New-York tribune., 1901-08-03
TAX EVADING BROKER ARRESTED.
TO TEST THE CONsTITUTIONALITY
OF THE FEDERAL LAW

The proceedings in the OF George c. Thomas.
the broker and director of the Consolidated Stock
and Petroleum Exchange, conducted yester-
day, The Tribune announced they would be
Mr.. Thomas the Office of Charles H. Treat,
the Collector of Internal Revenue, at noon. to
be arrested for evading the stock transfer tax
regulations. He was accompanied by W. J. Moore
of the law firm Of Pavey & Moore his counsel
and by W. B. Smith and Charles Stoppani. who
were prepared to become his bondsmen. They were
sent into the Office of Colonel F. G. Thompson the
Internal Revenue agent, who ready to make
the arrest and take the broker before United
States Commissioner Shields. Mr.. Thomas and
Colonel Thompson shook hands cordially, and then
they started for MT. Shields's office.
When MI Thomas faced the United States Com
missioner. Assistant United States District At
torney Houghton was present, and assented when
the bail was fixed at 81 500 Mr.. Thomas waived ex-
animation and signed the bail bond. Mr. Stop
pani becoming his bondsman. Then Mr.. Thomas
and his friends returned 10 WalI-st. Mr
Houghton said the Federal grand jury would be
asked to indict Mr.. Thomas and the indictment
probably would be filed October s. Mr.. Thomas
would then be called on to plead to the indictment
and his counsel would interpose a demurrer, rails
ing the question OF the constitutionality OF the
law authorizing the collection of the tax stock
transfers. II the demurrer is sustained by the
courts. the against Mr. Thomas will fall to the
ground. and all the brokers who have been paying
the tax stock transfers will have ground for
suits 10 recover the money from the government
II the demurrer fails. however Mr.. Thomas can
only plead guilty and take the consequences of re-
fusng to pay the
Colonel Thompson said yesterday afternoon that
he had hoped force Mr.. Thomas into paying the
tax without causing his arrest. but he heard that
many brokers In Wall Street secretly evading
the tax having learned that Mr.. Thomas pre-
pairing TO make test case. Mr.. Thomas IS an
honorable man. and acted openly in this matter"
Colonel Thompson said. and IL the goes
against him II Is be supposed that he will
receive severe punishment. If l get proof that
a dozen other brokers under suspicion have
been evading the payment of the tax l will cause
their arrest, and prosecute them. Mr.. Thomas will
pay the tax he has been refusing to pay. that
test case has been made. and his action will be
his credit I told Mr.. Thomas's lawyers months
ago that he did not have leg stand If he
forced criminal prosecution. The law has been
upheld three times by the Federal courts, once in
Philadelphia and twice in Chicago. In the Chicago
the brokers who were found guilty OF evading
the tax were sentenced TO pay $1,000 fine and to
serve six months in Jail
At the Consolidated Stock and Petroleum EN-
change yesterday there considerable talk about
the risk which Mr. Thomas had in making the
test case, and some Of the brokers apparently
thought IL was possible he might be sentenced to
pay fines amounting 10 100000 and to spend 500
years in jail. There evidence. too. of some
uneasness over the possibility OF other arrests for
eyading the tax regulation. The announcement
thst a dozen brokers were under suspicion seemed
TO have a disquieting effect.