The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1909-03-29

! l.
Martin Luther. Otto Gerrher. Bernard NJ
| Barueh, Payne Whitney and Samuel
| NeWhouse, Flynn is represented by Her
/ bert R Limburg and Ira Leo hamburger.
/ a large company of lawyers represent the
| defendants.
Newhouse seapegoat.
| The order for an examination under
/ which the defendants are brought before
/ Mr.. Wolf as referee was obtained from
| Justice MaTean in the supreme court in
Kings county, on an affidavit by Mr..
4 Flynn and a copy of a complaint filed
/ about year ago in the state courts here
! by Samuel Newhouse, Jacob Field and
John JOsten. who alleged that William
/ II. BTevOOTt had misled the rest of his
! associates in the King Edward Mines
/ promotion, and in so doing had made
profit of some S60,O90 himself. Little was
ever heard of this complaint. for the case
/ never came to trial, and inquiry at the
/ county clerks office has revealed the
fact that for some reason or other the
complaint is no longer on file there.
/ BY means of this complaint and of
( Flynn's affidavit the whole story of the
/ King Edward Mines promotion has nox
come to light. The affidavit asserts that
I Flynn was engaged to get options on some
mining property in the Nipissing district
/ in 1906. on the basis of a commission
equal TO 10 per cent of all the profits
realized both on the properties them
selves and on the flOtation of the stock
which was to be issued in the consoIida-
/ ton. Flynn says he recommended the
purchase of the Watts mine and the King
! Cobalt mine. which the defendants agreed
/ to buy, and had got options on both prop
critics. when negotiations with him were
/ broken off the defendants agreeing to
/ pay Flynn just as if he had closed the
! deal
/ The Promotion Scheme,
/ Subsequently. declares Flynn. the de-
| PENDANTS acquired 100000 shares out OF
! 100000 shares of the Watts mine and
| the whole of the King Cobalt. which prop
critics they transferred eventually to the
/ King Edward Silver Mines. q Maine cor
poration. This eomDauv was capitalized
| at 10000 shares of s. par value. Ac-
cordinS to the affidavit and the alleg5-
1 tins Of Mr.. Newhouse and his CO.
| plaintiffs in the suit against the promo
/ teTs of the King Edward Mines this was
what was done with the stock of the con-
solidated company:
Four hundred thousand shares were
sold to the Dubiic at $3.50 a share. real
iziug 100000
Two hundred thousand shares were
placed in the treasury of the company
six hundred thousand shares were
retained as profits to the svndicators-
Of the 81 .0010d0 cash realized on the
public sale $4,000 was paid into the
treasury Of the company working
caDital. and. according to FIynns af-
fidavit. less than S}0f00 was paid for
the Watts mine and the King Cobalt
mine. leaving q cash profit in addition
To the 100000 shares of stock OF $3.50.
600
F1vun go4s on to say:
The result was that the public
bought one-third OF the mines. one
sixth was put into the trea sury. and
one-half was kept by the svndica tors
and the syndicate was paid back every
dollar in advance. OF the money that
the public nut I'D the syndicate puts
Si10O 19 in the treasury and keeDs. ia
addition To half OF the stock. S6G0.0oG
cash profit. so that the pUblic has
been induced 20 buy one-third Of the
mine for more than three times the
cost Of the entire property to the syn
dictate.
Flynn bases his estimates a. to the
price which must have been paid for the
mines on the fact that he himself had an
option on the Watts mine for Sl50.eG
while his brother bad an option on the
King Cobalt At $500 At this point
Flynns affidavit is sunDlemented by the
Newhouse complaint This comnlaint do
clares that the price at which the syndi-
Gators thought they were ACQUIRING the
properties vase SS00O00 which added to
/ the $40. 00n put into the treasury as work
ing capital. would account for the 81 00000
taken from the pHblic on the sale of the
King Edward Mines stock. which was
| largely Oversubsoribed.
Cot Mines at a Low Price.
The Newhouse complaint says that the
remaining 100000 shares of the King Ed
ward stock was pooled with Robert Leslie
MOffett for one year. the proceeds to be
distributed to the syndicate. The COM
L
his 100000; that the stock was oversub-
scribed largely owing to the fact that Mr.
Newhouse's name was connected with the
enterprise. and that after that dummy
directors We're named for the constituent
companies. who voted to turn their prop
ertv over TO the King Edward Mines
The complaint then charges that Bre-
WORT. instead OF having paid $4,000 for
the Watts mine and $4,000 for the King
CabOlt as he represented, in fact packed
IN the Watts mine for $500 and the
King Cobalt for a sum that did not bring
the total purchase price above 5000 600.
ore OF the most interesting disclosures
Of the Newhouse complaint was that of
the $4,000 shares of pooled stock 250 Cos
shares should be placed in the hands of
Mccormick Brothers to be sold at s. 80 a
share and that the fund so created should
be used ito buy and sell shares Of stock
of the King Edward Silver Mines and to
support the market OF such stock in any
manner by the use of said 250co0 shares
or any part thereof as may seem to said
firm for tine best interests Of the under
signed" The agreement authorized the
firm OF Mccormick Brothers to operate
for one year and released them from any
responsibility for the results.
The Ncwhouse action wanted the ISL 900
shares remaining Of the pooled syndicate
stock Cancelled and order directing Mr..
BreVoort to account for the $4,000 that
he represented to have been the cost of
the properties. All the parties concerned
in that action. with the exception of Mr.
Moffett, are under subpoena TO appear
before Mr.. Wolf for examination today.