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Colonial Cases

Attorney General v. Cohen, 1932

[gambling - banking]

Attorney General v. Cohen

Magistrates Court, Tel Aviv
Source: The Palestine Bulletin, 6 October 1932



Judgment Against Eastern-Lloyd Bank

   Confiscation of the cash and articles "which formed the object of the lottery" was ordered by the British Magistrate, Mr. P. E., F. Cressall, sitting at Tel Aviv, in his judgment against the Eastern-Lloyd Bank, Ltd., dated October 4th.

   The Magistrate found the defendant, Mr. Cohen, part owner and managing director off the Bank, guilty of conducting a lottery against Article 243 of the Ottoman Penal Code.

   The case sets an important precedent, since there are many banks or firms of this kind operating in the country.  This was the first case to be conducted, although the practice is universal.  The man was sentenced to a day's imprisonment and fined £P. 2 and costs.

   It is believed that a number of other cases will now be brought into the Courts by the Police.  Important institutions are likely to be involved.

The Judgment.

   In the judgment, the Magistrate describes the system of selling debentures on instalment payments and the drawing of prizes which are termed "loans for the period of twenty years without interest or security."

   He points out that the lottery drum actually contains some 10,000 numbers representing the total number of subscribers to debentures, which the bank hoped to obtain under the scheme: in actual fact there were only about 300 subscribers, so the remaining 9,7009 numbers were held by the promoters of the scheme.

"Mother Hubbard's Dog"

   "At the first draw ion 1.7.32," says the judgment, "if the winning tickets (28) were held by the Bank (which, of course, is not surprising in view of the percentage of numbers held by the public), so like Mother Hubbard's dog, the subscribers got nothing."

   The description continues amusingly: "At the draw of 3.8.32, however, Dame Fortune was in a better mood and smiled on the public to the extent of two winning tickets out of the 28 drawn, which entitled the fortunate holders to the colossal sum of L.P. 1 apiece, 'free of inertest and security for twenty years.'

   The evidence does not shew whether the public was, or was not satisfied with the ratio of success allotted to them by the "turn of the wheel," but it must be obvious to the merest tyro that so long as the bank continued to hold the large majority of numbers, a subscriber's chance of success was, to say the least, a very slender one.

Defendant's Submission

   According to the defendant, the awards were loans and not prizes, and the scheme outlined was the general practice in the banking business of the country; that a debenture is given for the money paid in; that the purchase price is not forfeited as in the case of lottery tickets; that the corporation which conducted the drawings) and not the defendant as an individual ought to have been prosecuted.

   In a series of arguments, the magistrate reasons that to call a "loan for twenty years, free of interest and without guarantee" other than a prize is "an insult to (his) intelligence."  They are really lottery prizes disguised by another name; and he reminded the defendant that "just as a rose by an y other name smells just as sweet," so a lottery prize called by any other designation is just as illegal, for "what's in a name?"

"Heads I Win, Tails You Lose"

   Moreover, the Magistrate points out that the inducement to the subscriber is the chance of winning one of the monthly prizes awarded, and not acquiring  a debenture.  The whole scheme, Mr. Cressall states, is based on the policy of "Heads I win and tails you lose" so far as the promoters are concerned.

   Thirdly, the Magistrate points out, the test is not the consideration that a subscriber receives, but whether the distribution of prizes is by lot or chance.  In the present case, the defendant admitted that the factor which decided the winning of a prize was the lottery drum.

   With regard to the sale of the canton de Fribourg debentures, Mr. Cress all says that the present case is not based  on the sale of such debentures but on the means adopted by the defendant to sell them.  These means, the prosecution aver, are illegal as they constitute a lottery, and the prosecution, in his opinion, are amply justified in this view by the evidence adduced in the case.

   Mr. Cohen was held to be responsible in his general capacity of the charge, as the established facts showed quite clearly that the drawings took place under his personal direction and responsibility.

Erring in Good Company

   Commenting on defendant's suggestion that his scheme was one generally adopted by several banks in Palestine, Mr. Cressall remarks that "he erred in good company."

   "If this is so, then it is time that the fallacy of these get rich quick gambles was publicly exposed, and I trust that the Law Officers of the Government will pursue the matter further and introduce legislation which will make it impossible for firms of mushroom growth to spring up overnight for the purpose of exploiting the public," the judgment reads.

   "That there are so many firms masquerading under the name of Bank is, in my view, a blot on the commercial life of the country, and I can only express the hope that as a result of these proceedings, they will disappear back into the oblivion from when they came."


District Court, Jaffa


Source: The Palestine Bulletin, 7 December 1932





   The fine might have been as high as £P. 1,500, but since the Court had no information as to the number of days the accused had been carrying on his activities as a banker without proper license, it was assumed the Company was in operation for less than a day without a permit and was therefore ordered to pay only £P. 20.

   The above judgment was delivered on Monday at the District Court in Jaffa in the case of Mr. Samuel Cohen, manager of the Eastern Lloyd Bank, who was charged with commencing business as a bank without making the necessary declaration before the Registrar of Companies in accordance with the Companies Law.

   The decedent's lawyer admitted the charge but pleaded that his client had been ignorant of the existence of the law and had had no evil intentions.  Judge Copland, President of the Court, replied that the purpose of the section with regard to the registration of Companies was clear: the section had been enacted so that companies should not accept money from the public or give pledges until it was certain that the companies in question were in a sound financial position.

Obligation of Companies

   The declaration required, Judge Copland said, was a written statement setting out the finances of the company and its capacity for fulfilling such obligations as it might take on itself.  It was highly necessary that the Registrar should be able to supervise the activities of all companies in order to safeguard the interests of the public.  The Court did not know if there was any evil purpose underlying this company but it was the duty of the founders of such a company to acquaint themselves with the law and act in accordance with it.,   The offence was not purely technical in nature, and in such cases it was impossible to be lenient, for the interests of the public must be secured.  It was fortunate for the accused that the prosecution had not mentioned the number of days prior to receiving permission from the registrar of companies the accused had been carrying in the business of a bank, otherwise he might have been subject to a fine of £P. 1,500.


Published by Centre for Comparative Law, History and Governance at Macquarie Law School