The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1895-12-17
That Of the Los Angeles
Electric Railway
Disputed.
CHARGE OF FRAUD MADE
President Sherman Said to Have
Combined With the
Bondholders.
HOLDERS OF STOCK LEFT OUT.
Trustees Also Asserted to Have Co.
operated With the Bondholders
in the Deal.
HOLDERS OF STOCK LEFT OUT.

Tie suit about to be brought by the law
firm of Nougues & Boone to set aside the
sale of the Los Angeles Consolidated EIec-
trio Railway Company is rich in promises
of sensational development.
Frank McQuade, the well-known poll
tician, is the plaintiff. He is a stock
holder in the Los Angeles combine and his
suit is in the interest of the holders of
stock who it is said have suffered financial
losses through the sale of the road and the
formation of the new company.
"Suit will be brought in the Circuit
Court within three or four days." said Mr..
Boone, representing McQuade, yesterday
afternoon. 1.-THE story to be told then
Will be far more interesting than any out
line that | can give now, though the facts
alone are startling to sensational degree.
"This man, M. III. Sherman, the presi-
dent OF the company, as l shall allege In
my complaint, purposely defaulted the
bonds of the corporation. 1t was given
out that the roads were not making money
when the profits were known by the de-
frauded stockholders to be $3.50, 900 in 1894.
Sherman took these profits and built roads
to Pasadena and Santa Monica for his own
personal benefit. The whole thing has
been one of the biggest steals ever perpe-
trateQ on the Paclhc Coast.
when the consolidated corporation is
sued bonds in the sum of So, COG, 900 Messrs.
Dorm & Mckee of this City were appointed
trustees to protect the bonds. These we're
given a deed of trust, in which it was re-
cited that if the interest OF any OF the
bonds should default at any time. then
the whole amount was to become due at
once ana the trustees were authorized to
sell the property for the benefit of the
bondholders.
1.-The Los Angeles Consolidated Electric
Railway Company was ostensibly an Ari-
IONA corporation, but no members thereof
are known to be residents of that Terri
tory and no meetings were ever held there.
The whole thing, as has since become so
very well known, was manipulated in the
back room of the McDonalds' bank. Frank
Mcdonald and Sherman faxed the MIN
utes, issued stock and held meetings with
out the knowledge of the directors or any
of their representatives.
"As | said, when the roads were making
money at the rate of two hundred and
fifty thousand dollars a year, the bonds
were purposely allowed to default. That
was in the interest of the combination
Sherman, the trustees and certain banks
who held the bonds. After McKee's
death Dorm was left alone as trustee. Ex-
Mayor Pond was appointed to fill the va
cancy, and then began the slow music.
Intrigue followed intrigue. The lights
were lowered and as the slow music turned
into the creepy scrapings Of violin, cello
and Dass numerous heavy villains came on
the stage. Dorm wanted to get Pond out
and the latter did not seem to heed. But
he did, as the sequel shows,
GA man came to me saying that he rep
resented the holder of ten shares of stock
who wanted to bring suit to enioin Dorm
from making the sale under the clause re-
lating to the defaulting bonds. That
mans name was Johns. He did not re-
veal the identity of his principal. 1 was
engaged for some time in drawing up the
papers-several days, in fact-as 1 could
never keep track of my client Johns from
one day to the other. 1 understood IN a
general way, however. that it was scheme
of Dorn's to complicate matters so that he
could GUST his co-trustee. He wanted to
bring on whole whirlwind of litigation,
so that his purpose could the more easily
be accomplished. l knew it was not a
bona fide suit-that is subsequently-to
prevent the sale of the road. Well, this
man Johns was a mystery. He would tell
me little that meant much and then tell
me that was enough. At important stages
in his deposition he would break off alb
ruptly and leave the Office on some pre-
text. Perhaps l would not see him again
for days.
Finally he deserted the case and nv
office altogether. Waiting a reasonable
length of time, sent for him. He told
me, with a great show of mystery and
sundry mods and winks, that he had been
called out of bed at 2 O'Clock in the morn
ing and requested to discontinue the pro-
ceedings. A deprecating smile accom-
panied the intimation that he had been
fixed.
1.-The sale was made, and was left with
out client and fees. l afterward saw the