Nashville union and American. [volume] (Nashville, Tenn.) 1868-1875, 1872-11-23
ERIE EMANCIPATED.
Jay Gould Arrested for Embezzlement
OF Some Ten Million Dollars!

l.
noon at the suit of p. 81. Watson, Presi-
dent of the Erie railway Jay Gould has
been arrested. The warrant was issued by
Judge Fancher of the Supreme Court, and
is based on an affidavit which charges Jay
Gould with wrongfally taking to his OVID
use while In control of the Erie Railway,
nine million and a half dollars of money
belonging to Erie stockholders. The sure
ties in the order of arrest are VIM. Butler,
Duncan and Wm. R. Travers. At $40 p.
M; Gould entered the Sheriff's office and
gave bail.
LATER.-Jay Gould presented himself
at the Sheriff IS office accompanied by
Augustus Schell and Hon. F. Clarke who
has consented to become sureties on his
bail bond. Bail being fixed at one million
dollars, each of the bondsmen justified,
whereupon Gould was released by the
Sheriff. Counsel for the Erie Railway,
however, will object to the sureties on the
ground that they should have justified in one
million each.
The Charges I'm Detail
The affidavit of President Watson, of the
Erie Railway, AYERS that that company has
cause of action against Jay Gould for more
than the sum of $9,725,541.26, to which in
terest is to be added; that such causesof ac-
ton arises from the fraudulent detention,
emezzlement and misapplcation of the
moneys and property of said company; that
Gould, while acting as President and Treas
urer of said corporation, has been guilty Of
fraud in incurring the obligations for which
this action is brought; that at the same time
Gould was a co-partner with Henry n.
Smith, Henry 81. Martin and Jas. B. Back,
under the firm name Of Smith, Gould, Mar
tin s. Co., bankers and brokers, and the
agents and brokers of the Erie Company,
and that all moneys claimed as having beet
at any time to the credit ofsaid Erie Compa-
ny on the books of said firm we're received
for said R. r. Co. during the time Gould
was its President and Treasurer; that at
various times from the 30sh of Aug. 1868
to the 9th of Nov. 1869, said Erie
Company created and issued
407,347 shares of q par value of
$40, ,T34, 700, increasing its capital stock
exclusive of preferred stock to SIS, 900, 600;
that in the issue of said stock Gould took
prominent and active part as an officer and
director, and that it was issued directly to
to him as President and Treasurer or to
said firm of Smith, Gould, Martin 81 Co. as
agents and brokers, to be converted into
cash for the benefit of the Erie Company;
that the aforesaid stock, sold under Gould's
direction, produced after deducting charges
and commissions, l2,S0S, ,059.23, which
sum was received by said firm
as appears from their books and that
while said firm has accounted in cash for
this amount to said Gould, SAID Gould has
fraudulently received large part Of the
net proceeds of said stock, 10 wit, the sum
of s., ,499, 1872 % as appears by said books and
has converted and applied tie same 10 his
oSn use; that by reason of the sales of
stocks and other property of the Erie Con-
pany by Smith, Gould, Martin 81 Co., there
appeared on their books the Ist August,
1869, the further sum of S3 ,06l, ,700.l Is justly
due the Erie Company without deduction or
offset and that on said day By the Express
direction of Jay Gould it was transferred to
his individual credit upon a false and fraud
ulent pretence that the Erie Company was
largely indebted to him, and that ne would
account to them for said sum, when IL
point of fact Gould was then largely in-
debted to said company; that this transfer
was made for the purpose OF repaying to
said firm the losses then recently made by
said Gould in a speculation in gold carried
on by him and for bis individual accountant
as between himself and said firm as appears
by their regular books of accounts the
whole sum thereup0n became payable to
said Jay Gould individually, and he there :
by fraudulently embezzled and misapplied
the moneys of said railway for which be vas
liable as a member of the firm and as Pre-
sdent and Treasurer of the Erie Railway
Company. Also that ON OR about the 18Th
of November, 1868, Gould commenced a
speculation on his individual account in
shares Of the said Erie, purchased a
large number of shares of said stock
through said firm upon which he
had then very large loss, arising from the
depreciation of the market value Of such
shares after their purchase; that to relieve
himself from this loss, and fraudulently to
throw upon the Erie Co. the Durthen OF h.s
private speculate rs ard los, in or about the
month Of July, 1869, the said Gould,
through his agents and attorneys cOliusiye-
", and as deponent believes by fraud up
on the court or one Of its judges, procured
an order purporting to authorize the Erie
Co. or its officers TO repurchase in the
market for the purpose of cancellation q
large number of shares of said company
heretofore issued by and under the appro-
val of said Gould, but which for the pur-
pose of said application were admitted to
be illegally issued and of doubtful validity,
and that in eonsummation of such fraud
said Gould caused 121, 400 shares Of said
stock to be charged against the Erie Com
ha nly5 nf H-Y,, . - -,
of August, 1869, at an average price Of
81 47-I00 per share, amounting In the ag
gregate TO S746 ,245.S0 and the assumed cost
of said shares was on that day charged to the
Erie company on the books of the firm, in
nominal satisfaction of monies then belong
ingto said Railroad company in the hands
of Smith, Gould & Co.; that these shares
were only worth the sum of 20 dollars per
share and large transactions were made in
the market at that rate; that Gould by the
devices above set forth fraudulently misap-
pied the monies of the Erie company and
was therefore guilty of fraud upon said
company TO the extent of 8, ,941 ,S5S dollars,
for which further sum with interest this ac
ton is in part brought; that Gould having
been in the early part of 1859 engaged III a
speculation in the shares of the Reading
railroad, and having lost 359, ,6l2 as appears
by the books of said firm, on May II ordered
said loss to be charged TO Erie Railway
company, and on the 3lst of December,
1869, transferred to his own account, the
further sum of l68, ,S03 dollars and 90 cents,
then TO credit of the Erie company on the
books of the said firm,
which said Gould fraudalently
embezzled and misapplied. Gould is also
charged with fraudulently misappyiDg
Sl3,5S0 of the company's money in January,
1869, to cover his loss in speculation in
New York Central stock; also with draw
ing from the monies of the Erie company,
the I'd Of August, 1869, the sum of SCI, 900
which he paid TO James Fisk, Jr., whom
Gould knew had no legal claim for saEd
sum or any portion thereof; also
with paying ont of the funds of
The Erie $23,554 70 without authority or
t. secure his own reelection as
director in October, 1868; also with, On the
2o,h OF December, 1870, further increasing
the capital stock of the Erie by S2,O00,00
on the 18th Of January, 1871, further in
creasing the same by Sl,000,000 at the
rate Of So per share or thereabouts, and
his applying the whole proceeds to the
extent of 100000.
Affidavit of GOutd's Partner,
Henry N. Smith, ill his affidavit, says he
has read the affidavit Of Peter w. Watson,
President of the Erie Railway Co, plaintitf;s