The Birmingham age-herald., 1908-02-28
PROMISES MUST
 FACE BAD CHARGE
Indictments Brought Against
 Two New York Bankers
VIOLATIONS OF STATE LAW
E. R. Thomas and Orlando Thomas Are Indicted by Special Jury and Several Hundred Thousand
 Dollars Are Involved.

1 New York February 27.-Edward H. 1 Thomas and Orlando F. Thomas fnan-
 ciers of extensive interests, were in-
 dicted today on charges growing out of 1 their management of the funds of the l Prevalent Savings Life Assurance so- ciety, which they controlled.
 The indictments which were returned by the special grand jury for New York
 county that has been Investigating the Prevalent Life and other financial in
 stitutions are three in number, two
 being against Edward R., and one against Orlando F. The offenses l charged are violations of the state in-
 surance laws and constitute a misde-
 meanor punishable by a fine of $500 or
 a years imprisonment, or both on each
 count. Late this afternoon, the Thom-
 ases were arraigned, pleaded not guilty,
 and were given two weeks in which to
 change the pleas or demur, meantime being admitted to bail.
 Justice Bowling fixed bail at s5O00 on each indictment.
 In the first indictment against E. R. l Thomas, he Is accused of "unlawfully being the pecuniarily connected bene- l ficiary in a loan from an insurance
 company doing business in this state,
 of which corporation he was then and
 there a director"
 Indicted on Loans. l This indictment deals with loan made by Thomas to the firm of Thomas. 1 MacLay & Co.,, stock brokers. On Apr.i 1 ?. 1907, Thomas was customer of the | firm and indebted to them for demand loans In large sums. At the same time
 the indictment alleges Thomas, Mac Lay < tp were indebted to financial institutions. to leans being secure | with stock and other securities of l Thomas, MacLay & Go, and of their customers.
 On the same day April 2, 1907. Thom- as, MacLay 6 Co. was indebted to the Hamilton bank for a loan payable oa demand for $1OO.OO0 made by the bank
 to the company, secured by securities similar to those put up for the other loans. The indictment says:
 'On that day the bank did then anl there demand of Thomas, MacLay &s
 Co. payment of said loans, and Thomas,
 MacLay & Go. did not have on that day | Sl00,00O with which to ray the said 1 loan, whereupon it became necessary l for Thomas. MacLay & Co. either to
 borrow S100,0O0 with which to pay the
 loan, or then and there suspend busi- ness"
 Demands Payment. | After the Hamilton bank had demanded | the payment of this particular loan, the | Prevalent Savings Life Assurance society ] loaned $10o0O0 to the Italian-American | Trust company and on the same day | Thomas was a director in the insurance | company and the indictment says was un- | lawfully pecuniarily interested as beneh- i ciary in the loan made by the Prevalent ] Life, because Thomas knew that the fail- l ure of Thomas, MacLay & Co. would
 means decnne in the prices of the secu- rites put up by the firm as collateral on | the loans. It was agreed that the loan 1 made by the Prevalent Life to the ltal- l ian-Amercan Trust company should be
 turned over to Thomas MacLay x Co.,, which was done, and the loans of the | Hamilton bank paid.
 |
 ment which says that the loan made by | the Prevalent Life was not on policy | issued by the company, and therefore was | in violation of the insurance law. | The second indictment again accuses | Thomas of ''unlawfully receiving valu- able thing for procuring loan from an insurance company" in winch he was then a director. This happened on Feb 1 ruary l, 1907. when the Prevalent Life loaned $30,000 to the Union bank of Brook lyn, the loan being negotiated, procured and recommended by Thomas. few days before that Thomas had received loan of s100,000 from the Union bank. The in-
 dlctment says that Thomas agreed with
 the Union bank to recommend a loan of
 $sO,0 ,0oO to the bank by the Prevalent Life,
 and he carried out his part of the con-
 tract. In consideration of that, the bank made loan to him of s10O,000. Guaranteed Loans. ! Orlando F. Thomas was also a customer of Thomas, MacLay & Co.,, and according l to the indictments against him, he had guaranteed several loans to the company On March 8. 1905. Thomas MacLay & Co., owed the Hudson Trust company $75.000, the loan being payable on demand. The
 trust company demanded payment of the
 loan but Thomas. MacLay & Co., only had | S25,000 On March the Prevalent Life, of which o. F. -.omas was director, had loaned s5000 to the New Amsterdam National bank on condition that the bank should lend 1t to Thomas, MacLay & Co.,, and on the following day Thomas, Mac Lay & Co. paid the loan of s75,000 to the Hudson Trust company.
 The investigation pursued by the grand jury In the affairs of the Prevalent Saw ings Life was greatly facilitated by the report of E. E. Rittenhouse. the Colorado commissioner of insurance, which was sent to the society in January and which
 has been accessible to the grand jury. Commissioner Rittenhouse made close investigation of the Prevalent Life's af- fairs and the manner In which the funds of the company had been handled by the Thomases after they secured control of the company from Timothy l.. Woodruff. The reasons why the Thomases finally decided to get out of the company and sell the control to a Philadelphia syndi- cate headed by John c. Coyle, were inti- mated In this report The sale, however, was never completed because of the in- ability of the Thomases to deliver the stock which had been hypothecated for loans.