SAVINGS BANK SWINDLE

NZ Truth, Issue 1055, 11 February 1926, Page 7

SAVINGS BANK SWINDLE

Clever Law Student and Laborer Found Guilty of "Impudent Fraud" BAUME, "THE MASTER MIND^ SMITH, "THE SIMPLETON" ■••..."' (From "Truth's" Special Wellington Representative.) A young man! of 20 with sen>i-aquiline nose, intellectual forehead; law student, brilliant scholar, champion debater, , "fond of studying humanity m the rough," popular among college associat s: His life before him. That is young Sidney Erne Baume, the master-mind behind one of the most cleverly conceived Post Office frauds ever perpetrated m New Zealand.

yi " V HROWN m strik-C y/L_ /^W * n £ .contrast is his aTBQA associate, a man of A _; __^ 40, more rugged of (r == WMff l bk —\\ countenance, more «J timid of pose, a ffiw laborer "with a EMm weakness for j /*^[' " As a boy he ran /' h!^ vrith cash for a ) f Jy^f _J London departv_ J , «^f ft. i«y inent house v As a manof 4o he. was simply doing the old job on a bigger scale under the spell of young Baume. That's William Smitn. If ever Life offered a study m contrast to the world it was m the case of Baume and Smith, as far apart as poles socially, yet thrown together m crime and now undergoing reformative treatment for defrauding the Wellington Post Office of £1,100 by means of false pretences. Crowded galleries at the Supreme Court heard the issue fought out before Mr. Justice Alpers last v^eek and when the Court sat m the evening, all the wealth of fashion flocked into the ladies' gallery m a surge of curiosity akin to a display of Spring millinery at a popular city emporium. But there was something more than millinery m their minds that evening. • There was a striking young man facing two clever lawyers and fighting for his very liberty and future. .'■'.' The clear, defiant,' crisp evidence that flowed from the prisoner m s a •nicely modulated voice revealed a mind that was calm and clear m every detail. ? . - His story was well memorised, his oratcry brilliant, but was not his father one of the ablest King's Counsel that ever graced and honored the Bar? A Clever Swindle The 'story of the clever swindlemade very easy by- an absurd system m the Post Office— is one not without a great deal of interest and has caused a general stir among all sections of the community m the capital. Apparently the perpetrators were thrown together by one of those queer casts of the dice of Fate. Smithy was "down and out," down at mouth and; down at heel. ' It was no neiy experience for Smith, because drink had tossed him more or less relentlessly about on the sea of life. ■■■■ - - ■■- ■ Although ;he calls himself a laboring man, he -commenced manhood with an ex-seventh standard English school pass* and 'to his\ credit he served very faithfully m .the Big. Scrap. But he was a drifter, and — until the meeting with .Baume— an honest one. It was Smith who made the first move towards his present predicament when he accosted Baume with a request Cfor a meal. From the depth of a warm .heart young Baume provided him with a meal, gave, him clothes, and then. more food and money. A friendship developed. Smith, believing—as he said— that young Baume was a solicitor, agreed to open accounts at the bank m his own name for Baume and signed deposit slips and withdrawal slips" on the PiO. savingsbank. He also deposited and withdrew money for Baume. In a nutshell, the scheme of fraud was simply this. At the instigation of Baume, Smith would pay into the P.O. cheques of different amounts on the Bank of New Zealand, Invercargill, and then before they had been cleared at Invercargill, or before Wellington had time to receive notification that the che- . ques were O.K.> withdrawals were made against these worthless cheques. A well-thought-out scheme, this, requiring a great deal of intricate detail m the preparation, but proving nevertheless that there was an easily accessible loophole m the P.O. banking system. Smith Gets Drunk But the unexpected happened. With £750 m his possession, the sum that he had been^told by Baume to .withdraw, Smith got drunk. , He failed to keep his appointment with young Baume and it is from that point that the skeins of the web of complexity began to weave themselves very uncertainly about the two principals. The police got busy and found -it necessary, from what they had discovered, to have a talk, with young. Baume. He denied all knowledge of a man named Smith, but when it was explained that Smith, who had been picked up m' the throes of inebriacy, had made a statement to the police, and that the typing on the cheques and the P.O. slips had been done on a' typewriter m the office m which Baume worked, he asked if the case could be held over for ten days if he. made "an admission," as he wanted to complete his law examinations. When this was refused, he asked if the case could not be taken outside Wellington. There was nothing doing. Further questioned by detectives, Baume then said he had received the sum of £350, not from Smith, but from a "man named Watson." Fearing complications that might embarrass him during his examinations he posted the notes for £300 to a fictitious address at Sydney, feeling that through the dead -letter office the money would be restored to its rightful owner and that neither the man "Watson," whom he had befriended, nor himself would be any the worse for the unpleasant experience. ;'■■■'■'■■■ The notes were intercepted m the post by special warrant. The evidence to explain all this required 13 witnesses for the Grown, and more than once during the. evidence ; of the postal clerks his Honor was moved to, comment on the thoroughly stupid system which allowed money to be drawn against cheques before they had been cleared.. As to Baume himself, Lawyer A W,. Blair, when cross-examined,; stated that young Baume had displayed a great curiosity m his study of humanity.V ..-;-. — :.- ; v

y— — : ( "He liked to study humanity m the rough," said witness. 'He seemed to think it his business, and would associate with persons from Government House down to members of the Communist Party. He liked to 'mix it,' so to speak" (laughter.) Crown Prosecutor Macassey: The brotherhood of man? i Lawyer H. F. O'Leary (for Baume): You're not surprised to know that he gave a man who was down. and out a meal?— -No, he would like that. It would be a part of his study. Evidence was given by typewriter .experts to the effect that the typed obliteration of the words "North End Branch," and substitution of the word "Invercargill," had been done on the typewriter m an office accessible to Baume. Evidence was also given as to the inks used, the opinion being that lines on the cheque were identical with ink found m the office frequented by Baume. A bit of a bombshell was pitched, into the legal camp of Baume when the Crown called Senior Detective Cameron to speak of what he had heard at the ,d.e tective office when Mr. and Mrs. Kane, parents of the prisoner, called to see their son. - Lawyer O'Leary raised a strong objection to the calling of evidence that had neither been intimated to him nor embodied m the form of a police report, but Cr.own Prosecutor Macassey explained that it had been necessary m order to meet questions that had arisen from the cross-examination of the previous police witnesses. Cameron's story, which, for a | time, seemed *as if it was going to upset the legal apple-cart for Baume, was this: He had asked the detective who had taken down the .statement if Baume had had it read over to him, when Baume, who was present, said: "It's quite all right, detective, the statement is true and I have made it voluntarily." Witness' then related how, on meßting her son at the office, Mrs Kane had said to him: "You must have known it was wrong when you got the monoy from the man," and Baume was alleged to have said: "Of course, I knew it was wrong. I could not think otherwise." Baume's Character There was no dearth of witnesses ready to pay tribute to the character, ability and high ideals of the accused Baume. Professor Hunter, of Victoria University, had a word to say. Peter Fraser, Labor member for Wellington Qentral, spoke of a four years' acquaintanceship and , told of how Baume, jn his thirst for knowledge on sociological and economic questions, frequently found his way into all sides of Parliamentary life. '■'■ Joseph Isaac Goldsmith was also giving evidence as to Baume's general desire to help other's when his Honor interpolated with: "I hope most of us, occasionally, have' helped a lame dog over a stile, even perhaps when we were 20. "Whoever conceived the idea of working this fraud on the Post Office," said Lawyer J. F. B. Stevenson, before putting Smith into the box, "rriust have had the knowledge that the scheme could be worked. "A clever business min,d would be absolutely necessary to carry . out the swindle," and he suggested that the shrewd mind was Baume's It would be said that Baume was a philanthropist and that he had hobnobbed with all sections of the community ranging from Government Houvse to the Communist Pa^ty. "But, gentlemen," said counsel, "would the richest man m this town give even £4 10s to a man he had not seen before, to help a lame dbg qyer.a stile? "We usually give a man a bob for a feed when accosted, or we might even go to five or ten bob when we hear the well-worn tale that a chap has got work to go to at Palmerston North, but has tonly half the fare, but who, gentlemen, is going to give a stranger £4 10s— -and a law clerk at that?"---"A Tool; A Dupe" Mr Stevenson contended that Smith was nothing more or less than a tool m the hands of the clever Baume— a dupe. ; It might be reasonably understood that a man was the (more easily duped by a man who appeared to be his friend. Lawyer O'Leary asked the jury to weigh the coincidences mentioned by his confrere with the "extraordinary coincidence of six different clerks employed m the savings branch passing those cheques and permitting money to be paid out." Did that one coincidence .alone, said counsel, make all the other coincidences pale into insignificance. When the police made inquiries the "arch criminal" had £350, while the "gull and simpleton" had' the, hefty wad of £750. "Dealing with the typewriter m Baume's office, the fact remained that Smith paid many visits to Baume's office, and although it was stated that Smith was not an expert typist and that the typing on the cheques was neatly done, how many cheque forms had been used m doing it? The prisoner, William Smith,, placed m . the box, gave an account of his meeting Baume and how the latter had requested him to open an account and then withdraw, money. He thought that Baume was a solicitor and was anxious to help him. : After doing several little banking jobs for Baume, he began to think heavily, but eventually concluded that the transactions had something to do with Baume's business as a solicitor. He remembered later that Baume told him to change his name to Watson when he got to Auckland. "I said 'What's that for?' " said witness, "and he replied: 'Oh, that's all right, it's just to please me,' so I put the name down oh ' a slip so that I would not forget it." His Honor: You intended to change your name?— l don't think I did. .-;. At all events, you were careful to take a note of it?— l had promised to

write from Auckland to let him know how I was getting on. . Smith denied that he had ever told Baume that his name was Watson. "It's a lie, .sir," he said with some force, "When you were arrested what did you think it was for?" asked his Honor Witness: I thought it was for not taking the money back to Mr. Baume. To Lawyer. O'Leary, Smith admitted that he had passed the ex-seventh standard at school m England and he "supposed" he was intelligent and wrote a splendid hand. It has been suggested that because you were once a cash boy nearly 30 years ago, you know a bit about high finance; you know nothing about finance? — No. As a boy you used to carry money, You would bring it and take it. On this occasion it so happens that you were doing your old boyhood job on a slightly larger scale. (Laughter.) When Baume went into the box to give evidence on Friday evening, space was at a premium m all the galleries and a hush, relieved by the quiet ticking of the official typewriter, reigned while he was undergoing two and a hall hours' examination. His mother and stepfather, Mr. Kane (Clerk of the House of Representatives) were front-rankers m the audience within the barrier. The young man told a clear, wellconnected story of how he had met and befriended Smith, "an unwashed tramp," whom he had taken to a restaurant m his car. He detailed how Smith had called subsequently and pressed some notes into his (Baume's) hand, with the remark that he had drawn it from the bank by cheque. Discovering after Smith had gone, that actually he had been given seven £50 notes, he was perplexed as to what to do with if, as he neither wanted get Smith (known to him as Watson) into trouble nor himself be implicated m a police inquiry, especially at a time when his law examinations were m full swing. A Visit to Australia He fully detailed how he had eventually posted the notes to Sydney. Mr. Stevenson: The man you had just- met and who had just been turned down by two boarding-houses as not respect- ' able," dirty and unwashed, and a drunkard, the very next day gave you money and you took it from , him?— Yes. Mr. Stevenson: Tou did intend visiting Australia about the time you posted the notes to the fictitious address there? — Yes, if I could get the vacation I had intended going for a holiday there. What was your wage?—Thirtyfive shillings a week. What was your income other than wages for the year? — I could not say exactly. The police could have found that out. His Honor: But we want your views on the subject. — Well, about £30. Witness then explained that other sources of income included his grandmother's estate, about 120 25/- shares m the E. and F. Piano Company, Auckland. ' ' . His Honor: Would your income from all sources reach £200? Mr. Stevenson: Oh, no. , ' His Honor: Would it reach £150?— Last year it did come up to £200. Mr. Stevenson: Now, supposing those to wtiom ycu were indebted cams to you for demands totalling £50, how wars you going to meet them when you had - only about £42 m your cwn account? — I could have overdrawn my salary to pay it back. . Will you' say that you honestly di-i not know that this particular class of fraud could be worked on the Po^si Offipe?— l swear that I did hot. Mr. Macassey : Why dirt you send the money to Australia? — For two reasons; I wanted t^ get it out of my possession and I knew that after the lapse of a month it would get back to the police. Baume, surely you know that if a person comes by money that has been dishonestly obtained he has nothing to fear if he at once reports the matter openly? — I dreaded a long inquiry and I did. not want Smith to get into trouble. Why so anxious to protect Smith, because the money was obtained dishonestly ?---There are ways of obtaining large sums of money other than by dishonest means; gambling, for instance. "One Flying- Risk" His Honor: What do you suggest is the reason for this \mwashed tramp thrusting £350 into your hands ?— At the time, sir, I thought it was for safe custody. : And what do you think now? — Now I think that he wanted to get rid of it. Can you suggest why Smith, a laboring man, should give to you, his benefactor, a false name, after giving his name as Smith to hotels . and hostelries?— No. I cannot. His Honor: H'm, men do .strange ,things. - "Why not take just one flying risk and say that the detectives told the truth," said his ' Honor, after- hearing Baume say a number of times that he had not really had a chance to make a proper statement, although he had signed each separate page. "There is. a current statement," said prisoner to Mr. Macassey," and I suppose you know it,, that is — never make a statement, to the police — " • ■ Mr. Macassey: Yes, I have heard that from guilty men, Baume; but an honest man should have nothing to fear m making a to the police. His Honor: You ask us to believe 'that although you read those statements: through yourself, and actually signed them, you did not know all that you had signed for?— l have said that. It was after 1 had been questioned m the presence of three detectives for nearly two and a-quarter hours that I could see that it was hopeless,' so I let it go. His Honor: But you have been : m the witness-box here for nearly two and a- ha If. hours, under the most severe of crossrexaminatipr.s, : but you certainly do not appear to have lost your head on this occa- ■ ■ sion, ■ -•• • . '.•• -.■•■•• ■ . >•■-• '- '■■'■_■■ ■;■ ■':.

o — — — ■ — — — — — Edward William Kane, Clerk of the House of Representatives, m detailing I how he and Mrs. Kane had called at . the detective office, said that the con- . versation related by Detective Cam- [ eron as having taken place between . Eaume and his step-mother never took place. ■ • " .. As early as the previous February, the prisoner had been promised a holiday to Sydney, wh,ere «he had two 1 brothers. » No Impecunious Clerk Mrs. 'Rosetta Kane also denied the ■ conversation given m evidence by De--1 tective Cameron. . -. Hotly refuting the suggestion that : Baume was merely an impecunious law clerk, she explained at very great • length the financial standing, of iher 1 son. [ "He has been m a very sound financial position ever sine* , childhood," she said, and the cvi- ( dence closed. ■-,-. i The whole of the Saturday morn- ■ ing the wearied jury listened at great i length to the addresses of counsel, ' Mr. O'Leary drawing a powerful picture of a young man not yet of /legal . age, brilliant m debate and oratory, standing on the threshold of what i should be for a man of his brilliant attainments a great future. A future, by the way, which was : along exactly the same lines' as trai versed by his father before him — admittedly a great leader m the law and an ornament to his profession. Mr. Stevenson conjured up a picture of a human derelict, a piece of life's flotsam and jetsam, drifting and washed up . at the feet of Baume, who readily us«d , him to complete his plans. [ Crpwn Prosecutor Macassey asked ' the jury to picture a clever .. young ' man m Baume who had invented the , scheme and a not too stupid man m Smith who had acted for him. Smith was not, on .his own show- . ing m the witness-box and by reason of his education, the intellectual dullard that he had been made out. Finally, his. Hbnor, m a particularly . eloquent summing up, brushed away the irrelevancies which had become mingled into such a complicated case, and the jury retired at 1 p.m. The Last Word / Just when the interested persons m the Court had begun to imagine that the jury had failed to agree, -the twelve good men arid true arrived with their . verdict at 4.40 p.m. l It was couched m these words: "The jury finds that Baume and ! Smith are both guilty of fraud 1 on the Post Office; that Baume engineered the scheme and that Smith did not fully understand the fraud, -and recommends him to mercy. In view of Baume's youth the jury also strongly reL commends him to mercy." Neither prisoner seemed a great 1 deal perturbed visibly at the announcement. ■■- . :.» r His Honor, after hearing counsel • briefly, decided to pass sentence m ! order to avoid further suspense, arid ' the profound nature of his address to' prisoners left many wet eyes among s the younger folk m Court. ' "Prisoners at the bar," said his Honor, "you have been found guilty of a very grave fraud,, a very clever fraud/ and, I am bound . to say, an impudent fraud." Addressing Baume, his Honor said: "I desire to give the fullest effect to that recommendation. I realize : that you are a young man with a promising career before you, although to a certsin extent you have made a shipwreck of it. "A Very Bad End" \ "You were under no temptation m ■■ regard to money. You had an abundance of practically all you required, almost from childhood, and I think the scheme appealed to your vanity rather than to your, cupidity. "Although the crime is a grave one, you have committed a graver. "My own opinion is that your crime of fraud hs much less than the crime you committed m the witness-box when, with a cleverness sometimes diabolical, you told this extraordinary story, of exculpation with some lack of generosity towards y % our confederate, and with a smug plausibility that . makes me almost doubt it— though I am inclined to think that it was a sudden plunge into crime. "And yet perhaps it is well that this plausible, facile method of fraud enabled you to be checked now, other--1 wise you might bave come to a very 1 bad end indeed. ; "I cannot accede to counsel's re--1 quest for probation, because the manner of giving your evidence convinced ": me of 'something 'more than a passing ■ temptation within you, and to which you yielded. . . ." v To eradicate the tendency towards crime that had so early manifested itself m prisoner, his Honor said he proposed to place him, not m an ordinary prison, where he might be dei based by his associates, but m the Borstal Institute, which was specially : designed for young men between the : ages of 15 and 21, and where they had every chance of reforming, and follow - : ing any calling;, they desirea". '■, ; >:. Chance of Salvage The term would be for a period not less than three years, which, of course, 1 meant that if he behaved himself We could, N and m all probability would, if the. Prisons Board saw fit, be. released before that full period had elapsed. ■ ■ , . His Honor reminde.d, Baume that while for the present he no doubt . felt that he had drifted on to the rocks and had made a bad mess of his young life, there „ was no reason why he should not retrieve "it. ; . ; '\ .... . : ■' ■'. :'. ■ ■ .■ • ' ..; Turning |to Smith, his Honor said that he, like Baume, had been most : ably defended. v ■'■;'.- /. ■ He agreed that Smith was, hot the master mind and: at first was V misled, but that at some stage he acquired a knowledge that he was : doing something dishonest. . ■ He would be sentenced to a term of reformative treatment not exceeding twelve months, V ' -