New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-06-05

! age price of $3.50 share, and 10000
I shares Of preferred stock, at SO a
share, have been foisted upon 10000
persons.
/ OF the S1,620.0OO the public has thus
paid the company received only about
S650,000. About S150,000 of this sum
was paid out for advertising, commits
sions and other expenses in selling the
preferred stock
| Almost 100000 of the money "in-
/ vestors" paid for stock has gone, the
I government alleges, into the pocket
! books of Wilson and the other invest
| ment brokers'"
Introduction to the Public
The Emerson Motors Company was
/ first introduced to the public as the re
7 suit Of a visit Of Hupp and T. A. Camp
/ bell to New York early in April, 1916.
They came looking for capital TO use IN
the manufacture Of $4,000 Monarch
automobile, and accidentally met WI
I son. He declared he was not interested
in the proposition. but had long wished
60 be connected with company making
/ a 1895 car price which would permit
4 underselling OF other popular priced
[ cars.
/ With a view to deciding how this
sum could be raised, Wilson called in
Emerson, and on April b, 1916, the four
/ drew their first contract
They agreed to incorporate the Emer-
son Motors Company, with SlO,OO0,OOO
in capital stock. divided into 100000
shares of common stock and 100000
shares of preferred, with a par value OF
SO a share. The government alleges
that they agreed to divide 100000
shares of common stock among the four
original promoters. One share Of com
mon was to be given away with each
share of preferred stock sold, and the
remaining 100000 was to be used TO
secure directors. Shares not needed
for this purpose were to be divided
among the promoters.
An artist, to make picture of the
1 Emerson car. was secured at once. Inc
government believes his attempt TO
make the car appear TO be worth $500
was a pronounced success. 1t could
easily be mistaken for one costing sew
eral thousand dollars.
Sale of Common Stock Begins
Wilson began to sell common stoci
about April 10. He was free to sell II
at any price. provided he paid the com
pany 81 share as il was sold. Inc
food of literature" with the picture
by the artist and extravagant claims OF
the compasy's prospects, began on
April II. The Tribune's exposure con-
tanned examples of these statements
with which the mails were deluged.
"The probable profits to the Emer-
son Motors Company, Inc, for 1915
said one representation on which the
~stock was offered for sale, based on
the production of 10000 cars per an
NUN. amount to S69 per car
Another statement was: The com
pany proposes TO adopt the most mod
ern business methods, paying cash as
il goes, and pursuing a conservative,
business-like administration
The Emerson company was moor
porated on April 29, 1916. About May
/ the promoters decided to build ten
demonstration" cars for brokers' use.
They bought ten Ford engines, the
government alleges. and placed them IN
the cars with the idcntlhcatlon MARKS
arased. At least one OF them IL Is
further stated, had Ford chassis. i
asserted these cars cost at least sooV
each.
The Indictment recites that on May
Wilson, Emerson. Hupp and the TWO
Campbells caused the common STOCK o.
the company. Of the par value OF So
COO o0o 10 be issued TO Hupp for
consideration the defendants knew 70
he nominal. II was their purpose, II
alleges. TO enable themselves TO pre-
tend that the treasury of the company
had received adequate and just con-
sideration for its stock and TO state
with sembance of truth that the
stock of the company was fully paid
and non-assess sable. and their turthel
purpose was "to defraud the Victims.
Officers Salaries Fixed
The officers salaries were fixed at
directors meeting on May 6. ]. p.
Campbell and Hupp were voted sl,5VO
a wear and G.. y. Campbell S5'ooo.
These sums were to be increased re
spectivelv to $4,000 and $1,000 an
nuallv after January J, 1917.
Nv Nav % the sale Of stock was go
ing well. and Wilson was permitted 10
offer 10000 shares more. making 'o'OOV
in all II is charged that back-dated
letters were entered on the minutes
Of directors meeting on May 20, 10
make il appear that Wilson had actual
lv nut I'D $4,000 in cash for this stock,
though Wilson had not touched ms
nocketbook. except for comparatively
small organization expenses.
Chenev and Sturken opened offices at
* Rroad Street about the middle OF
Nav and undertook to sell stock or
another corporation in which Nuson
was interested. BY the end OF May
tbev were circularizing the pubic Tor
Emerson stock. They paid Wilson sl.!5
a share. as the stock was sold. IL Is
alleged he paid the company 81 and
mt n cents i'm his pocket. Az about
tho same time Matches opened the
Boston office. In Chicago stock was
sold by David W. Rothensuis, who the
Federal officials say. Is now serving
two-year prison term IN Reading, fehh'
for fraud. w,
The directors on June gave WI
son permission TO sell lOo'VVV aqul-
tional shares of common STOCK or
this he was to pay the company -
share. The government alleges tnaI
,hev went through the form of selling
his stock TO him. but in reality didn't.
He gave promissory notes, secured by
the stock. but the directors agreed
that there should be no suit, claim or
deficiency judgment against him II the
notes were not paid.
Wilson then put LOOMS and Riess IN
business selling Emerson stock. In
vestment brokers" thereafter paid him
50 a share, Wilson thus netting 81.
less expenses The stock was sold 10
victims. at increasing prices, fixed arbi
trarily by the brokers. and later as high
as s. a share.
The sale Of preferred stock was
started by the company on July 30, with
an advertising campaign in the columns
of newspapers that would accept the
Literature" Humphrey and Morgan