New-York tribune., 1910-02-02
BIG FRAUD CHARGE
ARRESTS IN ALLEGED
500 900 SPINDLE.
Charles E. Ellis and E. T..
GraCes IN Trouble OUer
Use of Mails.

Charles E. Ellis, president, and Erwin
r, Graves, vice president and treasurer
of the Kornit Manufacturing Company
which is in bankruptcy in New Jersey
and also partners in publishing concerns
which print several magazines, were ar
rested late yesterday by Frank A
O'Bren, a postoffice inspector. on three
federal indictments, charging them with
using the mails to defraud investors IN
the stock of the Kornit corporation.
The prisoners were arraigned before
United States Commissioner Shields and
held in $4,000 for pleading to-day in
the Criminal Branch of the United
States Circuit Court
Mrs Ellis was fatally burned during
the New Years celebration at the care
Martin. Her dress caught fire from
cigar lighter and she died two days
later. She was the owner of the Hotel
Frederick. in West 56th street.
About five years ago Ellis organized
the kornt Manufacturing Company,
with a capital stock of S5OO.OO0, to make
imitation rubber from the hoofs ana
horns of cattle. He said, 1t is alleeeu'
that he had a plant in operation aI
Belleville, a suburb of Newark. n. d.
Through the medium of The Magazine
of Mysteries THE Home Magazine
and METROPOLITAN and Rural Homes
and prospectuses printed and circulated
it is alleged. by Ellis & Graves and the
Ellis Publishing Company, of No GAY
West AID street, investors in the stock of
the Kornit company were silly obtained
!, all la0o
dlers are said to have obtained about
100000
In November, 1909. Ellis was served
with 4 subpoena in Newark to answer
a claim made in the New Jersey Court
of Chancery by Nathan Bilder for SlSo,-
SEQ At the same time property belong
ing to Ellis in Manhattan was attacheo
in connection with a suit for the same
amount brought in the New York courts
I,v Mr. Bilder. who was acting as trus-
tee of stockholders in the kornit Man
ufacturing Company.
According to the indictments, the sale
of Kornit stock was promoted by means
of the mails, and it is charged that Ellis
e. Graves falsely represented that they
possessed the exclusive right to, make
and sell patented substance called kof~
nit. produced from the horns and hoofs
of cattle. which they said was extremely
valuable as a ncn-Conductor, for eleCtrl-
cal purposes
The indictments further charge that
Ellis and Graves represented that the
Kornit Manufacturing Company had
large orders on hand for the production
limit a rllhhST.
Ellis had invested thousands of dollars
in the enterprise, and that all the money
sent by purchasers Of the stock had been
invested in the business and in the erec-
ton of the factory at Belleville.
The imitation rubber failing to make
its apnearance anxious investors in the
Kornit stock finally started an lnvestI-
CATION. and in the course of time petit
ton in Involuntary bankruptcy was flled b..
against the corporation.
The matter was then brought to the
attention Of the federal grand jury, and
the indictments handed in yesterday ac-
cuse Ellis and Graves with having used
te mails to swindle Preme1ia Maria
Swader. OF Nevo. Pike County, Ill; W.
a. Brown of No. SSS Myrtle avenue,
Brooklyn; Nj. L. Dorian, of No. 1896
First avenue, New York; Thomas B.
Davis, Of No. 1890 Chicago avenue,
Evanston, H.; Viola Mortimer, of No
212 East 10oth street: Orpha NJ.
Hawkez. of Newfoundland, n. J., and
thousands of other investors in Kornit
stock.
After the finding of the indictments
Ellis was arrested at the Hotel Frederick,
and Graves was taken into custody in
the printing office at No. $40 West 43d
street They furnished bail
Postoffice Inspector O'Brien says that
before reaping a fortune through the
Kornit scheme Ellis and Graves were
identified with the Hopkins Publishing
Company and the Robinson Publishing
Company, both of which concerns We're
put out of business through the issuance
of fraud orders against them by the
Postoff1ce Department.
MI m