The San Francisco call., 1909-06-05
CHARGES OF FRAUD
BY HIGH FINANCE
Sensational Suit Against Off
GERS of French-American
Bank
Litigation in Which Manipula-
ton of Chemical Company
Is the Storm Center

Involved in a sensational suit filed
yesterday in the superior court are sew
eral of the directors and officials of the
esting session is promised when the
cause comes up for trial, as charges and
counter charges of conspiracy to de-
fraud by means of a system of high
finance have been made.
Ranged on one side as defendants are
Charles Carpy, president of the finan-'
cial institution; Arthur Legallet, vice
president, and several others, while
their opponents are o. Bozio, director
Of the bank, and John Lacoste and E. o.
Reiser, officials of prominent local man
Ufacturing concerns.
The bone of contention is the control
of the Reynolds chemical company. In
which all of the parties are interested
and of which the bank is the principal
creditor
One side alleges fake sales of stock
of the chemical company by Carpy and
his associates. the appointment of
dummy directors, who in turn voted
a salary to the man who put them in
prive minority stock holders of their
interest in the concern by means of the
levying of ilegitimate assessments and
depreclating the value Of the stock As
sociates of the defendant banker reply
that the charges are all rot" and that
this Will be quickly proved at the hear.
granted by Judge Oabaniss of the supe-
rior court, which is effective at the
present time In keeping the affairs of
the concern at standstill
THE STORM CENTER
The Reynolds chemical company,
f2lx (HA rf -
the eiin litigation IS % sfoTr for saoo
600, divided into 1000 shares, with
par value of 500. The concern owns
corporation at the present time, and it
of all kinds William Esters Won Kra-
kau of 2S07 Bryant street is acting as
president and general manager of the
corporation at the present ime, and 1t
is against him as the alleged dummy
of Carpy and Legallet that Bozio and
his associates. have directed most of
the charges of conspiracy.
Bozio and his associates, who own
255 shares of the 925 shares of the
capital stock which has been issued,
charge that Carpy and Legallet trans
ferred to Won Krakau 240 shares of
stock which they owned in the cor
poration, taking in payment his prom
issory note secured by the same iden-
tical stock. This gave him control of
the company, as he already owned 290
shares. They allege further that Won
Kraksu elected a dummy" board of
directors, which elected him president
and general manager at a salary of
$3.50 a month ousting John Laeoste
who had acted in the same capacity
without compensation. They allege
that in various ways the present man
agement contracted illegitimate debts,
including a claim of $4,000, which Won
Krakau claimed was due him for serv-
ices and money advanced. 1t is also
claimed by the plaintiffs that the man
aged disposed of property of the cor
poration. for which he has not ao-
counted.
ASSESSMENT OF $40
Having brought about this condi-
tion in the company's affairs. the COM
plaint continues, Won Krakau, through
the board of directors which he elected,
voted an assessment of $40 on each
share of the outstanding capital stock.
giving the share holders the privilege
of paying the assessment in the form
of promissory notes payable in six
months. The plaintiffs allege that Won
Krakau is insolvent, and that by this
device he intended to secure notes
from the plaintiffs which would be
negotiable. while he could deposit in
the treasury of the concern worthless
paper to cover his Indebtedness. The
pla1ntlnS refused TO pay the assess
ment, claiming that Won Krakau and
his directors intended to continue
levying such assessment until the
plaintiffs would become disgusted and
allow their stock to be sol dto the de-
PENDANTS in default of payment Won
Krakau advertised the stock of the
plaintiffs for sale, but was restrained
from disposing of it by an injunction
issued by Judge Cabaniss at the re-
quest of Keogh & Olds, attorneys for
the plaintiffs. The defendants were
cited to show cause why the Injunction
should not be made permanent, and
why Won Krakau should not be forced
to render an accounting of the cor
porations affairs.
Won Krakau refused absolutely to
make any statement last night regard
ing the transfer of the Carpy and Le-
gallet stock to himself, or the compen-
sation paid by himself.
"All of these charges of conspiracy
are rot" he said, "and we will show
IT as soon as we get into court. There
is no conspiracy. Mr. Carpy and Mr.. Le-
gallet offered their stock to Lacoste
first and when he refused to buy Of
fered it to me- I was forced to buy
1T so that I would not be forced out
of the company. 1 elected the board of
directors because I then held the ma
jority of the stock. This entire suit is
rot and we will show 1t In court"