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Show MONEY ORDER FRAUDS, FORGER-IES, FORGER-IES, AND EMBEZZLEMENTS. (By Henry A. Castle, In Harper's Weekly.) The Issue and payment of postal money orders Involve cash transac-tfl transac-tfl tlons aggregating nearly $1,000,000,000 per annum. This almost Inconceivable Inconceiv-able sum Is received and paid out by the postmasters of the country In amounts averaging less than eight dollars dol-lars for each transaction. Innumerable Innumer-able mistakes necessarily occur in the performance of these operations. And human naturo being weak, temptations temp-tations strong, and opportunities numerous, nu-merous, a wldo field Is offered for the exercise of criminal propensities. For-' For-' gerles, false impersonations, thefts, and many other varieties of fraud are constantly perpetrated; defalcations and embezzlements of money order funds by postmasters are of daily oc-g) oc-g) currenco. It is believed that no other function undertaken by the national government' opens so wide an avenue for pecuniary risks and losses. Stealing money order blanks from postofflces, filling them out and collecting col-lecting them rapidly before detection, detec-tion, have been successfully tried by many adepts. Some years ago the assistant postmaster of a town In South Dakota, a man greatly respect-' respect-' ed in the community, obtained a short leave of absence and failed to return. ( Reports soon came In that numerous money orders of largo denominations, purporting to bo Issued at that office, had been paid along a line of travel reaching Chicago and eastward. No such orders had been regularly Issued, i but an examination disclosed that the absconding assistant had removed ! blank orders from the book, properly filled them out for the maximum sum I ($100 each), forwarded the advices ' marked "identification waived," I stopped off at towns en route, and col lected In all about $2,500 without question. ques-tion. Inspectors sought the culprit in vain. All trace of him vanished, until, many months later, his remains were identified in the victim of an accident in Kansas and that "jacketed caso" I was closed forever. His methods havo ' been frequently followed by others, with less success in eluding pursuit. Much more recently a swindler at I Lima, Ohio, was captured by inspect ors after an extended night vigil near his homo. Ho had fleeced merchants of Terro Haute, Now Albany, Fort Wayne, South Bend, Elkhart, Shakes- poare, and other Indiana cities by - means of money orders which he raised from their original amounts to sums much larger. This man's peculiar pecu-liar gamo was to buy orders for twenty-five or thirty cents, or similar small amount, and so raise the figures as to make the orders read for $50, $75, or $100. Ho was clover at this work of changing the amounts of the orders, using somo chemical solutions to eraso the original figures and give spaco for the fraudulent ones that ho would put in their place. Ho would not attempt, as a rule, to cash those money orders at the post-offices, post-offices, but would call nt stores, saloons, sa-loons, or shops, where ho would mako somo small purchaso and then tender tho orders In payment. This was always al-ways done after tho post office had closed for tho day, and the persons getting tho ordors could not havo them oxi ulncd until next day. This allowed al-lowed him time to got out of town and l pass on to fresh victims in new pas- ' tures. Very often ho resorted to tho sympathy dodge In order to get the fraudulent orders cashed, telling a k pltlous talo of distress, such as that , somo member of his family was dying or dead, that the money order had t been sent to him to pay his way homo, fr. and that it was important that ho get l to tho bedside of the dying or dead (' by '.that night's train. His rueful story I' secured victims counted by hundreds. j In August, 1903, Mrs. Annie B. Sharpley, a criminal of similar propensities propen-sities living in Philadelphia, was arrested ar-rested In tho general postofllco at Now York, charged with systematically "raising" postal orders. Numerous complaints had been made of tho woman's wo-man's operations during tho preceding months, her method being, It Is said, to purchaso small orders, usually for twenty-flvo cents, eraso tho figures with acids, raising them from $G5 to $100,, and Inducing hotel-keepers or tradesmen to cash them. When arrested ar-rested half a dozen such "raised" notes wero found on her. Postofllco Inspectors who arrested the woman say she Is tho cleverest "raiser" of notes that tho department has over had to deal with. She is forty-five years old, and previously conducted an express business in Philadelphia. Tomptatlons to defalcation and embezzlement em-bezzlement on tho part of postmasters aro enormously increased by the considerable con-siderable amounts of money handled by them In connection with the money mon-ey order service. Postmasters aro entitled en-titled to carry a reserve sufficient to meet any reasonable call for payment of orders drawn on them. This re-servo re-servo is a sacred trust fund and should always bo kept' intact and held for Inspection. But among the 3G.000 postmasters who sell orders aro, of course, a duo proportion of dishonest, Improvident, or careless persons who, notwithstanding all tho watchfulness of tho department, dissipate these funds, and when confronted with their fault must take tho consequences. Here, again, comes almost certain loss to tho government. If tho bondsmen bonds-men aro insolvent' tho loss is total. If they aro solvent, congress Is usually appealed to for relief, and seldom in vain. The business of tho money order system is vastly swollen, and responsibilities respon-sibilities of postmasters correspondingly correspond-ingly Increased, with tho resulting chances for embezzlement, by Its employment em-ployment in a channel widely divergent diver-gent from its original purpose. This is tho uso of money orders as a savings sav-ings bank. Of course, tho patrons receive re-ceive no interest on tho deposits, but tho investment Is safe. Tho process Is to purchaso an order payable to one's self and hold until tho money Is wanted. Among those who uso this method of saving funds aro many theatrical the-atrical people. Tho savings bank does not appeal to those who leave Now York and do not expect to return for many weeks. Road companies get stranded, and It serves an actor or actress much better to write to a friend at home, enclosing a money order, or-der, and ask tho friend to get tho money from tho post ofllce, than to writo to the same friend and ask tho loan of money. At tho New York postofllco a short tlmo since $1,200 was paid to Maggie Cline on orders drawn to herself while out on tho road. Not long ago a Juggler who had been out with Barnum's circus presented orders pay-ablo pay-ablo to himself aggregating $2,700. Ho was asked for identification and said ho could not prove his Identity except by lithographs. Ho unrolled a poster, pos-ter, representing himself between two bull-dogs and endeavoring to look as fierce as possible. Tho clerk told him that if ho could mako himself look as he did In the lithographs he could havo tho money. Tho performer took off his hat, mussed up his hair, and made a face. Tho clerk Immediately Imme-diately counted out tho money. Congress and tho treasury department depart-ment are not always blameless in per-mill per-mill lug an open door to fraud. There havo been abuses sanctioned by law and long practised by tho accounting olllco. which gavo facile opportunity for wholesale swindling by postmas-trs postmas-trs as somo of those heroin described de-scribed give for operations against them. During several years the accounts ac-counts of postmasters Issuing money-orders money-orders were settled by checking their statements, not ngalnst tho orders, but ngnlnct tho stub or coupon attached therefrom. Accounts aggregating, probably, $COO,000,000 wero pnssed up-on up-on by this freo and easy process. It was tho pleasant privilege of tho writer writ-er to abolish this amazing procedure, hence a statement of Its Inception nnd operation will bo specially appropriate here. Tho so-called "Dockery Act,'" of 1893, which reorganized tho departmental depart-mental service, materially changod tho gystom of checking money ordors In tho "auditor's office. This change was an Incident of tho bill, which provided pro-vided thai thereafter money ordors should bo so printed that by detaching a coupon tho amount, of tho older should appear automatically on said coupon, and though tho requirement tc uso tho coupon for chooklng purposes pur-poses followed only by implication, It was plainly Intended, and tho coupon could servo no other possible purpose. In fact, tho report accompanying the bill stated that tho checking of money order statements would bo enormously oxpedlted by using tho coupon Instead of vouchor for that purpose. Tho auditor au-ditor then In office adopted tho system, sys-tem, and in moro than one report claimed great saving of tlmo by lis uso. Thus, for moro than three years tho money order accounts of the Issuing Is-suing postmasters wero audited on the "stubs" or coupons, aud not on tho money orders themselves, as had previously pre-viously been done, and has been done since January 1, 1898. This process was equivalent to settling a customer's custom-er's account nt bank on his own list of chocks used, verified only by tho stubs of his check book, and without scrutiny of tho checks themselves. The Issuing postmasters sot in with his weekly or monthly report of money mon-ey ordis Fold what purported to bo the coupon cut from each order, which coupon was supposed to represent by tho process of cutting tho exact amount of tho order from which it had been detached. If the postmaster's account corresponded with this coupon cou-pon it was assumed to bo correct, accepted ac-cepted and closed. Tho money order Itself was not checked by tho Issuing postmaster's accounts. Tho coupon came In with tho report and could bo Immediately checked, whereas if tho account must remain open until tho real voucher could bo compared with it much tlmo must elapse. Money orders or-ders go to all parts of tho country, and weeks or months lnterveno before thoy can bo gathered in at the auditor's au-ditor's office, chocked with tho accounts ac-counts of tho paying postmaster who sends them, then assorted by states, towns, and numbers, and compared with tho Issuing postmaster's account. Tho opportunities for fraud would seem to be too apparent to escape Immediate Im-mediate attention. A dishonest postmaster post-master or employe could issue a money mon-ey order for $100, cut tho coupon for $1, debit himself with $1 in his statement, state-ment, and pocket tho $99 difference with no risk whatever of detection. In 1897 a now auditor was appointed who speedily discovered the loopholes in this fearful and wonderful system of audit, and realized his responsibility for the losses that wero certain to ensue. en-sue. Ho figured out theoretically nlno distinct species of fraud which could bo perpetrated through this channel with absolute Impunity, and felt it a duty to promptly change tho system. sys-tem. On January 1, 1898, in pursuance of previous arrangements, but without notice, tho auditor's ofllce abandoned tho coupon entirely and resumed tho practice of checking both sides of every postmaster's account by tho money order itself. This Involved much additional labor and cons! lor-able lor-able delay, but was absolutely tho only safe method. Tho first day's experience exper-ience fully demonstrated Its necessity. Several cases wero uncovered In which ordors had been issued for largo amounts such as $80 and $100 each, which had been reported by tho Issu- lng postmnster at ono or two dollars j each, with coupon to correspond. Tho , process of checking went back six ', months and involved accounts which had already been settled and closed under tho old method, but must now bo reopened In order that tho post- i masters Implicated could bo debited with tho amounts which tho vouchors i proved they had actually received. In somo cases tho postmasters had gono out of tho servlco and had mado their 1 final settlements with tho govornmont. These settlements wero also reopened and corrected. It becamo evident that somo dishonest postmasters had learned learn-ed tho defectlvo auditing practlco ana had taken ntlvantago of It. In moro thnn ono caso embezzlements to tho amount of hundreds of dollars had been covered up In this manner, which wero now revealed and tho delinquents de-linquents wero crlmlally prosecuted. A careful re-audit of tho accounts for tho six preceding months disclosed moro than three thousand cases of fraud and error, ninety per cent of which In amount wero ngalnst tho government, gov-ernment, and nono of which would havo boon detected under tho coupon system. It was impossible with tho forco at hand to reopen all tho statement's for tho threo previous years during which tho defectlvo auditing system had been in operation. How many thousands thou-sands or hundreds of thousands of dollars dol-lars wero lost by Its lnrtoduction will never bo known. Tho plan was adopted adopt-ed in defiance of tho plainest dictates of business prudence, but was established estab-lished by direct authority of congress, operated by a careful and painstaking auditor, and only abandoned when a change In administration occurred. Thero is little danger that this particular parti-cular time-saving scheme will over bo reintroduced, but tho fact that it was over seriously considered, much less carried on for moro than threo years, is a standing Impeachment of accounting account-ing methods, and tho exigency of a moro expeditious settlement of postmasters' post-masters' accounts may at any tlmo lead to the Invention of somo other schomo equally or moro defectlvo and dangerous. o |