The Washington herald., 1908-01-08


grand jury to-day for Decentralization |
of checks, to the aggregate amount Of |
S4S1,l which. as president of the Mer-
camille National Bank. he made good to |
his brothers firm, otto c. Heinze & Co.
in settlement Of that firms accounts with |
other brokers.
The indictment specifies thirty counts
The CONGRATULATIONS, it says, were made
on October H. the first day Of the now
historic corner In United Copper stock,
which preceded. if it did not preclpitate.
the October furry
on October IA the managers Of the cor
ner in copper advanced the price 70 points
in less than that many minutes. The ad-
vance was made just before the close Of
the market. United Copper was stock
under which Fritz Augustus Heinze il is
alleged, had combated the Amalgamated
Copper Company In his successful CON
tests in Butte, and, Notwithstanding the
fact that he had sold to the Amalgamated
Company the most important OF the
Uniteds properties, Mr. Heinze and his
brothers, Otto c. and Arthur f. Heinze,
continued il as their favorite speculation
on their removal from Butte TO this city.
Associations of the Heinzes.
on their loudly heralded entrance into
the banking business, the Heinzes were
associated with the Thomases and Charles
". Morse. Mr.. Morse and both Of the
Thomases We're associated with the
Heinzes in control of the Mercantile
After that institution was drawn on by
depositors, as a result OF the collapse OF
the United Copper corner. and the man
agement was constrained to ask assist
ance from the clearing house. the results
of an examination made by the clearing
house and United States banking exam
iners We're laid before United States Dis
trict Attorney Sumson. This was in the
last week of last October
In connection with the Heinze .ndict-
ment, it was said authoritatively to-day
that the Federal grand jury, during the
past two months, had been exceedingly
busy in its investigation of the transac-
tions relating to the management and
control of certain national banks. and
that the public need not be surprised if
other and equally important indictments
follow in the near future. Not the slight
est intimation was given as TO the indi-
viduals against whom these indictments
may be brought All that is known is
that some Of the charges brought before
the attention of District Attorney Slim
son concern persons who are alleged 10
have been principals in the Thomas
Heinze-MOTse confederaCy. Further T1e-
sentiments are expected this week.
The Law In the Case.
Section 320S of the United States Re
vised Statutes provides that any officer.
clerk, or agent Of a national bank shall
not certify any check drawn upon the
bank unless the drawer has on deposit at
the time an amount Of money equal TO
the amount specified in the check The
penalty for violation of the section is a
fine Of not more than 5000 or imprison-
ment for not more than five years, or
both.
Although the indictment does not so
specify, it is alleged that most of the
checks were drawn by Otto Heinze & Co.
to pay for purchases of United Copper
stock. Most significant among them all
are checks TO Gross q Kleeberg. who be-
came the Heinze brokers and assisted in
the formation of the United Copper Cor
ner after the firm of J. S. Bache & Co.
also the recipient OF an alleged Overcer-
titled check had withdrawn as the Heinze
brokers.
A representative of Gross & Kleeberg
ceived by that firm was for United Cop
| per stock purchased on the order of ]. s.
Bache & Co.
| As VIII be recalled, the firm of Gross
| d Kleeberg failed two days after the date
| OF the alleged OverCertihcatiOn. At that
1 time the Heinze indebtedness to the firm
| had become nearly half million dollars.
/ Fritz Augustus Heinze. it was said by
! Gross & Kleeberg, promised TO make the
/ Indebtedness good in part on the morning
/ before the firm failed. He did not do so,
/ and the failure of Gross & Kleeberg was
/ followed the next day by the suspension
of Otto Heinze q Co. from the Stock Ex-
change.
One Other Count Made.
! In addition to the charge of oyercertii-
cation. one count in the indictment says
| that Fritz Augustus Heinze intentionally
misapplied the banks funds and did not
| get the banks consent to the payment of
| the fifteen checks referred to. This count
| is a coroIlary, implying intent, to the
| drst fifteen counts. The other of the
| thirty counts make the formal charge
that Mr.. Heinze. as president of the
/ bank, ordered two bank clerks to indOrse
| each of fifteen checks.
| Since the failure of the Heinze broker
| age firm, Fritz Augustus Heinze, Otto
| c.. Heinze, and Max II. Schultz, the board
member of the firm. have endeavored to
effect a compromise with creditors and
place the suspended house on it's feet.
Several weeks ago they announced the
organization of the Western Development
| Company stock in which was to be given
| to creditors, in satisfaction OF their
| claims. The company was represented TO
the concern holding valuable securities.
but it was suspected that most of the
securities were pledged as collateral for
loans, and Myers & Goldsmith, attorneys
| for Gross q Kleeberg. refused TO assent
to the proposition. On their contentious,
| efforts to discharge Gross & Kleeberg and
Otto Heinze 4 Co. from bankruptcy have
been turned over to a referee.
! Entirely apart from any recovery from
the Heinzes, a representative of Gross &
Kleeberg said tonight that their firm has
settled with every creditor and will soon
be reinstated on the stock exchange. The
firms efforts to force fun settlement
from Otto Heinze & Co viii be prose
'cuted vigorously, it is said.