An elaborate system of fraud

Hertfordshire Mercury, 9th January 1915


James Hoatsen (61), clerk, pleaded guilty to indictments charging him with making false entries in the cash book of the National Health Association Ltd., of Stanborough Park, Watford, whilst a clerk in their employ, namely, £33 6s. 7d. on November 30 1914, £118 1s. 9d. on August 10, 1914, and £111 6s. 6d. on July 31, 1914.

Mr J. H. Murphy, for the prosecution, said the prisoner was a married man, but his wife had some mental trouble.  Prior to his entering the employment of the National Health Association as a clerk, he had been in the employment of Messrs Wood & Co., coal merchants, of London, at a probably larger salary than he received from the Association.

It was in August 1907, that the prisoner entered the service of the Association.  There was at Stanborough Park a sect known as the Seventh Day Adventists.  They had a colony or settlement there, and a number of associations for various purposes: one, the Health Association, and another, the Tract Society.

The prisoner was in the service of the Health Association and it was his duty not only to keep the books but to handle the money.  He (counsel) believed that very often as much as £100 passed through his hands in a week.  In the early part of December an entry in the cash book attracted the attention of the manager.  The Association was debited with the payment to the firm of Colin Taylor, King & Co. of £33 6s. 7d.

The manager had himself drawn the cheque in respect of coke supplied by the firm, and the cheque was actually handed by the manager to Mr Taylor in the presence of the prisoner.  This item occurred and there was missing from the book a corresponding entry which would have shown the whole matter.  The prisoner, when asked what the explanation was, said that a mistake had been made, and admitted that in fact he had been present when the cheque was handed over.

Inquiries took place, and unfortunately a very elaborate system of fraud then appeared, which had probably been going on since 1910, and the prisoner admitted to the secretary and other gentlemen that he had been induced to speculate in rubber, and that had probably been the cause of his downfall.  There were only four items mentioned in the depositions, but there were more than 200 which appeared in the books when investigated.

On July 31 there was a payment made into the bank of £11 6s. 6d. and that was entered in the books as £111 6s. 6d., the result being that there was £100 debited to the Society, which, in fact, was a false entry.  Similar false entries were made on August 10, December 10 and October 26.  The way in which this escaped observation was as follows: the auditor, who was not a professional auditor, but merely one of the members of the society, would, one day, take the book, cast up the totals in the column, and get a certain figure.  Having concluded the casting of the columns, he would adjourn the audit to some future day, the books in the meantime being returned to the prisoner.

The next time the auditor would take the items in the column which he had added up, and they would be found to be correct, but in the meantime the prisoner had erased the figure ‘1’ which he had added to the real figure so that the items when checked would be accurate.  That had gone on for a considerable number of times.

Counsel remarked that on an examination of the  books by the aid of a magnifying glass, the figures erased were quite visible to him; but then of course he knew where to look for them.  The prisoner gave all the assistance possible in tracing the false entries, but expressed surprise that the amount of his defalcations was as great as it had turned out to be.

Mr Fordham, on behalf of the prisoner, said this was an exceedingly sad case.  He had served the firm of Messrs Wood & Co., earning £3 a week, with absolute fidelity, and there was no doubt whatever that, had he wished to do so, he could have remained with them so long as his capacity for work lasted.  Unfortunately, his wife became affected by the Seventh Day Adventist’s Creed, and she desired to live near the headquarters of that body.  She induced him to give up his excellent employment and took a post with this quasi-religious body at 35s. a week.

He began by making a false entry and embezzling a certain small amount of money, in the hope that he would immediately be able to repay it.  He failed in that expectation.  He got into more difficulties, and his speculations in rubber made him hopelessly involved.  Then there came the mental affliction of his wife and the expenses incurred by him in looking after her and seeing that she was properly treated.  While the defalcations were going on, the audit was of a most peculiar character.  He (Mr Fordham) did not put that forward as an excuse for the crime, but he was sure that the Bench would regard it as a mitigating circumstance.

What was now a very serious amount embezzled by the prisoner would, if anything like reasonable precautions been taken by those persons in whose employ he was, have been only a very trifling amount, which must have been stopped very soon after it had begun.   When the first discovery of the fraud was made, he had every opportunity to fly.  He had no less than £50 about him belonging to the prosecutors, but instead of disappearing, he returned the next day, handed over this money, and gave the Association every possible assistance because he desired to make ‘a clean breast’ of the whole thing.

Mr J. E. Kent, called as to character, said that he had known the prisoner for 20 years, and had always regarded him as a strictly honest man.  His wife had been in St Luke’s Hospital for 15 months, and he treated her with the utmost consideration.

The Rev. J. Alford Davis, Congregational Church, New Barnet, said he had known the prisoner for 18 years, and held him in the highest esteem and respect.  During the time he was at New Barnet he was associated with one of the church’s missions, and devoted to it both time, labour, and money.

The Chairman, when passing sentence, said that this was a very sad case, and the court had had some difficulty to know how to deal with it.  To judge by the depositions, the prisoner had embezzled to a large extent the funds entrusted to him.  The Bench had taken into careful consideration the prisoner’s previous good character, and the fact that he had had very great domestic trouble.  He had given the prosecution every assistance in tracing the defalcations, and the court would pass a very lenient sentence upon him, namely, three months’ imprisonment in the first division.

Upon hearing his sentence, the prisoner fell forward in the dock and wept.


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