The Telegraph-courier. [volume] (Kenosha, Wis.) 1888-1946, 1908-02-06
President Frost, of C. 8 N. Elec-
trio, Charged With the Man
puIating Of Finances
SUNK MONEY IN KEN0SHA LINE
Judge Grosscup Declares That He Will
See To 1t That President Frost is
Given Square Deal in Effort
to Wreck Big Enterprise

Charges and counter charges of a
most serious nature involving Presi-
dent A. G. Frost and the Chicago and
Milwaukee Electric Railway Company
were brought out in Chicago on We'd
nesday afternoon IN connection with
the most recent receivership and serious
charges were made against President
Frost by Charles G.. Dawes who was
named as trustee for the company
under the former receivership In
these charges Dawes alleges that
Frost has sunk the money of the stock
holders of the company in many enter
prices and among others mentioned is
the Kenosha Electric Railway Com
pany. The statement of Dawes was an
official one made to the court and Mr.
Frost gave it out in response to it a re-
tort courteous. The Dawes statement
and the reply of President Frost are
as follows
II object to A. O. Frost as receiver
for the reason that from my investiga-
tion Of the affairs of the road [ have
discovered that he has induced the Sc
curity holders to purchase the bonds of
the road upon statements Of net earn
ings which are absolutely misleading
Says Frost Padded Earnings
81 have statements from accountants
showing that in the case of alleged
freight earnings for the year 1904, the
total Of which is said to have been
$163, 800, there. were included charges
to the Republic Construction Company,
which is owned entirely by A. G. Frost
of $l58,800 for hauling material for the
construction of the road itself
The total freight earnings for 1905
were stated to be 1922, 500 and of this
amount $228,3 300 was the items similar
to those included in 1904. In 1906, the
total freight earnings we're given as
$3O5,45O and $295,7O0 was made up Of
similar items. In 1907 the freight earn
ings were given as $3l3,80O and includ-
ed charges to the Republic Construction
Company for hauling gravel, ETC., of
$267,800.
Accountants have also found that
it was the practice of A. c. Frost &
Co. to arbitrarily increase the passen-
ger earnings by giving weekly checks
ranging from ST. 900 to$3,00
The total of these fictitious passen-
ger earnings for the year ended Dec.
81, 1905, amounted to 100000; $l71,-
900 in 1906; $158,8O0 in 1907.
I submit that without entering into
other matters, A. G. Frost, who is re-
sponsible for the negotiation of the
securities based upon such fraudulent
statements, is not proper man to act
as receiver for this road =
After receiving the statement from
Mr.. Dawes, Judge Grosscup said:
''I told Mr.. Dawes that [ regretted
that he had given his statement to the
press. Mr.. Frost who built up this
property, has not been heard, and moth
ing will be taken as established against
him until he has been heard. :"
What7 Did Mr.. Dawes make such
statement as that7'' inquired Presi-
dent Frost sharply when he was told
of the charges made against him.
Well, this is pretty serious business.
AS soon as can get hold of my attor-
neys again I shall draw up an answer
to it..
True to his promise President Frost
last night gave out the following state
ment:
Mr.. Dawes evidently bases his
charges on short and incomplete ex.
tracts taken in hasty examination OF
the books of six corporations and one
firm, covering period from 1899 to
1908, which extracts were made for
partisan purposes in a period Of forty
eight hours while the company was in
the hands of receivers on Jan. l 1908
F'As all of these matters are now
under judicial investigation in the
federal court, 1 do not propose to be
drawn into any newspaper controversy
In the course of these Investigations
shall be prepared to go fully into
every material and relevant fact anG
to furnish the court with the fullest
information as to all the transaction
in question. When this has been done
and the court reaches its conclusion,
feel confident that my conduct ant
motives in my efforts to build up THU
great railway property for the benef'
Of all interested in it will be fully
vindicated and the rights of creditors
bondholders and all other concerned
fully secured and protected.
"As regards my acting as receiver
I sent word to Judge Grosscup yester
day that I would not qualify if Their,
was any objection to my serving unless
he desired me to do so. /"