The Wenatchee daily world. [volume] (Wenatchee, Wash.) 1905-1971, 1910-06-25

Conclusive Evidence of
Fraud Prepared by Chief
Postoffice Inspector.

Conclusive evidence of the frauds
which the United Wireless telegraph
company has perpetrated continu-
ously since its inception has been
prepared by Chief Postoffice Inspec-
tor Walter L. Meyer for the trial in
New York City July IL of President
c. c. Wilson and Vice President S.
s. Bogart of the company, who were
arrested recently on charge of u.s.
ing the mails for fraudulent pur-
poses. Meyers evidence covers ex-
haustively the methods by which the
United Wireless arbitrarily increased
the price of it's stock, despite the
fact that the company was unable
to pay even its operating expenses.
Summarized, Meyers charges fol-
low:
The stock is really worth but
100000 a. share. The entire COM
pany does not possess an actual val
uation of more than 100000. This
is a conservative estimate.
One of the officers is believed to
have cleaned up 100000 when
shares were selling. for $40 each,
and possibly 100000 when they
ranged from $40 to $50. The other
officers of lesser degree have profit
ed in proportion.
The valuations of stock were de-
termined by an executive committee
which met every so often and arbi-
trarily increased the price of the
stock, from $3.50 to SIS, $25, $35
and so on up to $50.
Stocks Value Decreases.
- The operating expenses have been
much greater than the receipts, so
that instead of the stock having an
increasing value upon actual per-
formances, it has a decreasing value,
because the business has been a
money-losing one.
There was no possible analogy be-
tween the value of the stock quoted
to the public and the real income
of the company. Whenever a new
contract was obtained from a ship
or line of ships, the stock would be
increased $50 a share.
Inspector Meyer has delved deeply
into the origin of the company, trac-
ing its union first with the Amalga-
mated Wireless Securities company
and later with the defunct American
DeForest Wireless Telegraph COM
pany. At that time the latter con-
Germ was almost worthless. The Of
ficers were allowed, however, to ex-
change their shares on an equal ba-
sis, receiving in turn stock of the
United Wireless, while the ordinary
stockholders were compelled to ac-
cept ten to one ratio. Meyer says:
For a short time stockholders in
the defunct American DeForrest COM
pany were made an offer by the Uni
ted Company to exchange their stock
on a ten to one basis. At that very
time the officers who were holding
immense block of stock in the De-
Forrest company, were exchanging
their own stock share for share
Officers Raise Price.
Soon after this the officers raised
the price of the United Wireless
stock and declined to accept any more
exchange from the holders of the
DeForrest stock except at $40
premium or more per share. The al
legged valuation of the United Wire
less was raised from time to time by
arbitrary methods upon the repre-
sentation that the business was
growing so rapidly that the increase
in value was fully warranted, and the
outside stockholders were let to be-
lieve they were secure in their in
vestment by those extravagant rep
reservations.
while the inside officers of the
company were privileged to sell their
stock, all the outside purchasers
were required to accept stock certi-
ficates stamped mot transferable un-
til February II, 1911 The price
of the United stock had been ad-
vanced a score of times starting at
$3.50 and recently selling at $50 a
share. 1t has no market value for
outsiders because it is not exchange
able on the stock books of the COM
pany, but the insiders have contin-
ued to flood the country with their
own stock at these increasing valua-
tions.
THE valuations were determined
by an executive committee which met
every SO often and arbitrarily In
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