The New York herald., 1879-08-02
WALL STREET VRECKING.
The South American Navigation and
Marine Railway Company.
ALLEGATIONS OF FRAUD
A Suit Against General Burnside, William
r. Garrison and Others.

Ns 81 Z it
suit giving an insight into the way in which
certain stocks in Wall street put upon the market
has been begun in the Superior Court. The action
is brought by George w. siebert. Are insurance
adjuster. having an office in Wall street. against
Joseph b. Manton. General Ambrose Z. Burnside,
Lyman B. Frieze. ex-Quartermaster General of Rhode
Island, and several other Rhode Island capitalists.
to recover s11.7O0. which he claims to have lost
in the stock ofsthe South American Navigation and
Marine Railway Company. having made the invest
ment upon false representations He claims that the
corporation is amalganation of two defunct Rhode
Island companies and that the stock fell from lit
to nothing 1t is also stated that the Farmers Loan
and Trust Company. the Fourth National Bank. the
Bank of Commonwealth and other institutions ad-
vanced large sums Of money upon worthless securi-
ties offered by the same corporation. The
came before Judge Speir yesterday ON a motion to
examine certain parties before trial. but upon con-
sent such examination adjourned until the LIST
OF September. Ex-Judge Samuel Jones appears as
counsel and William Writ Hewett attorney for the
plaintiff. while the respondents SO far as served,
answer through John S. Washburn.
In long affidavit Mr.. Gilbert alleges that the de-
PENDANTS entered into an unlawful combination and
conspiracy cheat and defraud the defendant among
others that prior to said combination there existed
q corporation of which Ambrose f. Burnside WILL
lam r. Garrison and Lutner g. Warner were stock
holders and directors, organized under the laws of
Rhode Island and known the South American
Navigation Company; that defendants, except
above stated. the getters up and promoters Of
the company and that at the time it was insol-
vent and largely in debt; that through its officers
and agents it was falsely and fraudulently repre-
sented to the world that it the of certain
steamships and vessels that in faith did not have
to sell them in the name of else. all Of
which facts well known to the defendants The
plaintiff also asserts that prior to the said combina
ton there exisedHso another corporation. of which
the defendants, except Ambrose T. Burnside. William
r. Garrison and Luther G. Warner. the stock
holders and directors. organized under the laws of
Rhode Island, and known as the La Plata Marine
Railway Company; that the defendants, except
above stated. were the getters up of the above
pany; that il was nsolvent the time aud largely
in debt that falsely and fraudulently represented
throu gh its officers and agents that it had the title
to and owned certain franchises and concessions
from the government of Uruguay. in South Amer
ica. when In fact. the company did not SUCH
of which facts known to the defendants. The
plaintiff also charges that, in pursuance OF this con-
spiracy the defendants were owners OF the majority
il not all, OF the stock OF these two corpora-
tions. and, with the intent to defraud him.
caused resolution TO be passed by the
spective boards of directors Of these com.
panes directing the proper officers OF
each under the laws OF New York. to consolidate and
erect corporation known the South American
Navigation aud Marine Railway Company with the
nominal capital stock Of by which each Of
the companies were 70 sell to the south American
ships and vessels. franchises and CONCESSIONS which
they falsely pretended to own. together with nil
property, for the sum OF Sl5OU0O0, to be rep
resented by stock Of the South American Navigation
ana Marine Railway Company. the par value thereof
worth 500 share and the number OF shares 15,OOU
the same being far greater than the value of the
property; and, moreover, no property whatever was
conveyed in for the stock issued by the last
named corporation
Mr. Gilbert also charges in his affidavit that this
company organized tor the purpose Of putting
its stock OIL the New York Stock Exchange list anu
making market for it; that some OF the stock
holders and MISUNDERSTANDING AN brose E. Burn
side William II. Garrison and Luther G. Warner
were not lawful purchasers owners of the stock
but allowed their be used to give standing
TO the company aud to profit by the same, and
further assist the other defendants in the scheme
to dispose tner stock at price tar greater than
the real value of the and the purpose
doing the defendants caused to be prepared and
issued false and fraudulent statements i'll circular
containing prospectus. representing among other
things, that this company was under favorable
aud running under the entire satisfaction
OF the government or Brazil and OF the Argentine
Confederation.
it's further alleged by the complainant that the
business of the company and that which compre-
hended the special tranchises-a dry DOCK, ana re-
pairing and wreckng operations, the chief seat OF
which in the La Plata River, and the second in
Importance at Rio Grande do Sol. BRAZIL and that the
company had concessions for docks Buenos Ayrcs
city Montevdeo city and Colonia-were misrepre-
sented with deceive. This circular
tanned letter purporting to have appeared
nal of Commerce under date OF January 1867 which
it was stated. among other things that marine rail-
WAY, constructed by the South American Navigation
and Marine hallway Company, capable of taking up
ships OF the largest size. was then in successful
operation at Colonia, Uruguay city situated
the north side of the La Plata fifteen miles distant
from Buenos Ayres and sixty miles from Monte
yideo; that up to that time the entire absence of
facilities repair vessels in those waters had
ship owners and underwriters many thousands Of
dollars annually. and that the successful consruc
tion or the railway the result OF the American
enterprise, and the agents and managers of the
South American Navigation and Marine Railway
Company gentlemen who had had much ex-
perience affairs in the United States. The
circular also contained letters prominent New
York gentlemen connected with the insurance and
other interests recommending the enterprise There
was also III 1t what purporteu to be correct state
ment OF the assets OF the company. with the asser
ton that its capital stock fully paid in. 1t is
also charged that these letters obtained
count OF the ialse and fraudulent representations
made to them by the defendants to the real
dition of the company.
A UNLOADING.
Mr.. Gilbert fu, ther alleges that in furtherance of
the conspiracy the deiendants organized pool or
combination Tor the purpose OF selling this stock for
greater sum than it was worth and to put 1t upon
the New York market; that they made caused to
bs made fictitious sales and quotations for the pur
pose OF enhancing the market price. to enable
the defendants to sell out ut price far above and
greater than the real market value that they falsely
represented him that the stock of great values
that all the representations In the circular were
true, while they were really made with the
tent and design to cheat the plaintiff, and
that they did 80 cheat him; that. believing
them, no purchased on the 10Th or January, 1867,
100 shares being part OF the stock belonging to the
pool, OF the par value Of sl0O each. and paid $ll7
Ior each He asserts that thereafter
tanned that at the time he purchased his stock 1t
OF little value and that this was well known to
the defendants, He still further charges that IL ID
only within few weeks past that he became
quainted with the facts stated to some Of the
fraud practised upon him.
THE HAND.
Lyman ID. Freize OF the defendants, answers
through his counsel. John S. Washburn, denying
each allegation ia the first clause OF the complaint.
lie admits that an association existed in Rhode
Island known as the South American Navigation
Company and that he had an interest therein ~ q
director but denies every other allegation in that
connection. He admiB, Also that association
listed in Rhode Island known the La Plata hallway
Company and that the south American Navigation