New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-11-11
Kent Motors Men
Awaiting Sentence
. For Stock Frauds
Frederick H. Clarke and
Father to Hear Fate
Week From Tomorrow

W u u
One week from tomorrow Frederick
H. Clarke and his father, Henry F.,
will be sentenced in the United States
District Court in Trenton, N. j., for
misuse of the mails in connection with
sales Of stock Of the Kent Motors Cor
poration. They were convicted Friday.
The younger Clarke was president of
the concern and the elder its treasurer.
Soldiers and sailors were among
those who bought stock after reading
of the extensive plant on tidewater,
which actually consisted of a couple
of ill-equipped shacks. Until the Trib-
une Bureau of Investigations called his
attention to the true nature Of the con-
Germ, Mayor Thomas l.. Raymond of
Newark permitted his name to be used
as an advisory director.
The two Clarkes were in business in
New York City as the Kent Motors
Company until they conceived the idea
Of assembling car. They then or
ganized a company, under the laws Of
the State Of Delaware, with capital
zation Of 100000. In addition to his
other attainments, Frederick II. Clarke
is lawyer, and one OF his early bust
ness ventures was the Security Com
pany Of America, organized a few
years ago, and which, up to the or
ganizstlon of Kent Motors, was practi-
cally dead.
Stock All on Paper
After the organization of Kent
Motors, and in order to make the stock
of the company fully paid and non.
assessable, the Kent Motors Corpora.
ton agreed to pay TO the Security Com
pany of America the price of 100000
shares (par value SO per share) of the
stock as an alleged reasonable price
for the alleged financial aid of the Sc
curity Company of America. Then the
security company gave TO the Kent
Motors Corporation 10000 shares OF
the Motor stock and retained $4,000
shares. As a merry-go- round in high
finance this transaction is classic
After the financial arrangements had
been completed the company was still
without any tangible assets or physical
properties. Scraps Of paper" were all
they had.
The next problem was to secure a
plant-and a plant on paper was Sc
cured to match up with the financial
status Of the company. Drawings OF
this plant were made, and photographs
of the drawings were used in the stock
selling literature. In the trial this was
referred 10 as "the plant that never
was" Ten cars were assembled, at a
cost of $500 each, although the COM
plete car was to sell for 1886.
Then began the stock selling, or
rather the selling of interim certifi-
Gates. which entitled the purchaser TO
his stock at the expiration of three
years. In this fashion it was possible
for the Clarkes to control absolutely
the destinies Of their little paper COM
pany.
Printer Forgets Word
The directors were the two Clarkes
and A. II. Conquest. word about
Conquest. He is Son Of the Ameri-
can Revolution and is well known IN
circles. Through him 1t
was possible to induce some well known
people to consent to the use OF their
names on the list Of advisory directors,
although when the literature OF the
company was printed the word "ad-
visory" was omitted by a careless
printer, who incidentally received 81
600 in stock for the printing. The
printer, however, was not responsible,
as was shown at the trial, for the
omission of the word proposed
which was to have preceded the words
plant Of the Kent Motors Corporation
as pictured in the circulars. 1t was
proved that Frederick II. Clarke him
self read the PROOF and deleted the
word.
One of the men who consented TO act
on this advisory board was Mayor Kay
mond Of Newark After The Tribune
Bureau of Investigations had started
an inquiry. based on letters received
asking advice as to the soundness Of
This Investment. Mayor Raymond with
drew from the company.
Brokers Also Held
Nagel e. Simpson, OF 1870 Broadway,
we're the brokers who handled the stock
selling for the Clarkes, and these men
we're also found guilty along with them.
Their particular offence was in repre-.
senting themselves as the managers OF
the Underwriting Syndicate and dis
posing of the stock Of the Kent Motors
They were also accused
of increasing the price of the stock.
The whole plan of the company was
merely representative Of the plain out
and-out stock selling fraud, it was
proved at the trial. II was found that
about 5000 shares of the 10000 shares
in the treasury had been sold, although
II Is not known how many OF the SO'oOO
shares held by the Security Company
~ Ar,orica had been disposed OF.