DISHONEST BANKRUPTS

New Zealand Times, Volume LII, Issue 12096, 25 March 1925, Page 11

DISHONEST BANKRUPTS

NEW TYPE OF FRAUD ALIEN TRADERS’ TRICKS. SEVERAL SENT TO PRISON. JUDGE’S STRONG COMMENTS. Alarmed by the severity of the sentences passed at the Old'Bailey, London, on perspns convicted of “long firm” frauds, unscrupulous alien traders are adopting a new- form of swindle. Having obtained credit for large amounts, they deliberately become Bankrupt, and returning their liabilities at thousands of pounds and their assets at a few hundreds, offer Compositions of from 2s 6d to ,4s in the £- Like the practitioners of the “long firm’’ trick, most of these traders ate of alien origin, and in some cases quite young men, with practically no business experience, are exploiting the credit system of Britain. s Within a fortnight in January there were quite a number of creditors’ mootings at which bankrupts made ridiculous offers. In one instance a young fellow of 22 admitted that he was taking £4O a week out of the business for him - self, and it was discovered that he was living in a most extravagant fashion. AT THE OLD BAILEY. Several men of thi6 typo have been dealt with at the Old Bailey. One such was Abraham Allen, who was sentenced

to nine months’ imprisonment for obtaining goods by false pretences, and also for offences under the Bankruptcy j Act by attempting to account for part ■ of his property by means of fictitious losses. He was adjudicated bankrupt in April, 1923, with liabilities £4580 and assets £4lB. It was shown that shortly before the petition was presented against him he ordered large quantities of goods on credit from textile firms, and sold them for cash under cost price. Judge Atherley Jones, in passing sentence. said Allen’s offence was a most grave one, for mutual confidence was khe foundation of trade in this country, ft was impossible for honest traders to make conclusive investigations intoHhe stability of all the persons with whom they were called upon to do business, arid, although defendant was a first offender, his conduct could not be ptlsscd over. PROPERTY “TRANSFERRED.” Another man. named Harry Adler, traveller, was sentenced b.v the Recorder (Sir Ernest Wild. K. 0.) to eight months’ imprisonment for making a transfer of his property—stock value , £o3l9—to Harry Adler and Co., Ltd., With intent to defraud his creditors, j W hen the bankruptcy petition was preI seuted againsrt him Iris liabilities | amounted to £15,000. and his assets i were estimated to produce £262. i The Official Receiver discovered that | before the presentation of the petition I -the defendant had sold all his assests for I £15,362, but received only £262. From his three principal customers lie did not 1 receive any payment at all and one < f them had ‘since been convicted at the i Old Bailey of a “long firm” fraud. > Adler admitted at his public examI ination that he did not get any references for these customers and practically knew nothing about them. When his original company got into difficulties Adler formed a new company, to , which he transferred all his stocks. NEW LAW WANTED. The Recorder, in passing sentence, said that, for some reason or other, the legislature had thought fit to impose a ' maximum penalty of one year’s imj prisonment for this very serious offence. And yet for other bankruptcy offences, which were morally much less heinous, it was possible to give a sentence of ] two years. Most of the frauds, which have been j perpetrated during the last two years, Were made relatively easy of accomplish, ment by the drastic slump in prices l

following the artificial boom in the te»tile trades after the Armistice. Large and old established firms in the North of England found themselves burdened with huge stocks produced when prioes were at high-water mark, and felt that the risk of making bad debts was a leaser evil than having goods on their hands. This soon became known to the gang which is behind these frauds, and the traders whom they approached had little difficulty in getting their orders carried out. No fewer than twelve aliens who had victimised traders were sentenced at the Old ’Bailey during the last year.