On this day in 1783, Samuel Swartwout is born in Poughskeepie, New York. He is perhaps best known for his role in the Swartwout-Hoyt scandal. Who stole more than $1 million from the still relatively new American government?!
Swartwout was a supporter of Andrew Jackson during the presidential election of 1828. Jackson rewarded him by appointing him to be the customs collector for the Port of New York. The appointment was made over the objections of then-Secretary of State Martin Van Buren. Nevertheless, Congress ended up confirming Swartwout for two full four-year terms. The second term expired during Van Buren’s administration, in 1838.
The appointment put Swartwout in charge of one of the highest-earning customs houses in the country. The U.S. Customs and Border Protection website reports that New York then contributed one-half to two-thirds of all funds collected into the U.S. Treasury.
When Swartwout retired, he did something that would have been more normal back then: He retained a portion of the government’s collections. He could be held personally liable for lawsuits filed against him in his official capacity, thus it was expected that he would use these funds to pay judgments against him. The excess could be returned later. Thus, when Swartwout’s term expired, he reported that he was holding out approximately $200,000 until the court decided some cases related to his term in office.
This was a pretty high amount, and the Treasury Department questioned him about it. He was able to provide satisfactory answers, and everything seemed fine at first. Soon afterwards, he left for Europe.
Before too long, it was discovered that all was not as it seemed with Swartwout’s accounts. Swartwout was not only retaining $200,000, but an additional $1 million was also missing! Had Swartwout stolen these funds?
Congressional hearings were held, of course. And many court cases followed. Throughout everything, Swartwout maintained his innocence, but he also refused to return home until he was sure that he would not be arrested. In the end, he was able to return home after forfeiting personal property in the states to pay back what he could. (It was nowhere near enough.)
Some doubt remains about this scandal today. Some people say that Swartwout intentionally stole the money and fled to Europe. Some claim that Swartwout was set up by his subordinates, and his European trip was taken for a perfectly innocent business reason. Still others claim that Hoyt set up Swartwout.
As an interesting postscript, Swartwout ‘s successor Jesse Hoyt later swindled about $150,000 from the Treasury.
Hmmm. Does this give credence to the theory that Hoyt set up Swartwout?