The San Francisco call., 1905-01-29
SAY ITS SCHEME
IS TO DEFRAUD
Suit Begun Against Realty
Syndicate by Six Hold
ers of It's Certificates
RECEIVER is WANTED
Plaintiffs Charge the Board
With Misrepresentation
and Misuse of Property


Allegations such as would delight
Tom Lawson in a chapter on ''frenzied
finance" are contained in a complaint
filed in the Superior Court yesterday
against the Oakland Realty Syndicate
by Attorney Frank w. Sawyer on be-
half Of "a half-dozen persons who in
vested In the corporations certificates
with the expectation of earning good
interest and big dividends. The ap-
pointment of q receiver for the syndi-
cate is demanded and a commission to
expert it's books. to which is added
prayer for judgment for the restoration
of property which, it is said, wrong
fully has been taken from the syndi-
cate. The burden of the complaint is
that Misrepresentation have been
made for the purpose of defrauding in
vestors.
The plaintiffs are A. S. Hooe, ]. H.
McCauley, Mrs. Annie E. DUNCAN, L.
H. Bither, NJ. Lucid and w. F. Malone.
The defendants, besides the corpora
ton, are its officers and directors-John
M. Chase, e. D. Harris, VIII C. Wal
lace, r. c. Havens, J. c. Wanans, Aid
en- H. Clough, George Sterling and
Samuel 7. Taylor 1t is first recited
that the syndicate was incorporated on
September s, 1856, with a capital stock
of $4,000, 900, of which only $500 was sub
scribed.
1t is stated that the corporation rep
resented that it was of great financial
strength and wealth and was managed
and operaed by men Of strength and
wealth; that it has a paid-up capital
of $4,600.000. assets in realty worth $6,-
060,5 22, stocks and bonds in other
corporations valued at So, ,9SS, ,172 4S. bills
receivable 1921. .413 02. cash in bank $780,
7S3 81. and that all of it's certificate
holders were fully protected.
Upon the belief of investors that they
were buying certificates of value, 1t is
alleged, the company has been enabled
to sell more than 10000 certificates upon
which it has collected more than $4,000
900. The complaint declares that each
and all of the representations above
quoted were false and made for the
sole purpose of defrauding the plain
! tiffS and other certificate purchasers,
and that the certificates were inten-
tionally and cunningly designed to de-
ceive investors.
1t is set forth that the company
promised to pay six per cent per an
mum and an equal rate based upon
excess dividends, but that 1t has never
paid other than the six per cent and
has taken the principal paid in by GER
tificate purchasers to pay the interest
instead of paying 1t from profits of in
{ vestments. 1t is alleged that the COM
pany employed many solicitors and
paid them twenty per cent for the
/ sales of certificates. Further 1t is
charged that the officers and directors
have voted themselves large salaries
and incomes aggregating more than
81, 900, 000
The complaint declares that the COM
pany, after having obtained large
sums, caused it to be reported that
the certificates were not of any value
and payments were not protected. This
created alarm and the defendants were
able to buV back certificates at a dis
count of over fifty per cent-a great
secret profit to the directors. And, too,
it is alleged that the directors wrong
fully purchased, in their own and their
agents names, large areas of real es-
tate in Alameda County, paying for it
out of the money of the corporation
and pretending to sell it to the cor
poratien at an increased price.
1t is charged also that the directors
of the syndicate incorporated other
companies and sold their shares to the
syndicate at par, when they were worth
much less: that they caused to be
transferred to themselves and these
companies nearly all the real estate of
the syndicate, and reported that it had
been sold at a great profit.
/ Finally, it is alleged that the COM
pany is insolvent and has no assets
with which to pay the certificate hold