Los Angeles herald., 1905-07-02
BIG TAX SWINDLE
DISCOVERED BY
OFFICIALS
: Property Is Falsely
Recorded
Stanford University Used
as Blind
Alleged School Holdings
Are Questioned
Threatened Exposure May Reveal
Startling Methods by Which It
Is Asserted City and County
Have Been Fleeced

After an investigation extending
over the past four weeks the city as
SCISSORS office is in possession Of evil
dence which tends to show that promi-
nent Los Angeles realty holders own
ing property here but having 1t re-
corded as belonging to state educa-
tional institutions, the holdings of
which are exempt from taxation, have
swindled the city and county, out Of
thousands of dollars.
The investigation continues. Each
day is bringing forth additional evil
dence of manipulations by which some
of the most valuable business proper
ty of the city is escaping taxation and
startling developments are expected
when the evidence is placed before the
board of equalization at the opening
of its sessions next month. Some Of
the swindles are of several years
standing. One business man is said
to have already convicted himself in
letters which are now in the hands Of
the authorities.
Under the state law the properties
of Stanford university and of the
newly founded State School of Mechani-
cal Arts are free from taxation. This
includes not only the real estate IN
actual use by these institutions, but
any properties mich may be in their
possession as part of their endow-
ment funds.
Have Big Holdings
From the records in the city assess
or's Office Leland Stanford university
has invested in Los Angeles business
property over $1,OOOO00. while the
School OF Mechanical Arts has
holdings valued at 100000. This
property, receiving fire and po-
lice protection and other advantages,
does not pay one cent to the city for
the benefits which it is receiving. How
much of this property in the name Of
the two institutions, but which is In
reality owned by private individuals,
will not become apparent until City
Assessor Lewis makes public the re-
suit of his Investigations.
The modus operandi has been as fol-
lows: The state institutions, using
money from their endowment funds,
have taken mortgages on much Los
Angeles real estate for slightly over
one-half it's real value AS the prop
.erty is assessed for only one-half it's
real value and it devolves upon the
mortgage. in this case the state in
stitution. to pay the taxes. it yields
nothing to the city.
Records Not Satisfied
In a number of cases. it is asserted
by the city assessors office. the mort
cages held by the university have been
Cancelled, but no assignment has been
made OF the property on the assess
or's books. and although of private
ownership. as recorded state property
it remains exempt.
-Four weeks ago City Assessor Lew
IS. through secret source. became
aware Of the subterfuge. In the partlc-
ular transaction which came to his at
tention. he says he convinced himself
of the transfer Of money through local
bank by which Los Angeles men had
paid off the mortgage. But there was
no assignment of the property made
on the records.
He apprised County Assessor Ward
OF his discovery and when statements
were sent out to property owners both
he and Mr. Ward assigned the owner
ship Of the mortgage to the person
who purchased II, and awaited devel-
opments. They came sooner than was
expected.
Say Letters Are convlctlng
Two days later each received a letter
copched IN Identical terms, In which
the individual puts himself on record as
sayingtha the mortgage is held by the
univeriity, Is SO recorded and Is, there
fore exempt N->va taxation.