Worcester daily spy. [volume] (Worcester [Mass.]) 1850-1888, 1872-11-23
Jay Gould Under Arrest.
History OF HIS Financial RascaIiIies
With tho Funds of Eric,

Vdy E1IIVAbt
With the Funds of Eric,
New YORK, Nov. 22.-At last the new Erie
directors are,abe to act. This afternoon, at the
suit of 7. II. Watson, president of the Eric rail-
way, Jay Gould was arrested. The warrant
was issued by Judge Faucher OF the supreme
court, and is based on an affidavit which charges
jay Gould with wrongfully taking TO his own
use, while in the Erie railroad, 50, 500, 900 OF the
money belonging TO the Eric stockholders. The
SuretleS IN the order OF arrest are VIM. Butler
Duncan and VIM. K. Travers. AT 8:40 P. NJ,
Gould entered the Sheril's Office and gave bail.
Jay Gould presented himself about four
O'Clock at the sheriHs office, accompanied by
Aug. Schell and Horace I. Clark, who had con-
scented to become bOndSmen. Gu his bail being
fixed at 81 900, 900, each OF the bondsmen justi-
fed in halt million, whereupon Gould was re-
leased by the sheriff. The counsel for the Erie
railroad, however, will object to the securities.
The affidavit of President Watson of the Erie
railway AYERS that that company has cause of
action against Gould for more than So 726, Sal 81,
TO which interest is to be added that such cause
of action arises from the fraudulent detention,
ENLIGHTENMENT and msapphcatiOn of the monyes
and property of said company, that Gould, while
acting as president and treasurer of said corpor-
alton, has been guilty OF fraud in mourning the
obligations for which this action is brought; at
the same time, Gould was cOpartner with
Henry V. Smith, Henry H Martin and
James B. Bach, under the firm name of Smith,
Gould, Martin Co., bankers and brokers, and
the agents and brokers Of the Erie company;
and that all moneys claimed as having been at
any time to the credit of said Erie COM
pany on the books of said firm, were received for
sad railway company during the time Gould
was its president and treasurer; that at various
times, from the third of August, 1868,
D nj g
Erie company created and issued 407,-
BAT shares of a par value of $40, 1874 200,
increasing its capital stock, exclusive of pre-
ierred stock, TO seventy-fve Millions; that in
the issue of said stock, Gould took prominent
and active part as officer and director, and that
it was issued directly to him as president and
treasurer, or to said firm of Smith, Gould, Martin
& CO., as agents and brokers, to be converted in
cash for the benefit of the Erie company that
the aforesaid stock, sold under Gould'S drec.
ton, produced, after deducting charges and
commissions, S12 SO3, O59.2S, which sum was re-
ceiYed by said firm, rs appears from their books
aad thar while said firm has accounted in cash
for this amount to said Gould, said Gould
frauduently received large part of the net pro-
ceeds of said stock, to wit: the sum of 81, 49,
1872 %, as appears by said books, and has con-
yerted and applied the same to his own use;
that by reason of THE sale of stocks and
other property of the Erie company,
by Smith, Gould, Martin & Co., there appeared
on their books, the list of August, 1869, the
further sum of So, 061 ,70015 justly due the Eric
company, without reduction or ofset and that
on said day, by express direction Of Jay Gould,
it was transferred to his individual credit upon
false and fraudulent pretense; that the Erie
company is largely indebted TO him, and that
he would account to them for said sum, when in
point of fact Gould was then largely indebted 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
Speculatons in gold carried on by him, and
for bis individual account; and as between him
self and said firm, as appears by their regular
books of accounts, the whole OF this sum there
upon became payable to said Jay Gould in
dividually; snd he thereby fraudulently en-
bezzled and misapplied the moneys of
said railway, for which he is liable as
member of the firm and as presi-
dent and treasurer of the Erie company.
Also that, on or about the 10th of November,
1868, Gould commenced speculation on his in.
dvIdual account in shares of said Erie, pur
chased large number Of shares of said stock
through said firm, upon which he had met very
large loss, arising from the depreciation of the
market value of such shares after purchase;
that to relieve himself from this loss
he fraudulently tried TO throw upon
the Erie company the burthen of his
private speCulatons and losses; and about
the 9th of July, 1869, said Gould, through his
agents and attorneys collusvelY, and, as de-
pOuelL DellbNtS, DN lTduu upon t0e court OF
on one OF its Judges, procured an order purport-
ing to authorize the Erie company or its officers
to repurchase in the market, for the purpose OF
cancellation, large number Of shares of said
company heretofore issued by and under the
approval of said Gould, but whether for the
purpose of said application, they were
admitted to be illegally issued and
of doubtful validity, and that in consummation
of such fraud, said Gould caused 121 400 shares
Of said stock to be charged against the Erie
company on the books of said finn on the 9TH
of August 1862 at an average price of SCI Al
per share, amounting in the aggregate to ST.
1852 74S; 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 moneys then belonging to said railway COM
pany, in the hands of Smith, Gould & Co; that
these shares were only worth the sum
of 500 per share, and large transactions
were made in the market at that rate:
that Could by devices above set FORTH fraudu
lently misapplied the moneys of the Erie COM
pany and was thereby guilty Of fraud upon
said company TO the extent of 1891 1858, Tor
which with interest this action is in part brought
that Gould, having been in the early part of
1869 engaged in the speculation in shares Of the
Reading railroad, and having lost 1858, 612 as
appears by the books of said firm, on May nth
he ordered said loss charged to the Erie railway
company, and on December 31st, 1869,
transferred to his own account the further
sum of S16S, 500 &c. then to the credit of the Erie
company, on the books Of said firm, which said
Gould fraudulently embezzed and misapplied.
Gould is also charged with fraudulently misap-
plying 13,580.51 of the company's money in
January, 1862 to cover his loss in speculation in
the New York Central stock; also, with drawing
from the moneys of the Erie company, on the
I'd of August, 1869, the sum of SCI 900, which
was paid to James Fisk, Jr., whom Gould knew
had no legal claim for said sum, or any portion
thereof: also, with paying out of the funds
Of Erio TX without authoritV mr. Vor-
rant, TO secure his own reelection as director in
Oct, 1868; also with, on the 2Sth of December,
1870, further increasing the capital stock of
Erie by 50 600, 900, and on the 18Th of January,
1871, further increasing the same by 81 900 600,
at the rate Of S22 per share or Whereabouts, and
misapplying the whole proceeds TO the extent of
S660,000
Henry A. Smith, in his affidavit, says he has
read of that of Peter H. Watson, president of
the Erie railway company plaintiff; that the
facts therein stated touching the organization,
existence and business OF the Of firm Smith,
Could Martin 4 Co., are true; that the books of
account of said firm were intended to be- and as
he believes were, accurately kept; and that the
results of said accounts, as stated in the afiida-
Wit Of said Watson, are in all respects accurate
and true as this deponent verify believes;
that the accounts in the books OF
Smith, Gould, Martin & Co., embracing the
transactions in question, were kept under the or.
ders and supervision OF Jay Gould, and various
transfers Of accountsrelerred to in the affidavit
of said Watson were made by direction Of said
| Gould.
The arrest OF Jay Gould to-day at the suit OF
the Erie railway company is the indirect result
OF the corner in Erie got up short time ago. by
which Smith and Gould, who were then working
in unison, were heavily pressed Both these
| gentlemen vowed TO be revenged upon the Drew
clique, and proceeded to lay their Mines but a
sudden disagreement ended their plans, and
opened bitter quarrel between them; and war
] 10 the knlle was declared, In his nnger Smith