Los Angeles herald., 1910-12-20
AUDITOR FINDS FRAUD
IN CLEVELAND AFFAIRS
Oil Company Wrecked by Pro-
moters Refuses to Report to
Victims and Is Exposed

Tho affairs of the Cleveland OIL company,
under examination by expert accountants,
prove to be In n deplorablo condition. with
scarcely anything favorable for the stock
holders and with the stamp of fraud and
dishonesty in evidence throughout. A re-
port of the stock exchange committee read
yesterday at the close of the call showed
that the Cleveland's accounts were mac
eurate, its prospectus untrue. that 1t had
paid in dividends moro than its earnings,
and that among other discrepancies its di-
rectors had made over to themselves lafge
blocks of stock at a very low price
The committees report was made pos
sible only after the exchange had been put
to a great deal OF trouble.
The Cleveland directors were. the COM
mttee states, to report as far back Octo-
ber on the affairs of the company But
they failed to do so. Then several other
dates were set and ignored by the Cleve-
land people. Finally one day last week was
set for the report but the Cleveland peo-
pie did not show UP.
The meeting yesterday open to the
public and was called by Edward Grak, a
Cleveland stockholder. who said the stock
holders had been kent in the dark and
unshed light. Don Dickinson OF the ex-
change was appointed chairman, and Charles
p. Sutton secretary. The report of the in
vestigaton committee was read by Broker
Sullivan.
Mr. Sullivan said the committee appointed
the Mushet Auditing company to examine
and report on the books of the Cleveland.
He read from this report excerpts showing
where the Cleveland was in bad financial
and moral condition. The prospectus, was Was
first picked to pieces and found, said the
auditing company inaccurate" Here the
production was set at 300 barrels daily IN
November. Mr.. Mushet showed by the
books where the ten months preceding July,
1910, gave a total production of only SOoV
barrels after royalty was deducted
The next head in the report covered as
signments to the Cleveland Oil company by
NJ leases and forth. w.
A. France frequently mentioned IN
these assignments and involved large blocks
of stock. in payment therefor at ID cents
share.
The report then showed where the leases
were forfeited and the Cleveland was or
dere6 to vacate its Kern river property Tor
failure to live UP to its contracts OF oe-
velopment and payment of royalty
At a meeting OF directors of the Cleve-
land the report stated. business of the
company was turned over TO two zone Men llent-
bers of the board. namely. T. NJ, Mont,
eomery and w. ]. Bachelor France ana
his associates withdrew on plea that nus
mess demanded their presence ELSEWHERE m
The minutes OF following meetings re-
veeIed the fact that there was frequent
transfers of stock. showing also where treas
ury stock had been donated contrary TO law
AT one of these strange meetings attehue9 attei
nv the two lone directors it was moved
nv Montgomery and seconded by bache,uer
that Montgomery take charge OF the pni,le Dc
in the field at 5000 fnontn anH ntt,,ere or
1900 shares OF stock Tor the PIi'iiSe0
serving his own company .
The question of Cleveland DIVIDENDS Vas Was
ro1t discussed in the report. Were the
st,5onds Maid from earnings from cap
itaI9" Is the head of this chapter:
The report showed that two dividends nts
were paid. amounting to S964l. tee heceipe9 pe9
coints 5000. That the gross receipts We're
nor sufficient for dividends was emphasi2eu
in the report. +o rav
p,IIs fell due with no money TO pay
49, " was then that the moving splrlts
os ofetir the company had to dig up $4,000. IN IN
a quiet meeting of directors 1t was re-
ported that C. G. Gillette. former We PIT its
nresiaent 1@eet % and Secretary Bachelor Offered
70 .roan' the company on promise on OF STU nh
and bonds therein the sum oboS OF S@0S 1910. says
+ba Mushet report.