New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1910-06-16
Federal Authorities Charge Huge
Scheme to DefraUd Through
Use of the Mails.
INSIDERS MADE MILLIONS
While Right of Transfer Was De-
MED to Purchasers of Stock,
Complaint Alleges-Ship
Service Goes On.

director. of the United Wireless Tele-
graph Company that the federal author
tiles were about to swoop down upon
them with warrants alleging attempts to
use the mails TO defraud. Mr.. Wilson
and Mr.. Bogart were arrested soon after
noon at the company's office. No 42
Broadway, and Mr. Tompkins at 5
o'clock on his farm at Mahcpac Falls. in
Putnam County.
Initiation of values aggregattng mill
ions of dollars was said in the complaint
to have been practised by the company,
stocks based on this alleged fictitious
valuation were sold by the use Of the
mails to thousands of persons at figures
many times in excess of the true value.
according TO the statement OF the POST
office inspector in charge of the case,
and the whole is an arraignment of the
company for practices which the officers
and their counsel vigorously denied
yesterday.
Mr. Wilson's bail was made $4,000.
which a surety company furnished. and
Mr.. Bogart gave $4,000 ball. John NJ
Robinson. of Tea Neck. n. J.. going on
his bond Mr. Tompkins was arraigned
so late that he could not get into COM
munica ton with his counsel. E B Will
son, of No. 141 Broadway, and spent the
night in the Tombs. The examination
will be held on July II by United States
Commissioner Shields. before whom the
accused men were arraigned yesterday
by United States Marshal Henkel-
Action by the federal grand jury. 1t
was said last evening, will follow as
soon as the United States Attorney can
prepare the case for presentation There
may be other arrests in the East, and il
was said that there were warrants for
the apprehension of persons connected
with the company in the West. While
it was denied that the Department of
Justice had taken the initiative in the
case. the Investigations leading up to
the arrests were known of in Washing
ton long before materials for action had
been obtained.
Where the Proceedings Began.
Arthur NJ. King. of No. 4s Wall street.
a former Assistant United States At
torney, counsel for Mr.. Wilson and Mr..
Bogart, laid the beginning OF the pro-
ceedings against the company to Abra-
ham Gruber. but Walter S. Mayer. the
Postoffice inspector in charge. said that
the first complaints regarding the opera
tions in United Wireless stock as prac-
company came from Utah. At all events.
two of Mr.. Mayors subordinates en-
gineered the scheme which forms the
basis for the charges.
The story is told in the complaint.
brought under Section 215 of the federal
criminal code, which provides as a max
imum punishment a fine of $1,000 or i'm
prisonment for five years. or both, for
each specific act As. according &c Mr.
Mayer, many thousands of letters Of the
kind mentioned in the complaint were
sent out. the penalty might aggregate
fines of many millions of dollars and
imprisonment for many years more than
a mans natural life.
The complaint. which was made on
June u. is by Carter B Keene. a post
office inspector. who. with Michael
OBrien, another inspector. negotiated
for the purchase of stock. A letter was
sent to O'Brien. at No. 920 Main street.
Waterbury, Conn. and the statements in
the letter form the basis for the arrest
II is charged that all the representations
as to the value of the assets are false
and fraudulent
According TO a statement obtained by
the inspectors. the company had patent
rights and patents valued at $500
233 so: stocks and bonds in other COM
nanies valued at s1414S.610; real estate
of the value of s34.292 20; furniture and
fixtures. S25.990 "A. and cash in the treas
urv and with agents. s317.44S 10 The
surpIus assets over liabilities was said TO
be s6.52s.329 "A. The complaint says:
"Au of which representations were
false and fraudulent. and the said Chris
-orbar c Wilson, s. Bogart and w w
we'll knew that all said repre-
ser.ations we're false and fraudulent, and
further as a part of said scheme. BY
falsely and fraudulently representing
that the value OF the said stock had been
advancing for a period OF three
vears- whereas III truth and fact the
Ito Of said stocks had not been ad-
Cut Of Right of Transfer.
II was charged that upon these repre-
ssnts,ions made in the letters OF the
sent through the mails many
were induced to invest in the
stocks of. the company. From Inspector
,1avAr and another source IL was learned
that the stock sold 20 persons through
out the country had the right OF trans
fer until February. 1911. annulled, which
made II non-speculative so far as the
public was concerned As the
nr;ess went up from the par value OF
,1o a share to $50 a share. this advance
Aid not beneft any OF the outside share
holders who did not have the right OF
transfer.
Mr. King said last night that much OF
the stock did have the right OF transfer
annulled. but he said that the persons
who bought 10 were aware of that pro-
vision. Furthermore. he said. this was
nothing out OF the ordinary-preven.ed
speculative manipulation and assured
stability.
Inspector Mayer gave out long
statement which explained the govern