BANKRUPT SOLICITOR

Waikato Times, Volume 124, Issue 20853, 11 July 1939, Page 6

BANKRUPT SOLICITOR

MONEY ON DEPOSIT TREATED A 8 PERSONAL LOAN METHODS OF INVESTMENT (Special to Times) INVERCARGILL, Monday In a statement filed with his petition in bankruptcy, Charles Stephen Longuet, solicitor, whose estate showed a deficiency of £16,243, said: “Ever since 1 have been in practice it has been my custum to accept money on deposit from clients. 1 at all times thought that this money was loaned to me personally to invest or use, as i thought fit. In return 1 always paid interest at current rates on the full amount of the principal, whether I had invested the money or not. “1 have oeen ante throughout the whole time that 1 have practised to meet my obligations <as they came along, although it is now impossible for me to say wffien my obligations were greater than my assets, as 1 can see now that tiie income earned from investments each year could not possibly have been as great as tbe amount paid out to clients on principal sums loaned, owing to the following facts: “interest was paid on the lull loan, whether invested or not; Interest was paid at a greater rate in many cases than Lhe amount earned; when losses were sustained 1 stood these personally and did not reduce the loan or interest thereon, even when securities were allocated; if a demand were made for principal sums invested with me and 1 had the cash available 1 immediately paid out in full. Stood Losses Personally “In later years,” the statement continued, “my income from ah sources was paid to one banking account, which 1 operated to meet my demands, thus, as the investments were made by me personally 1 always stood the losses personally, although when original moneys were paid to me i may have invested them in town or country mortgages on which afterward losses were suffered, in the last six months, however, lYesh money did not come to me from clients to invest, and hence demands made lor repayments on original loans were increasingly difficult to pay. “This got so difficult in February that when 1 tried to find out my personal financial position 1 could see that my liabilities were greater than my assets. I therefore iniormed the president of the southland District Law Society of my position. After consideration they appointed Messrs Webb and Stark, public accountants, to make a special investigation on iheir behalf, in this report, which nas been shown to me, they state mat there is a deficiency of many thousands of pounds. No Balance Sheet “At all times I imagined that 1 was a wealthy man, as the amount of money wuicii was coming under my control was very great,” the statement said. “What 1 overlooked was that most of the amount represented loans and not income, and as such should have been invested. Instead of investing the money in my own name mortgages should have been put in clients’ names. If this had beeu done the losses would have been tbe clients’, and as well no interest need have been paid unless actually received by me. ‘*’l have no idea when my position first showed a deficiency, as no balance-sheet was ever prepared by or for me. 1 prided myself that 1 could pay interest at all tunes on the uue date or when it was asked for, but 1 can see now that 1 did so out of capital moneys and not from income.” After a statement had been made by Mr T. R. Pryde, president of the Southland District Law Society, in which he urged creditors not to take any precipitate action, the meeting was adjourned for a fortnight.