RASH SPECULATIONS.

Sun (Christchurch), Volume VII, Issue 2031, 18 August 1920, Page 10

RASH SPECULATIONS.

CASE OF WILLIAM SHAW. PRISONER FOUND GUILTY ON TWO CHARGES. Verdicts of guilty were returned by a jury, in the Supreme Court tins morning, against William Shaw, a bankrupt rubber merchant, of Chi'istchurch, on two of four charges laid against him under the Bankruptcy Act. The charges on which he was found guilty concerned payments out of the regular course of business that were not for the ordinary expenses of himself and his family, and his rash and hazardous speculations, bringing about his bankruptcy. Ho was acquitted on charges that lie brought about his bankruptcy by unjustifiable extravagance of living and by drunkenness. Shaw formerly carried on business as the North-Shaw Rubber Co., starting in September, 1919. He was adjudged a bankrupt, on Ajjril 20 of this year. It was stated that between January and April there came about a deficiency of £1156. The trial of Shaw was commenced in the Supreme Court yesterday, on the following four counts:—(l) That, having been adjudicated a bankrupt, accused, within three years before the commencement of his bankruptcy, made payments out of the rogular course of business, not being for the ordinary expenses of himself and his family, and I thereby committed a crime under section 138 sub-section (i), of the Bankruptcy Act; (2) that he brought about his bankruptcy by unjustifiable extravagance of living; (3) that he brought about his bankruptcy by rash and hazardous speculation; and (4) that he brought about his bankruptcy by drunkenness.

Mr A. T. Donnelly appeared for the Crown, and Mr J. R. Cuningham for the prisoner. The accused, continuing his evidence yesterday afternoon, said that it was a fact that he sent a sum of £2OO to a brother in England, in payment of an old debt. He gave a description of his business methods, and stated that he had to draw sums for expenses in travelling and selling goods. He admitted that he had paid off a loan of £l4O due to one Balkind by cashing a number of postdated cheques, Balkind then making him a further loan of £2BO. Mr Cuningham: We-won't discuss the morality of the scheme, but it enabled you to pay everybody, did it not? —Yes, it did.

Mr Donnelly: Honour where honour is due! Mr Balkind paid them all. Mr Cuningham (to tho witness): You paid him all you owed him? His Honour: Mr Balkind paid himself with his own money.

I Mr Cuningham (to the witness): I think Mr Balk in d proved too much for you in the end. He registered his bill of sale, and that did a good deal to bring on your bankruptcy?— Yes. It was the chief cause. The witness went oh to say that these devices were necessary because he was running the business with little or no capital. He gave an account of a large number of items of expenditure on personal matters. He obtained the necessary money by means of cheques on the business. He did know that his bookkeeper had established a " drawing account." His Honour remarked that he had been looking at the private account bank-book, which showed practically no entries between January and April. He asked the witness whether lie" had not spent a la v ge sum in drink before he was adjudicated a bankrupt. A DRINKING BOUT. Mr Cuniiigham stated that it would be shown that the allegation that Shaw had ewned up to spending £CO in liquor I was absurd. The accused admitted that he drank considerably towards the la«t, because his nerves were in such a- bad state through worry. He bought the liquor with cheques on the business. He could not say how much he spent, in t,hi<- way, but it vVris not a great amount-—cer-tainly nothing like £(!0 in three weeks. He was not a drinking man, and it was only his troubles that drove him into this one bout. He considered that between January and April ho spent i'.'2'M, leaving onlv £l9 unaccounted for. He mad.; endeavours to get more capital by floating the business into a company. The arrangements were all complete when Balkind registered his bill of sale, and precipitated the bankruptcy. HIS BOOKMAKER FRIEND. In reply to Mr Donnelly, the accused said that he kept his beating and business accounts entirely separate. Counsel proceeded to examine the accused in much detail about the bookmaker Neal, whom he was alleged to have financed, with unfortunate results. Shaw stated that he first became acquainted with Neal in Sydney, three years ago. Neal used to operate mainly on the racecourses. His Honour: Was he laying odds at the back of the grandstand?—lie used to receive money at the back of the grandstand. Questioned further, Shaw stated that hff received a commission on losing bets. Mr Donnelly: Oh, then you were a partner of his?— Well, yes, I was. The accused was unable to say where Neal lived when he was in Christehurcli, but said that ho made a certain hotel his usual headquarters. He could not recollect his telephone number, which was liable to change, but mentioned the number of a private box which he said Neal used. Mr Cuningham interrupted the examination by remarking that Mr Donnelly was getting evidence for the use of the police. Mr Donnelly: Oh, Mr Neal is safe. He has disappeared. His Honour: lie's a mythical personage, isn't he? Mr Donnelly: Obviously so. Questioned further, the accused said that he last went to the races with Neal on January 31. Before that Neal had been having a bad run of luck, and he had paid him money. Neal had since gone to Australia, and his address was not known.

Mr Donnelly: It. would be very convenient if you could find Mr Neal, who owes you all linn money'/—Yes. It would help a great deal. Harry Watts, a partner in the firm of Tonks, Norton mid Co., auctioneers, said that the accused approached him early in March with the object of floating his business into a limited company, lie was then informed that the sales wince the inception of the business were £I4OO, that the stock were worth £!»."i0 and that the book debts were £OOO. The total liabilities were given as about £I7OO. lie arranged to form a company, with a capital of £-000, to buy certain assets I from Shaw, lml llalkind, the onlv secured [creditor, registered liis bill of 'sale, and jthis was one reason why the scheme fell

tl.ro.igli. j To Mr Tlonnelly: When two of (he ' pin:.jh'i live investm* kept appointments jto go through the books and verify the 'figures given, Shaw did not attend. This !no doubt contributed to the breakdown of the flotation. I ■■llllll 11111111111111111111111 l

kept the accused's books, said that it was possible that the firm went in for transactions of which he had no record, but the bankruptcy proceedings had not disclosed any of importance. He did not luiow that the accused had any.dealings with a bookmaker named Neal, but lie recollected that a man, whom Shaw described as a bookmaker, used to cull at the store fairly often. Counsel addressed the jury. Summing up this morning, his Honour said that the four charges against the accused should be considered separately j by the jury, and a soparate verdict should be returned o.n each. The penal' clauses of the Bankruptcy Act, under which the charges were laid, were in-, tended to protect the public from persons who, while carrying on business,; squandered their money recklessly.' Persons in business were, in a sense,! trustees and it was right that theyj should be punished if, by squandering,! say, £2OO or £3OO a month in gambling, j they were able to defeat their creditors. I His Honour went on to refer to the fact \ that the accused, in three months, added! over £llOO to his original deficiencv of £263. Could it be said, he asked,'that this was the result of honest trading?! The evidence of himself and of others showed that he had gone from bad to' worse. If it were held that he had been I recklessly extravagant with his' creditors.' money, then he must be found] guilty. It was admitted that his busi- j ness was a good one, and from his deal-] ings jsvith Balkind it was plain that he was a man of no mean intelligence, but yet for a time he went to the bad at the rate of more than £4OOO a year. When asked to account for this he gave several reasons. He said he had paid! £2OO to a brother, hut he could produce ] no one who had soon this brother, nor, indeed, any evidence that tho brother | existed at all. Then ho said that he had spent £3OO to £4OO in financing a' bookmaker, who had likewise vanished j into space. Evidence had been given I that would lead the jury to suppose that the accused was carrying on two busi-1 nesses —one as a rubber merchant and j the other as the partner of a book-1 maker. It was for the jury to say whether such a line of conduct was a proper one. The onus was on accused of proving whether the payments said to have been made by the accused to the bookmaker, and for- drink (given by the accused at one stage as £6O) were justifiable. A business man was entitled to draw out sufficient to meet the needs of himself and his family, but he was not entitled to squander his creditors' money. It was for the jury to say whether the accused's drawings were justified. It had been suggested that the increased deficiency was due to the fact that the stock was sacrificed at auction, but actually the sum realised was only £SO less than the accused's estimate. After a retirement of 55 minutes, the jury returned a verdict of guilty on the first and third counts, and not guilty on the other two counts. The jury added a recommendation of leniency on account of the man's wife and family. The passing of sentence was deferred until to-morrow morning.