New-York tribune., 1908-02-28
INDICTS THE TH0MASES
.SPECI1L JURY ACIO.
Charged scith Manipulating ProV'-
dent Life Funds an Stock Deats.

,t.;- ovn benefit in violation of the state IN
surance laws. Edward r. and Orianoo L
Thomas were indicted yesterday by the speci"i
grand jury which two days ago hnlsheo dii III
vestigation of the affairs of that society Inc
indictments we're handed up to Justice Downing
in the afternoon; two were found against T. IT,
and one against o. f. Thomas
AccomDanied by counsel, the Thomases were
nromptly arraigned, pleaded mot guilty, ana
were released in 50 000 bail for each Indictment
which the Fidelity and Deposit Company 'l
MARYLAND furnished The indictments cnarSe
violation of Section 36 of the insurance law
which is msdemeanor and punlshapie pS d
fine of $500 Imprisonment for one year or both
In reality the indictments the result OF
their specuations in the stock market Both OF
them carried large blocks of stocks on margin
through the brokerage firm of Thomas, Maclay
G. co which was forced to suspend several
weeks ago and il was protect these stocks.
the indictments allege. that the ThomaseS Flo-
lated the insurance law by depositfng and loan
ing funds of the Provident society to d1nereht
banking and trust companies on the condition
that the deposits should in turn be loaned to the
brokerage firm of which son of o. F. Thomas
was a member.
The indictments aIege that the Thomases used
the funds of the insurance company to enable
customers of Thomas. Maclay & Co to play
the n1arket"-to buy sell stocks on margin
TWO COUNTS AGAINST f. r. THOMAS.
The first Indictment accuses "E. r. Thomas of
the crime of unawfuly being pecuniarily in
terested in A loan from an insurance company.
of which corporation he was then director,
and is based on two specific counts The first
is loan of 100000 of the Provident society
funds to the Italian-American Trust Company
with the understanding that that bank should
loan it to Thomas, Maclay & Co so the brokerage
firm might pay demand loan from the Ha1nlI-
ton Bank and thus prevent its failure and re-
sultant financial loss to Mr.. Thomas; the second
alleges that the loan was not a policy issued
by the company and therefore Is a violation OF
| the insurance law.
+. r. Thomas is accused in the second lnd1ct-
| ment Of "unawfuly receiving a valuable thing
| for procuring a loan from an insurance COM
| panv in which he was then Director 1t says
| that on February D. 1907 he procured loan OF
! $4,000 for the Union Bank of Brooklyn. from
| the Providont Life Five days before this he
| got a loan of 100000 from that bank and
! greed In return, ia charged to get the Provi-
| dent society to make It a loan, which part OF
| his contract he carried out
HISTORY OF THEIR DEALINGS.
| An account of the stock speculatons of the
Thoslases. especially of E. r., is given in the
indictments According to the indictments the
[ brokerage
| IN demand notes, which the Thomases valtdly
| guaranteed to speculate in stocks on margin
/ To get this money to advance to the Thomases
| the firm, had TO borrow itself This it did from
various financial companies in this and other
cities giving as collateral securities OF its own
! and its customers the indictments say. TheSe
| loans too were mainly payable on demand II
any of them should be called the firm could pro-
tect itself by calling some of the Thomas loans
! Two were called and to meet them the hfii
called upon the Thomases. They in turn, the IN
! dictments charge, deposited funds of the tnsur-
| ance company which they controlled on the con-
| dition that the depostary companies should
make loans TO Thomas. Maclay & Co
Furthermore, the first indictment charges that
| tho securities deposited by Thomas, Maclay
| e. Co TO secure their loans were not listed on the
| Stock Exchange and were of a questionable
character. and says E. r. Thomas knew this.
| On this point the indictment says:
Among said s Of Thomas 81 Ms6sy m6s
had been heretofore validiX gIaTahTTI % 0i ibuTdred
tbnmsand dollars from the Metropolitan Trust Com
nanv, made December 90 1895: 100000 from same
Warfranftie National Bank December a. 1895:
Slo0999 from same company a MADE 1angaTy angaSy S I
100000 from same bank made Marc3 - aOL' $iS,' y
| January 29 1897 and $4,000 from the Mount Morris
Bank on January "a 1906. ,,+.tar,7;,- and ,,rnaia
on "a April = 1907 and were payable on demand. and
was personally liable by reason of his guarantee
FEARED SLUMP IN MARKET.
Thus, on April > when Thomas, Maclay & Co.
owed more than 100000. which amount the firm
had right to demand from E r. Thomas at
any time the Hamilton Bank. to which the firm
was indebted called demand loan for SlOO,Ooo.
| Thomas Maclay & Co, the indictment says.
| did not have 100000 that day, and called
| upon Z. r. Thomas for it. Mr.. Thomas saw
that failure by the company to meet this loan
would mean that payment of other loans would
| he demanded and in default of such payment.
the indictment points out. the securities pledged
| as collateral would be dumped the market and
said securities because of their kind and nature
would then and there have sold for considerably
| less than the price being paid for securities of
the same kind sold in small lots"
In the event of such sales, the collateral which
Thomas had guaranteed would have gone for
less than the amount of the loans and because
of his guarantees he would have had TO make
| his advantage supply the firm with 500 600
! 10 meet the Hamilton note To do this Mr.
Thonaes the indictment charges, used the
! funds of the Provdent Society.
The indictment against o. F. Thomas states
! that he guaranteed the following loans to
Thomas Maclay & Co: $4,000 from the Empire
| Trust Company, made January 81, 1907: S25. 900
| from the Oriental Bank, made December %
| 1906 and $4,000 from the Bank of Wayne made
| August g. 1905. For each OF these loans he made
himself personally liable Thomas, Maclay &
! co. owed the Hudson Trust Company March
s. 1905. s75 900 on a demand note. on that date
il called the loan and the brokerage company
having only $4,000 with which it. called
/ ,,,,op NIr Thomas Here WAS he