HEPWORTH'S HURDLE

NZ Truth, Issue 509, 20 March 1915, Page 9

HEPWORTH'S HURDLE

A SPECULATOR'S BANKRUPTCY "SHELLOUT" SCHLIENTER RECALLED (From "Truth'a" Ohrirtphupch Rep.)

The Bankruptcy Court at Christchurch the other day revealed the rock bottom financial position of Raymond Hepworth, who at one time entertained glowing hopes of developing into a bulge-pocketed mining magnate, but was deflated, largely on account of the Christchurch public's gullibility having failed to come .up to anticipations. Consequently. Hepworth fell into the slush with a wallop which was responsible for last week's splash, when the broken stockbroker faced a meeting of his ere-

(Christchurch Speculator who went

Smash for £1200)

ditors before tho Official Assignee. Strange to say, the most pressing creditor, whose enthusiasm' was responsible for the meeting, was Mr. R. B. Holdsworth, who might, at one time, have been regarded by Hepworth as A CREDULOUS FINANCIAL WIND- j FALL. Verily, the tables have been turned! Hepworth's liabilities totalled something like £1201, whilst his assets were estimated at £25 17s 2d, leaving a deficiency of £ 1175 12s 2d. Holdsworth wanted £1186 to square, his account ' with Hepworth, whilst another creditor clamored- for £154. Hepworth's assets were: Furniture, £25; cash m hand, ; 7s 2d. ..%- /.-•. ■■:■-■ ■'-„■■■ ■• ■ ■:..■' -■ In his sworn statement, Hepwqrth reckoned he wasn't hiding behind the Bankruptcy Act, but had been forced to file on account of pressure by R. B. | Holdsworth, who had obtained from the Supreme Court an adjudicating order ! m respect to an unsatisfied judgment of the court 'for £1000 and costs m connection with Holdsworth's purchase of iOOO shares m the Golden Bar Scheellte Company. In December last, Hepworth disclosed that he had no means nor resources. He reckoned it was impossible for him to make any promise to pay the amount owing. His business was entirely of a speculative nature, and, although he had averaged t good commissions for a year or two, he j had, during the last couple of years, done comparatively little business. There Is always i A SUFFICIENCY OF, MUGS. I and no doubt the debtor could have floated a company and paid Holdsworth if the la'tte?f had bfeen a little less Impatient and delayed taking, action for a couple of months or so. Replying to Holdsworth's "Costs," Hepworth said ho was a registered accountant, valuer, had been city assessor, for a time was on the Stock Exchange, a company secretary, and, lastly, a company promoter. During the post three years he had acted as seoretary for a list of historical and speculative concerns. He had also been associated with the promotion of the Petroleum Co. He explained that he didn't keep books m connection with his own affairs. He opened a cash book when he sturted business, but subsequently discontinued It, although the customary books of account were kept when the Golden Bar Scheelitc Co. was let loose. Hepworth commenced business In January, 1908. He kept books which recorded his clients' business and trust accounts; thn trust moneys being banked In a different bank to that wjilch received his private moneys. He treated his DIARY AS A CASH BOOK and reckoned that no other books were necessary. Periodically, until the end of 1913, he went through his bodies and papers and destroyed those which were finished with. Mr. .Wright: Do you, as a registered accountant, consider tho entries m a diary are sufficient? — Yes, for my purpose. The diary was treated by me as a cash journal. Replying to a question concerning his income, Hopworth paid that In the first year it was £1300 gross, tho second year between £800 and £900, the third year It panned out at £2000, and then the next twelve months showed a \osp. In 1912, Hepworth received £6300, including £1300 from Holdsworth and Cunningham. Tho same year he paid out £7800. Ho had neither paid nor transferred large »uins to his wffo. n*itherrhad'he advanced money to her on mortgage. In one, year, £6000 or £7000 had passed through his hands m speculations, on account of which he had made and lost money. Hod not made £5 during tho last couple of yours from his accountancy business. whllHt from valuations he made £850 In tho first year and an average of about £60 a year subsequently. Altogether ho DIDN'T DO TOO AVKLL out of his Hharobroklng side-line, but he got £100 a year aa secretary of the Parapara Co. and a similar screw from the Golden Scheolite Co. Last year ha nnttcd an much an ho. did the provloun your— nil—although practically £2600 Imd pujwed through his linrvls slnrfl J9Kt. Approximately, £1074 of that account won 'loan money. Rr-Rnrdlnp cortaln irn np.tr tiohii, Hepworth raid h< did not know whrthcr memoranda existed. H«: hadn't kept a Jotter book.

but used to duplicate his letters and file them. Then, when that particular transaction was ended, the correspondence would be destroyed. In January, 1913, he paid £160, and a similar amount m March, for a motor car; the remainder of the purchase -money he satisfied by transferring £250 worth of Golden Bar debentures. A few days before HoldßWortb took to him m the Supreme Court, last September, he (Hepworth) raised £200 on the car, and finally sold it for £225, a month or two after the case, the proceeds of the mortgage being mopped up m court costs. As a matter of fact, didn't you dispose of the car so that you'd have NO ASSETS TO SATISFY Mr. Holdsworth? — Certainly not. Continuing, under cross-examination, Hepworth said he had nothing more m the way of papers relating to his own personal business that he could put before the Assignee. He would try, nevertheless, to dig up some statements relating to accounts between himself and his wife. He admitted holding 60 or 70 shares m Parapara, and regretted that he had not shown this on his statement of assets. . / A good deal more matter was discussed and Lawyer Wright asked the Official Assignee to accept the advice of the proper authorities as to whether Hepworth had kept proper books. The matter was a serious one m that Hepworth, being a registered accountant, might have committed a breach of the penal clauses m his failure to keep books. At any rate,- the authorities would be able to state , whether the books and papers produced by Hepworth were sufficient to comply with the requirements of the Bankruptcy Act. ' , * The Official Assignee undertook to have the matter looked into, and Hepworth promised to give all information at his • disposal regarding Parapara shares. ' The dollop of cash which creditor Holdsworth is chasing was von from Hepworth after a severe and lengthy litigated tussle m the Christchurch Supreme Court about six months ago, when affairs m connection with the ' GOLDEN BAR "SHELLOUT" COMPANY were shown up m all the^r gorgeous luridity, and the credulity of the Christchurch public, was, incidentally, paraded before the whole of the I "Dom." Holdsworth claimed from : Hepworth, and a couple of others, : £1000, on allegations of misrepresentation m connection with the sale of Golden Bar "Shellout" shares. Sir John JFindlay, outlining Holdsworth's case, ' said that the defendants formed a syndicate and acquired mining rights m respect to a claim near Naseby. They then proceeded to form a company, and, out of the claim they had acquired for j £ 295. undertook to make a profit of i £21,000. Counsel was of opinion that a company formed under such circumstances was planned to exploit the pockets of the public rather than the resources of the mine, aud that, from tho- standpoint of commercial morality, the scheme was an imposition on honest investors* Private companies, said Sir John, existed for various reasons, i but the Golden Bar "Shellout's" ex- ' ample was AN ATTEMPT TO ABUSE LEGISLATION 1 rightly laid clown to bring Into being legitimate private concerns. Tho whole thing was a scheme to get money from the pockets of the public, and it was preposterous to say that the defendants' intention was to work the mine and pay dividends. The idea was to • unload as many shares as possible on the public and then go into liquidation. I The case was of great Importance, es-

(Unlucky Shareholder of 'the Golden Bar '•Shell-out" Co.).

S peclally as the. court had been told, by ! one of the defending counsel, that Christchurch was a nest of rascality. imposing on credulous simplicity, and that the city grew all sortH of bogus concerns, and that the market would float almost any sham. It had been said that Hepworth got nothing out of the concern. Ho got all there was to get. He had debentures over all the assets of the company, and held the mine and a lot of shares. If Hopworth actually lost money that was nothing— ! he stood to make a lot, and kopt putting j his money into tho company to keep up the pretence so that more shares could |be unlonded on the public. At the exponse of COMMERCIAL MORALITY AND HONEST INVESTORS. !he was prepared to make as much as he could. Hcpworth's counsel, after calling many witnesses, whoso evldenco certainly toned down tho allegations of plaintiff, conceded that it. watt an injudicious thiitißr for it company to bo floated with 21,000 fully paid-up shares. It must bo remarked, however, that Hopworth had purchased the property and paid uway a considerable »urn of money. U had been suggested that because the company wiiH'fornii") on this paid* up capital, the Jury should infer fraud, and that Its formation, jn-ocred-lnß» and nfter-condtict hliouM rorrobdrotft the evMr.nrr? of the plaintiff on the charge. The articles or u»uociutlon had. however, been put through by .1

respectable firm of solicitors, who would certainly not have handled them if there was any suspicion of fraud about them.

The jury, after three hours' retirement, returned with answers to the thirteen issues submitted to them, which, collectively, were to the effect that Holdsworth wnß entitled to £1000 damages, which amount now forms Hepwortu's little Calvary m the Bankruptcy Court.

Subsequent developments should be interesting.