CLEVER FRAUD ALLEGED

New Zealand Times, Volume LIII, Issue 12363, 5 February 1926, Page 7

CLEVER FRAUD ALLEGED

WELLINGTON RESIDENTS CHARGED WITH CONSPIRACY P.O. SAVINGS BANK MONEYS OVER ONE THOUSAND POUNDS LIFTED ON WORTHLESS CHEQUES One of the cleverest frauds in the annats of New Zealand criminology is that for which Sydney Erne Baume and William Smith were yesterday charged in the Supreme Court before His Honour Mr Justice Alpers with obtaining from the Post Office Savings Bank by false pretences the sum of £lloo*

As set, forth .by Mr P. S. K. Mac* fessey the story of the crime, reconstructed from a statement made by the accused, Smith, was as follows: [Towards the end of October, Smith, a labourer, was in Wellington and out of work, when ho met Baume, and asked him if he could supply him with a meal. Baume did so, and also procured him a bed at the Salvation Army hostel. An arrangement was made that Smith should meet Baume next day, and it was then arranged that Smith should open an account in the Bank of New Zealand in his own name, Baume giving him £3 for the purpose. A bank passbook and cheque book was obtained. Another account, also in Smith’s name, was opened in the Post Office Savings Bank. A number of withdiawal slips were obtained, and three cheque forms and three withdrawal slips were signed by Smith at Bourne’s direction. Oil October 30th, Smith was given a withdrawal tdip for £lO with instructions to draw the money from the post office. This was done, and the money handed to Baume. The same day a further £350 was drawn out, and on the next day £750 was drawn out. The.•modus operandi was to pay in cheques on an Invercargill bank which would take several days to clear. In pursuance of this reheme cheques for £SO, £4OO, and £2OOO were paid in, the cheoueforms obtained from the North End Bank in Wellington, being altered by typewriter 1o make it appear that they wern drawn, on an Invercargill bank, and the withdrawals made before the clearince could be effected. Baume when arrested had denied all knowledge of the crime, and of Smith, but when it was pointed out to him that Smith, who had been picked up drunk by the police had made a confession, and that the typing on the cheques and withdrawal slips had been identified as having been done with the typewriter in his office, he had asked whether, if ho confessed to the crime, the matter could be held over for 10 days He had then admitted haring received £350 from Smith and had sent this to an address in Sydney.

“There is no doubt whatever,” concluded Mr Macassey, that a crime has been committed. It is for you, gentlemen of the jury, to say whether this crime was committed by the accused or either of them. If you decide that the accused are responsible for the crime, then you have to dewhich of them was the moving i spirit and which the dupe. It might he that Smith was the leading party, but the question which you have to decide is whether a working man with a deposit of £3 was likely to withdraw money to the value of £llOO. Baume, on the other band, has admitted receiving £350 from Smith, a man whom he knew to be a pauper, but disclaims any knowledge of how it was obtained. It is for the jury to say which of the accused is guilty, or whether both were equally concerned.”

As evidence in support of the contention that Baume was the leading spirit in the fraud. Mr Macassey detailed the fact of Baume having some months earlier paid a cheque from an Auckland bank into E!s account, and

having drawn on it before it was cleared. This, the Crown Prosecutor held, had given him the idea on which the crime was based. The court was crowded throughout the day, accused Baume being well known in Wellington, # where he had had a brilliant university career, and was employed in a leading barrister’s office. A large number of the spectators were ladies! Smith appeared nervous and ill at ease, Baume although slightly pale, being aelf-possessed and apparently confident. Mr H. F. O’Leary appeared for Baume, and Mr J. F. B. Stevenson for Smith. SMITH IDENTIFIED Robert Arthur Dixon, cashier in the North End branch of the Bank of New Zealand, gave evidence of the opening of the account, and identified the accused Smith as the man who had opened it. To Mr O'Leary: It was a fact that the cheque forms were taken out of the hook at different intervals, there aeing a big interval between the first cheque and the next. Edward Wm. Rudman, senior supervisor of the accountants’ branch of the Post Office Savings Batflc. gave formal evidence of the cheques having been put through his bank and being returned marked “no account.” On receipt of certain ii.formation from the police a Governor’s warrant had been obtained and a registered postal packet recovered from Sydney post office, containing six £SO notes. "Witness produced deposit slips admittedly made by Baume Tu connection with! his own account, which bore certain definite characteristics resembling those on the slips paid into Smith’s account. NO DISGUISE Mr Stevenson: You have mentioned several documents, chec.ues, withdrawal slips, etc. You are an expert in handwriting: would you say that the handwriting was in any way disguised ?—No. Mr Stevenson: He paid in £3 4s to your bank, and later £1 to the P.O. Mr O'Leary: He would not get a deposit unless he had the monkey. Mr Stevenson: This will he important later. Smith was a penniless man early in the day.—He certainly paid in the money. Mr Stevenson: Did Baume close his account before Smith opened his?— Baume closed his account early in the morning, taking out £7 Bs. About midday Smith opened his account. Mr Stevenson: When Baume paid on Tuesday a cheque drawn on an Auckland bank into his account, what time was it raid! in?—About four qf clock. Mr Stevenson: This was after the Hank of New Zealand, on which the ch*nue was drawn, was closed?—Yes.

Air Stevenson: So that the cheque could not he paid into the Bank of New Zealand until next day?—That is so. Mr Stevenson: Then if the cheque were wrong, no report of the fact could he received until Friday of that date? ■ —As a matter of fact, seven days elapsed I*>fore the cheque was cleared. 'Mr Stevenson: On the day. before flke dw:auQ^auld_ha,v.Q^JjiauljiflfiaiJdi.

eleaTi'd, Baume drew apninst this deposit?—That is so. Mr Stevenson: Any person should have kuown, should he not, that he could not legitimately draw against a cheque which is not cleared? Mr O'Leary: I object to that question. Mr Justice Alpers: No person of ordinary intelligence could, think otherwise. There is no other banking institution in tho country, other than the Post Office Savings Bank where it could be done. . TOO MANY OVERSIGHTS Mr Stevenson: This payment could not have been made without an oversight having been committed? Witness: That is so. His Honour: There were three oversights were there not? —Yes, Your Honour. His Honour: By three different people? Unfortunately so, Your Honour. His Honour: What happened was that in October Smith paid in a piece of paper and received a credit for £2OOO. Now what is to prevent a man getting a bank-book like this, and then going dovvn the street and buying a motor-oar for £looo.’’

Witness: As a matter of fact, these cheques should never have been accepted. They were irregular. The system is all right, but unfortunately the human element enters into it. His Honour: Would not any tradesman be justified in accepting this passbook as guarantee that there was an account in the Post Office Savings Bank? —Certainlv he would, and yet we have a responsible officer of the bank saying that the systom is all right. I say that it is all wrong. To Mr O'J.eary, witness stated there were probably six men concerned with the carelessness which had enabled tlio crime to be committed.

Mr O’Leary: You heard mv question to Mr Dixon, Mr Rudman: Would you think that anybody not conversant with your system would imagine that it would take longer than three days to clear a cheque? His Honour: I think that the case is overloaded with references to this Auckland £25. Tt will not hulp the jury when they come to consider tho case on trial.

Mr O’Leary: My learned friend has put this forward as evidence that Baume knew how long it would take to clear a cheque, and that the fraud was involved from that knowledge. DRAWING THE MONEY Percy Herbert White, teller in the Bank of New Zealand, Lambton Quay branch, gave evidence of having cashed the cheque for £350 for the accused Smith. The cheque was in order and he had no hesitation in cashing it. He next saw Smith in the bank about the same time when he had brought in a cheque for £750 drawn on the North End branch. Witness had refused to cash the cheque as the accused was apparently under the 'influence of liquor and told him to go to the West End branch for the money. Edward Maurice McGrath, in the North End branch of the Bank of New Zealand deposed to having cashed the cheque for £750. This was between 2 n.m. and 3 p.m. on November 3rd. Smith was under the influence .of liquor To the bench: The fact that a man was under the influence of liquor would not justify hi-.: in refusing to cash the cheque, providing it was in order. • John Rvan,- son of the proprietor of the Metropolitan Hotel, Molesworth street, said he first met the accused Smith on Tuesday October 3rd, when he had hooked up for that night and the following night. On Thursdav night he had noticed the accused pull out a roll of notes, and witness bad admonished him for displaying it openly. Ultimately accused had handed him £6BO. of which he had received back £8 at intervals. _ Accused had stayed at the hotel until the 9th instant, when he was arrested by the police. To Mr Stevenson: Smith had booked in at the hotel under his own name. He had handed the money over to witness openly in the bar, in the presence of a traveller for Staples’s Brewery. EVIDENCE OF THE TYPEWRITER Archibald Wm. Blair, barrister and solicitor, deposed that the accused Baume liad been a clerk in hiS firm for, two years. He identified the typewriter produced as the one which was in the room where Baume worked until six months prior to November. The machine was one which the com-mon-law clerks, of which Baume was one, used. Mr Stevenson: _ There were two names mentioned in this case—those of Halstead and Watson, which Smith had written on a piece of paper. Have you got people of those names working for you?—Yes. To Mr O’Leary: Before an examination if was usual to allow clerks halftime off. The typewriter was in a room oecuoiod by a clerk named Gledstono. There would he nothing _to prevent Baume taking Smith into Giedstone’s room when he had called to visit him. It was possible that ■whilst Smith was visiting Baume, he might have been called out of the room bv one of the principals of the firm. Baume was peculiar in that ne liked to mix with all classes of peonle, especially those in tho lower grades. He had an acquaintance from Government House to the Communist Partv To Mr Justice Alners: There would ho no difficultv in Banmo typing out the cheques on the tynewriter mentioned, had he desired to do so.

NOT A NOVICE’S WORK

Rupert Henry Eastman, typewriter expert, gave evidence of the means by which he judged that the cheques were filled in hy the typewriter produced. In the first place, between the right and left-hand shank of the letter, “r” was a little blank. In the “31st” the “1” was out of alignment as was the “1” in sterling; both those characters wero produced by the same key. The letter on the mnehino was burred, and in the word “Invercargill” tiio letter “c’’ was out of alignment..

In the cheques of £SO and £4OO, the “1” was out of alignment. Ail these were peculiarities of the machine under discussion. To Mr Stevenson: It was unlikely that a person who had never used a typewriter, could have filled in the cheques, as had been done, without making a mistake. The cash will proceed to-day.