March C, 1926, with intent to defraud, thev obtained Irom the Otao-o and Southland Finance Corporation £lO5 by falsely representing that Clifford Ecel had purchased a now Star motor lorry of the value ot £01)5, and had paid a deposit oi £230 as part pavmcnt. On March 26, 1920, with intent to defraud, obtained Irom the Traders’ Finance Corporation, Ltd., £330 by falsely representing that Cliflord Peel had purchased a new Star'motor outvalued at £195, and had paid a deposit of £lO5 as part payment for the said car. On October G, 1926, with intent to defraud, obtained from the Traders’ Finance Corpoialiou, Ltd., tho sum of £365 by falsely representing that Olivo Smith had purchased a. new Star motor car valued at £550, and had paid a deposit of £lB5 as part payment, Mr W. L. Moore appeared for the defendants Alexander, James, and Samuel Campbell, Mr W. G. Hay tor tho dofendeut Bamfield, and Mr W. Ward for tho defendant Lowery. CHARGES OUTLINED. The Chief Detective asked that the charges against tho live defendants should lie taken together, as the evidence in one case would apply to the others ns well. The Magistrate agreed to this being done. Tho Chief Detective, in outlining tho case, said that it was proposed to show that each defendant, if not an actual participant in every offence, had material dealings with the company, and if not principals were at least aiders. He stated that prior to June. 1925, Alexander Shaw Campbell and Samuel Campbell were in business as motor traders. In Jumc, 1925, the company was Termed into tho New Zealand Motoring and Engineering Company with a capital ot £IO,OOO, divided into £1 shares. The books that would bo produced would sin »: that Alexander Campbell and Samuel Campbell took 6,000 shares, Lowery 3,000 shares, and Bamfield 1,000. Mr Itcid, an accountant, would be called to show that tho Campbells had paid in actual cash' Hie sum ol £1.321, the balance being made up by stock, the value of which was assessed at £1,700. The stock consisted of cars and accessories from the previous business. The books showed that Lowery had not paid any cash, .hut that Bamficld had paid up in lull. Tho actual cash put into tho business was £2,321. The books showed that the Campbells, Lowery, and Bamfield were the directors ot the company. Mr Hay: is this relevant to the charges these men are called to meet? It is for the prosecution to show that, it is relevant.

The Chief Detective said the statements objected to by Air Hay showed the position of the company and were important. The Magistrate held that they were relevant, to the charges. Continuing, tho Chief Detective said that Bamfickl had been appointed chairman of directors. Later Samuel Campbell and James Shaw Campbell nacl been appointed diroctoi.s. The company went into liquidation on March 19, 192(i. Just before that was done 2,00 U shares were offered to the public, who failed to respond, and those were taken over by Bamfickl. Mr Hay: What lias this to do with tho charges? Jt merely shows that the compaify wanted money. Surely a main can bo hard up without it being suggested he was necessarily guilty oi .fraud?

Tlio Magistrate said lie thought it was relevant to the charges. A call of Is per share was made, and Bamfidd had not, paid; consequently his shares were declared to ho forfeited. The company advertised fur an accountant, and on March If), Bamlield was appointed to the position at a, salary of £6 per week. Up to that time he had been receiving £3 IQs per week for looking after the company’s books. The payment was made retrospective from September 1, 1925, which meant that Ba infield received £20.1, £IOO having been placed to his credit for the shares that had been forfeited to safeguard his interests in.the company. The Commercial Bank, with which the company had done business, appointed a receiver, the notice being received by James Shaw Campbell. It would be shown, added the chief detective, that on December 22. 1925, a fictitious sale had been put through in the name of R. S, Grey, and that an advance of £425 had been obtained from the Otago and Southland Finance Corporation. Grey would give evidence to the. effect that he had merely signed ft blank promissory, notey ft would also

bo shown that the car had actually boon sold to Malcolm Stevenson, and that he had paid cash for it. On February 15 there was another fictitious sale, when £515 had been obtained from the same company. In that case it would be shown- that, the car had been sold later to W. A. Ross. On the date that the amount had been handed over by the loan company it had been paid to Campbell Bros., accountant. On the same date as the first sale £515 had been obtained from the Traders’ Finance Corporation for a car that was sold to R. A. Wind. On February 15 £565 had been advanced from, the Traders’ Finance Corporation, this also being paid over to Campbell Bros.’ accountant. According to the records this car had been sold to Miss Durant. On March 1 £515 was advanced hy the Otago and Southland Finance Corporation in the name of Lowery. There seemed to bo some doubt as to what actually happened to the car concerned, though it was surmised that it was identical with the car that had been sold to J. Fletcher.

On March 6 there was another fictitious sale, this being to C. Reel for jx motor lorry, the advance being £465. xvbicb bad been obtained from the Otago and Southland Finance Corporation. On the same date that company paid £479 to Campbell Bros.’ accountant. The records showed that tho ear had been sold to Mr V inccnt, of Timaru. On March 2G there was another fictitious sale to 0. Peel, an advance of £350 being obtained from the Traders’ Finance Corporation. It was found that tfyx car was still in bond. On tbo same date there was a fictitious sale to W. M. Lowe, the advance being £3OO. Lowe was an employee of the company, and ho would give evidence to the effect that be bad signed a blank cheque, considering that, as an employee, it was his duty.to do so. The car concerned was the same that bad been “sold” to Peel. Thus two “sales” bad been made of ■ cars that were in bond. On October 6 there was a sale of a new car to Mrs Olivo Smith, an advance of £365 having been obtained. Sirs Smith would say that it was not a new car at all that she bad purchased. None of the transactions bad been recorded

In November. 1026, the Otago and Southland Finance Corjxoration learned that tilings were not quite right, and made a demand for immediate settlement of tbo outstanding promissory notes. The Gamj'bells paid the outstanding amount, which was £903 4s 2d. It would be shown that as an offset to tins two Star trucks were taken over, valued at £905. It was suggested that this was a part of the assets, and should have gone to tbo creditors. Tho total amount advanced by flic Otago and Southland Corporation Tas £2.261), and by the Traders’ Finance Corporation £1.793. George Walter Reid, jxublic accountant, said tjjat under* instructions of a meeting of creditors of the New Zealand Engineering and Motor Company, Limited, bo made an investigation of that company’s books. The books, numbering eleven, bo now jiroduccd. Witness went on to say that bo bad jxrepared a report. In the first place, ho bad examined the books to ascertain bow the company had arranged its finance. Ho found that tbo company had boon registered Mr Moore objected. The question of the formation of the company bad no bearing on tho jiroscnt charges. Tbo Chief-Detective said that as the question of one of fraudulent financing, that of the company's finances was relevant.

His Worship decided that the matter xvas relevant, and after Mr Hay bad asked that the objections be recorded, the witness continued.

Hu found, ho said, that tho company was registered with a share capital ul £IO.OOO 'in shares of £1 each. Those shares were taken up by the three Campbells (6,000 jointly), Bamfioid (1,000), and Lowery (3,000). The amounts paid in cash on these shares were:—Campbell brothers. £1,321 Ls Id; llamficld, £I,OOO, in three separate' amounts. Mr Hay again objected. There was no need, lie said, to quote separate references as to the pages of the books in which the entries were made, and so on. The Chief Detective said it would save time later and bo a convenient to' the Crown Prosecutor if the Magistrate decided that a prima facie case had been made out. Tho Magistrate agreed with the duel detective. 'Witness continued. He had been unable, ho said, to trace ajiy record of Lowery having paid anything on his shares. The amounts paid by Campbell Brothers wore recorded to the credit of their share account. The amounts paid by Banilield had not been entered in the share register, nor was there anything entered there as having been paid by Lowery. _ There was an endorsement on Bamfield’s account in the share register relating io a mortgage over 1,000 shares. Entries in the private journal showed transfers made from current account in the name of Campbell Brothers to the credit of their share account of £-1,678 18s Scl, that being the amount required to make their 6,00(3 shares lolly paid. In the share lodger there was. an endorsement on Lowery’s account respecting a- mortgage. . The nett result of the investigations, continued witness, was that the company had commenced operations with a paid-up capital of £7,000, of which £2,321 Is 4d was paid in actual cash. Entries in the minute hook showed that suno sonsideration had been given to the necessity lor raising lurther share capital. There was a resolution to the effect that the capital he increased to £12,000 by tho creation ol 2,000 ordinary shares. Further minutes showed that efforts had been made to dispose of these shares outside the company, but that those eflorts were unsuccessful. Further minutes showed that an August 12, 102.5, 2,000 now shares were offered to the members or the company and that the Campbell brothers and Lowery had declined to accept them; that Bamliekl had applied for the 2,000, and that those were allotted to him, though the books showed that nothing was paid on these shares at that stage. On August 17. 1926, a call of Is per share was made, payable on August 26, 1926, and a resolution .showed that Bamliekl was to he notified that unless the amount oi jciOO duo by him for the call was paid on or before September 17. the shares would be liable to forfeiture. A further resolution of September 8, 1926, declared the shares forfeited. At a meeting of directors held on August IS, 1926. it was resolved to advertise for applications tor the position oi accountant to the company, and another resolution appointed Mr F. W. Bamheld to the position at (ho rate ol £312 pei annum as from September 1. L3-o-In an entry in tho privale journn Bainficld was with £26-1, based on his wages as from September !. J.l-o. to March 12, 1927, less the wages at a lower rate, already paid him. Ims £204 was placed fo the credit ol an account in Bamlicld’s name, and in the private journal appeared an entry dated August 17, 1920, lor a call ol £IOO on Bamiiold’s shave, immediately followed bv an entry on March 16, 192/. whereby the call was met by a translcr of £IOO out of the £204 placed to Bamfield’s credit. The resolution apportioning and fixing Bamfield's salary was dated March 16, 1927. Witness, continuing, said that an examination of 1 he books showed that from the outset the company had worked on a, bunk overdraft, and had also raised money by mortgages and loans from various, persons. The books showed that the purchases of cars and other goods made by the company had run into largo figures, and that the company had been unable to meet all the payments on these purchases. Entries show that Campbell Bros, had paid for shipments of cars, the total involved being £9,781 Ills 7d. Varioussums were repaid by the company to Campbell Bros., these repayments totalling £5,996 (3s lid up to June 30, 1926, at Which date the amount shown as (still owing to .Campbell feoa. jsras

£3,785 9s Bd. Trading and profit and loss account prepared to June 30, 1920, showed that,the trading operations tor the first year resulted in a loss of £3,672 15s sd. A balance-sheet at June 30, 1926, and an analysis of the liability side showed the indebtedness of the company on dune 30, 1926, was as follows:—Creditors for earn and goods supplied, and sundries, £12.400 12s lOd; creditors for mortgages and advances, £2,622 12s; the total of advances and mortgages being £18.536 18s 3d. making a grand total of £30,946 11s Id. The assets side of the balance-sheet showed tho following items which might bo regarded as liquid assets in tho ordinary course of business Cash in hand, £2 10s; bills receivable, £8 16s lOdj book debts, £4,715 3s 8d: total, £4,720 Ills (id. Other items on the other side were: Stock of cars, £lB,/91 11s; stock of sundries, £067 5s 3d; a total of £19,458 16s 3d. As an accountant, it appeared to witness that the provision of available funds would depend on the possibility of realising these stocks on a cash basis He found from the books that after June 30, 1920, tho company continued to raise funds 'by the method of borrowing money ami further loans totalling £1,428 8s wore obtained. On examining the balance-sheet of June 30, 192(5, witness was struck with tho following items on tho liability side;—“Loan accounts,” then the initials and amounts —A.C., £329 12s; C.P., £240 18s; S.C., £3Ol 12s; C.P., £339 9s; J.S.C., £329 12s; C.J.L., £375 19s; R.S.G., £272 12s; G.E.C.. £132; W.M.L., £240 18s.

Witness then proceeded to deal with the individual transactions in respect of the six charges before the court, and in xvbicb the five defendants were charged. He produced an agreement on tiie biro purchase system "for the sale of a, car to Hubert Scott Grey, also promissory notes signed “R, S. Grey” and endorsed F. W. Bamfield and C. J. Lowery for tho N.Z. Motor and Engineering Company, and also endorsed the Otago and Southland Finance Corporation, Ltd. Witness produced documents respecting the proposal to insure the car alleged to have been sold to Grey, also a receipt given to M. Stevenson, signed by C. Peel on behalf of the New Zealand Motor and Engineering Company, Ltd., for tho jnircha.se of a car for £6OO, of which £4lO had boon paid in cash, the balance of £I9C being an allowance on a Buick. References were made to that car in tho private ledger, showing an account headed “R. S. Grey,” and in that account Grey was credited on Deof £125. Witness was unable to find any record in the sales ledger of a car having been sold to R. S. Grey or' of any deposit having been jiaid by him on the car. The documents described the car as a I t h.p. five-seatcr Delagc, Mo. 18,110. An entry for the car appeared iir the car register, where it was shown as being sold to M. Stevenson on April 4, 1926, for £595. The cash book showed an entry dated September 23, 1925, where £435 was received from R. S. Grey. There was no mention in the cash book of the advance having come from tho Finance Corporation. In vcspect to the charge concerning tljc alleged sale to J. Shaw Campbell, witness produced documents similar to those produced in the other matter. An entry showed the car in this case as sold to W. A. Ross on October 5, 1926, for £825, and witness was unable to trace any record of a sale of tbo car to J. S. Campbell, nor any record of the deposit of £260 having been paid to tho company. An entry showed that £515 had been received from J. Shaw Campbell, but there was no mention of the Finance Corporation. There was an entry of a payment of £515 to Campbell Bros.

With reference to the car alleged io have boon .sold to Alexander Campbell, documents were also produced similar to those prodnceif in the foregoing cases Tho witness said that an entry dated February 26, 1926, showed that £515 had been received from J. Shaw Campbell. On tho same dale there appeared an entry of a payment of £515 to Campbell Bros. Documents wore also produced relating to the alleged sale of a car to Alex. Campbell, who was credited with the. payment of £515 to the company. That amount was shown ns having been part of a lodgment of £I,OBO in the hank. On the credit side, then? appeared a payment of £I.OBO to Campbell Bros. There was an entry in the ear register of a car sold to R. A. Wind for £4"5. Witness could find no trace in the sales register of a car having been sold lor £825 to S. Campbell, jun., or the deposit of £285 which ho had stated in tho documents ho had paid. Respecting the alleged sale of a car to C. J. Lowery, witness produced a hire purchase agreement dated March 1. 1926. relating to a Star car which, it was stated, had been hired to Lowery, and that ho paid a deposit of £260 on the ear. There was also a proposal for insurance signed by Lowery and by A. Campbell, on behalf of the company, also promissory notes signed by Lowery and endorsed by A. Campbell and F. W. Bamfield on behalf of the company and the Olago and Southland Finance Corporation. On page 221 of 1 lie private ledger he found an account in the name of C. J. Lowery, where he was credited on March 1, 1926. with £515 as cash paid to the company. That appeared on page 32 of (he cash hook, where (ho sum of £515 was shown as having been received from Lowery. On l)io credit side there appeared a record of a payment to Campbell Brothers ol £51,5. lie was unable to find any record in the sales register of any car having been sold to Lowery, nor could ho trace the deposit, of £26(3 stated to have been paid I.y him. The car was described as No. A 555, hut ho could not trace it in tho car register, the nearest number being A 655.

Witness produced a hire-purchase agreement dated March SC, 1926, signed by \V. M. lanvc as hirer and Lowery as owner relating to a Star car, which was shown as hired to I,owe, and that tho deposit paid was £l6O, There was also a. proposal ior insurance. There were promissory notes signed by Lowe endorsed by F. W. ILanlicld and A. Campbell on hchal! of the company, and also endorsed by the Otago and Southland Finance Corporation. On jingo 223 of tho private ledger ho found an account in the name of ML M. Lowe, wheri ho was credited with £360 as cash paid to tho company. The entry of £330 received from Lowe was recovered in the cash hook. He was unable to trace (be sale of tb© car to Lowe or any deposit stated to have been paid by him. Tho car was described as 0,089, and an entry appeared in the ear register. It was shown there as still unsold. Mr Ward: Did you see anything to show that Lowery sold his business to the company? "Witness: Yes. The opening entrie* showed that. (Proceeding.)'