New-York tribune., 1902-02-14
FRAUD ALLEGED IN TRUST.
FORMED CONSPIRACY IN FLOUR
INATION-CHARGES De
NIED-SALE OF PROP
ERTY ENJOINED.

The sale OF fourteen properties owned by the
United States Flour Milling Company which was
advertised 10 be held in Jersey City to-day under
foreclosure Of a s15,00OOO0 mortgage held by the
Central Trust Company, Of this city. TO secure an
issue Of per cent. bonds for that amount. was
temporarily enjoned by Vice Chancellor Stevenson
in Newark yesterday The order Of the court was
obtained by the law firm of Griggs Dill & Harding.
acting for Mrs. Caroline T. Lock. Of Orange; Mrs
Anna w. Hecker and Henry Winsow White Of
New-York; {. 5. Wilson of Duluth. Mimi, and
John l. Dodge, Of Great harrington. Mass. all of
whom are mortgage bondhoders. A bill filed in
chanCery charges fraud and conspiracy.
The charge Of conspiracy is based the allega-
tion that plan entered into by prominent
capitalists. the Central Trust Company and the
Produce Exchange Trust Company TO secure the
payment of the companys floating Indebtedness at
the expense of the first mortgage bondholders. The
men named are Edwin Gould J. Edward Simmons
Brayton Ives, General Samuel Thomas. Warner
Van Norden, William Lanman Bull and George
William Ballou. The complaint says that the de-
PENDANTS mentioned had no interest IN the company
other than to bring about a Liquidation of its
secured and floating Indebtedness, and in pursu-
ance Of that purpose they formed a reorganization
committee. by which prospectus and plan of re-
organization were issued In this way they sought
TO compel the first mortgage boudholders to sur
render priority of lien on the assets OF the COM
pany and 10 a fund with which to pay the
floating debt Of the trust and its subsidiary COM
panies, together with the expense of the reorgani
Zaton and the incorporation of a company, TO
De created under the laws of New-Jersey and to be
known as the Standard Flour Company.
The bOndhOders, il IS said were told that unless
they deposited their securities with the
ton committee and paid the assessments provided
for in the prospectus they would not be allowed
70 take part in the reorganization or in the dement's
derived from IL. 1t IS shown in the complaint
that the money 70 meet the assessments amounts
TO 80 per cent OF the par value of the bonds held.
The bill goes say that the assessment had for
its object the forcing Of the complaining stock
holders and bondholders. The alleged conspiracy.
IL is said. entered into about January 3, 1900.
which date of the defendants owned any
bonds Of the company had any interest in the
company except 10 secure payment of the floating
Indebtedness.
The bill recites the history Of previous chancery
proceedings by which General Thomas. Albert &.
LoTing and Charles E RimbalI were made re-
ceivers These proceedings, II is alleged were be-
gun by George w Ballou, the secretary, and We're
brought about by COllusiOn by the officers OF the
company and the reorganization committee aftS~
the officers had declared the company insolvent
The foreclosure proceedings which checked By
the order Of the vice chancellor were begun on
after the company passed the payment Of Increase
its coupons.
one Of the fnanCiers named as defendants in the
bill fled by eX-AttOrney General GrlEES said yes
Ierdav afternoon that the charges contained in the
bill tho which the complaining interests
had been making since the foreclosure suit
was begun, and that he and his associates. who
owned 90 per cent Of the bonds OF the company,
against less than per owned by these OBJ
stTuCtiOnisrs,' had no doubt that the outcome OF
the litigation would be favorable 10 them