Evening star. [volume] (Washington, D.C.) 1854-1972, 1912-06-03
HALSTEAD ON TRIAL
Former Broker Accused of
Stock Emb excitement.
CUSTOMER is ACCUSER
Chauffeur Declared to Have Lost
Certificate Worth $1,000.
ARGUMENTS ARE PRESENTED
Defense Says Act Charged Was
Within Rules of the
Business.

Griffin Hastead, who formerly conduct
ed brokerage business in this city I'M
der the name of Griffin Halstead & Co,
and who failed in January. 1910, was
placed on trial today before Justice
Barnard and jury in Criminal Court
No. ., to answer an Indictment charging
the embezzlement or larceny of a certi6-
cate of stock valued at $1,000
The stock belonged to Hubert ]. Kline
peter "A chauffeur for Mrs. Mark Hanna.
klinepeter was a customer Of Halstead,
and deposited the stock with the broker
August 16, 1869
The defense of the young broker IS that
there was no criminal liability i'm the con-
version of the stock by him. as the GER
tficate had been deposited in lieu of a
cash margin on certain speculation. The
action of the broker, the defense claims.
is in accord with the customary prac-
tees among stockholders.
Trial on First Three Counts.
The Indictment against Halstead is in
nine counts. but only three refer to the
Klinepeter case and the government an
nounced that this trial would be on the
first three counts only. The other
counts were not nolle pressed, but held
IN aDeydnce.
Shortly after the jury was sworn. Mrs.
Halstead. the wife of the defendant. &C
companed by her father. Judge l.. T.
Kitchener, entered the courtroom. She
sat beside her husband throughout the
trial The wife listened attentively IL
the testimony of the chauffeur and other
witnesses brought against her husband
Assistant United States Attorney Proc
tor made the opening statement for the
government, He told the jury that Klein
epeter had dealt with the defendant. who
was conducting a brokerage business
under the name of Griffin Halstead Il
Co.. and that Halstead knew the chauf-
feur owned 100 shares of New York, On
tario and Western Railroad Company
stock.
Halstead persuaded klinepeter to de-
post the stock with him on the repre-
sentation that certain stock tipped by
the broker might take rise while the
speculator was out of town and could
not reach his stock and make a sale in
time to take advantage of the rise
Says He Sold Stock.
The chauffeur would testify. said Mr..
Proctor that he deposited the 1vr
shares with the distinct understanding
that no disposition would be made of
the deposit without express order from
klinepeter.
Disregarding the alleged agreement.
Mr. Proctor said. Halstead August 16,
1909, the very day on which he re
ceived the stock from his customer.
sent the certificate to New York and
Ihypothecated it for $4,000. Later Hal
stead sold the stock, the prosecutor
said
Attorney II. Prescott Galley, out
lining the defense, explained at length
to the jury the methods of stock
speculation on margin. He pointed out
that i'm the absence of cash margins
it was not unusual for a speculator to
deposit a certificate of stock with the
broker He claimed the evidence
would show that the alleged criminal
transaction was merely "A deposit of a
stock certificate in lieu of a cash mar
gin.
The hyrothecation, if proved. would APP
pear to be merely the ordinary custom
existing in the stock brokerage business.
The failing Of Mr.. Halstead a few months
later prevented him from having the
stock to deliver to the customer when
lawful conversion, the lawyer for the
defense claimed. and there could be no
criminal prosecution. Mr. Galley admit
ted his client might be civilly liable for
the value of the stock.
Klinepeter a Witness
The first witness was Hubert j. Kline
peter who told of several stock transac-
tions with the defendant. He said Hal
stead tried to borrow the stock from
him on several occasions and was re-
fused. August 16, 1909, he made some
representations which appealed to the
witness and he withdrew his opposition
to the loan
When the certificate was deposited, he
said. Halstead explained that the stock
would remain in the brokers' safe in
this city and would not be transferred
unless witness should advise the broker
to do So Mr.. Klinepeter was testifying
late this afternoon.
Attorney Arthur A. Birney is associated
with Mr. Galley in the defense.
When Halstead was indicted his coun-
sci interposed plea in abatement on the
claim that the United States attorney had
violated the constitutional rights of the
defendant in using before the grand jury
the books of account of the broker Sc
cured from his trustee in bankruptcy.
The lower court sustained this contention
but the Court of Appeals reversed the
finding and held that the title of the de-
eonaact In tho hooks had ceased when