Los Angeles herald. [microfilm reel] (Los Angeles [Calif.]) 1900-1911, 1908-01-08

SHORTAGE
IS 5000
INDICTED BY FEDERAL GRAND
JURY IN NEW YORK
IS RELEASED ON BONDS IN THE
SUM OF $4,000
Pleads Not Guilty to the charge--t4is
Attorney Denies Any Wrong
doing on the Part of
His Client

federal grand jury for generalization
of checks representing III the aggre-
gate over $400. 600 drawn by the firm of
Otto Heinze & Co, on the Mercantile
National bank +. Augustus Henze, the
copper magnate and former president
of the Mercantile National bank. sur
rendered himself to United states Com
missioner Shields today and later was
released on $4,000 bond.
Heinze will be formally arraigncd p
plead to the Indictment before Judg
Chatfc1d in the federal circuit court
tomorrow
Edward Lautcrbach, counsel for
Heinze. stated tonight that his cliepe
did not wlfully overcertify the ehecka
as he had drawn cheek to the credit
OF Otto Heinze & Co. to tho amouat
of $500. 900. which the hookk"eper -
the bank possibly failed to enter on the
books until a day after the eertiiieatloi
of the checks in question.
The Indictment by the federal granl
jury which has been Investigating The
Mercantile and other banks idertiho1
with tho Heinze and Charles w. MorTe
interests, is the aftermath of the COLI
lapse of the Heinze pool In United Con-
per and which brought about the sus
pension of Gross q kleeberg. stosN
brokers. and resulted in the resignation
of f. A. Heinze from the presidency ~
the -ercantile bank. and the retirs-
ment of the directors of that institu-
tion after an examination of the bank
had been made by the clearing hous"
He declared at the time that he had
been betrayed by his friends in tie
United Copper pool
Gives Himself Up
Heinzc had been informed quietly
that indictments charging him with the
overcertihcation OF fifteen checks All
drawn on October IA, just before the
smnsh in United Copper. had been
found BY the federal grand Jury on De-
cember . and that his appearance
would be required today.
without awaiting the services Aof a
bench warrant Heinze, in company
with his counsel. appeared before Co'h-
missioner Shields this afternoon. Ihe
proceedings were short. HeihEe pieaas
not guilt nd bail was furnished I'M
mediatel oy a surety company Wn"1
these roceedings were concluded
Heinze' told the newspaper men that f's
did not care to mako any statemeft
and hurried away with his counsel
After the examination of the muici-
nent. which contained thirty counts
Counsel Edward Lauterbaeh fohieht
made the following statement
THE Indictment is based upon eertihea
tion of fifteen checks amounting to some
thing over s4O00Og, drawn by otto Heinze
& Co. on the 18th day of October last
Before the certihcation was made r.
Augustus Heinze obtained the discount
of a note of 100000 secured BY abundant
stock exchange collateral worth at the
market rates of that day more than
$500 OOO and drew his check for $509,000 to
the credit of Otto Heinze & Co. the
amount Of which should have been passed
to their credit, as | think IT was. There
certainly was NJ wilful intent witnin the
statute to over-certify any check. not
even to the extent that over-eertiticatioa
is practiced every day in Wall street by
all the banks as a matter of business
necessity.
Explains the Charge
ION the contrary, as l have stated
there was far more than the amount OF
the checks standing to the credit of the
account of the drawers of the checks
when they were certified. ] believe that
if the grand jury could have understood
the situation correctly no indictment
would have been found.
The Indictment specifically charges that
Heinze while president of the Mercantile
National bank, over-certitied fifteen
checks; that is. that he guaranteed by the
banks signature that the sums indicated
in the checks were held by the institution
to the credit of the drawers 70 over
certify bank paper is, under the federal
onment of not less than five years, and
not more than ten years
One count is devoted to each of the
checks involved. 1t is alleged that Hefnze
knew that Otto Heinze & Co did not have
to its credit the sums named. The six
teenth count in the Indictment charges
that Heinze Intentionally applied the
funds of the banks and without the
knowledge of the directorate to the pay-l
ments of the fifteen checks drawn by otto
Heinze g. Co. and knowing that the COM
pany did not have on deposit a sum equal
to the amount named in the certified
checks.
For such an offense the federal statutes
provide a penalty of not less than five
years imprisonment or a fine, or not
more than $4,000, or both.
Troubles of Heinze
The troubles of F. Augustus Heinze
began with the bull campaign started by
Otto Heinze & Co. and associates in the
stock of the United Copper company,
which Mr. Heinze had organized and de-
veloped after his long fight with the
Amalgamated Copper company. The
stock was selling for about SO when a
mysterious selling movement was de-
tected.
Believing 1t to be an effort to raid the
stock by short selling. Otto Heinze &
Co. gave unlimited buying orders to
various brokers, believing that when the
time came the bear operators would be
unable to cover their contracts except
at such prices as Heinze dictated.
Heavy selling of United Copper corr
tinued, and then to purchase the stock
offered, Otto Heinze q Co. were forced
to draw checks for large amounts to
various brokers. When the souce OF tho
selling was ascertained the Heinzes de-
clared that they had been betrayed by