The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1901-07-28
SUIT To RECOVER
HALF A MILLION
?. E. FarnswOPth and Others
Charged With Fraud.
AUSTIN COMPANY
Is THE PLAINTIFF
Misuse Of Funds and Manipula-
ion of Books Alleged.

Suit was commenced yesterday in
the federal court by the Austin Min
ing company, a corporation existing
unuer the laws of the state of New
jersey, against PhIIO T. FarnswOrth of
this city and Allan c. Washington of
New York for recovery of large sums
of money alleged to have been wrong
fully taken from the defendant com
pRny. The Horn Silver Mining com
pany is made a party defendant and
IN the complaint il is stated that
tarnSwoTth and Washington had many
contederates, who, as soon as their
names are asceTtained viii also be
brought in to defend their alleged
fraudulent transactions. in all the sum
Of nearly $500. 600 is involved in this
suit. Many sensational allegations are
set up lin the complaint, and much of
the matters stated are reminiscent of
the litigation between Arson Phelps
Stokes of New York who is really the
complainant in this action, and Mr..
FarHsworth a couple of years ago.
when a large judgment was rendered
against Mr. Farnsworth.
The bin in equity was prepared by
Attorneys Dey and Street and is sworn
10 by j. @. Phelps Stokes, son of An
son Phelps Stokes. and now president
OF the plaintiff company
History Of Company
A preliminary recital IN the complaint
Is that the Austin Mining company was
organized in August, 1891, with cap
lIal Stock OF Aeo-UJo, 0ue-half OF which
was Immediately paid in by the incor-
poraIors, who included defendants
Farusworth and Washington and An
SOE Phelps Stokes, and who held
majority of the stock. The purpose of
The corporation was 10 acquire the
property of the Manhattan Mining &
deduction company, - ated in Ian
der county, Nevada. and this was done
II is alleged, by paying to the Man
haitian company the sum of $500, 600 in
1nstaiiments from Sept. S, 1891, TO Jan.
i. 1894.
Tt is alleged that the new. company
went into immediate possession of the
Manhattan COmpany's property and
operated il as soon a S the first pay
ment on the agreed purchase price was
made Washington. as president. and
taTnSWorth. as manager, of the Austin
company, il is alleged, mad full author
ity ana were entrusted TO conduct the
negotiations leading up to and result
ing in the purchase OF the Manhattan
Company's property The payments on
account of the purchase were made to
the Illinois Trust * Savings bank of
Chicago 40 the credit of the selling
company, and from time to time the
payments were met from the proceeds
OF the operation of the mine and tribu-
Iary properties. but to these proceeds
IL became necessary to add the balance
OF the stock subscriptions and a loan
of SS6.15O from Arson Phelps Stokes
and one Of S94.375 from Washington
and Farnsworth 10 the Austin COM
paEy.
lit is further alleged by the plafntiff
company that instead of Washington
and FaTnsworJh paying over the money
required to be paid TO the Illinois Trust
< Savings bank until the total sum OF
S5Ot.OeO for the purchase of the Man
haitian cOmpany's property was paid,
these two defendants paid only STA
$3.50. and that out Of the sum actually
paid over to the credit OF the selling
company washington received a rebate
or a commission for Sl5,l22.6O.
Charges Of Fraud.
One OF the sensational allegations
recited in che complaint is that Wash
ington and Farnsworth, by means of
false and fraudulent contracts, rebates
and discounts. and through other Sc
Cret and fraudulent means in cOnnec-
ton with the purchase of the Manh1t-
tan cOmpany'S property, secured TO
themselves sums OF money aggTegaung
S125. 900, as the complaining company
alleges on information and belief.
Another racy recital in the complaint
IS that after the completion OF the pur-
chase il became necessary for Stokes
Washington and Farusworth to ad-
vance large sums of money Tor the OPP
Grafton of the company, and while a
settlement was pending between them
and the Austin company president
Wsshingcon. without notice. com
menCed an attachment suit in the dis
trict court of Lander county, Nevada
10 recover S1S6. go, together with S2-,4U
for interest. Thereafter, on April :
1895. Arson Phelps Stokes filed bill ID
equity against Washington in New Jer-
sew to restrain him from pushing has
Attachment suit. and on April follow
ing. a p'an of settlement was agreed
upon. whereby Stokes was TO BUY Sht
40 shares of Washington and EatnS-
worth in the Austin company at par
and for this and other indebtedness tbs
company issued S659.O0O IN ten year
per cent bonds. In pursuance Of this
settlement il is stated. Washington
represented that the cOmpany's iabu
iUy to hm was S143.5s7-11, which includ-
ed S111. g62 - for an OVerdraIt TO tn.
State Bank OF Utah. ON other repre-
sensations il is alleged the total III
debtedress adjusted in favor of Wash
fngton and FarnSWOrth aggregated
1895 O0G an Of which was paid by th'
issuance to them of 1926, 600 in the mort
gage bonds of the Austin company, am
it Is alleged that Washington am
Fa-nzworth stan own and hold thes'
bonds.
Manipulation of Books.
II is set up tbat the two defendant
kent the c0mpany's book accounts L
SUIT themselves, and that after the set
tlement Washington resigned as presi
dent OF the Austin company and Farms
worth was removed as manager, h
July 1S9S. Later K was discovered b.
the complaining company that tn
overdrafL at the State Bank of Utal
did not exceed $4,000, and that b.
false and fictitious entries in the com
panys looks and in secret transaction
large sums of the cOmpany's mOne-
was uisaDpropriated by Farnswortl
and washington to tleir own uses an,
false notes were issued, IL is furthe
alleged TO show a fctiuOns indebted
moss Of the company to the two de
PENDANTS. hul in what amounts tn
complaining company is unable &
state.
The Horn Silver Mining com 7any 1
made a party defendant on the allega
ton that while Washington was it
president ans EarnsWOrth its manage
they secretly and fraUdulently use
large sums of money belonging to tn
Horn Silver company for unlawful pUr
poses for the Austin company Will
also In charge of that company's prop
erty. BY pretended loans and pretendia
TO repay these loans. The amount o
money so misapr ~opriated is charge
in the complaint to be in excess c
500 600. It is alleged that the amour
OF the Austin cOmpany's overdraft a
the State Bank Of Utah was misrepre
scented from time to time so as to con
ceal the transactions of the complain
zig company with the Horn Silver con-