The sun. [volume] (New York [N.Y.]) 1916-1920, 1918-06-19
BEGIN ARRESTS
IN FEE GRAFT
INVESTIGATION
Lieut.. James c. Stalcy of
Iowa Is Accused of
Taking Bribe.
NEW FORM OF CONTRACT
Clausc in Future Awards Bars
All Commission Pay.
mcnts.
NEW FORM OF CONTRACT


which the Department OF Justice is
making into the conspiracy concerning
Government contracts was made to-day
81 New York city. Agents Of the De-
ys-ment Of Justice took into custody
there First Lieut.. James c. Staley of
'le Quartermaster Corps. 1t is alleged
Lieut. Staley accepted money from rep
issentatives of the True Fit Waterproof
company. $40 broadway. whose plant
j. had just inspected.
The arrest Of Lieut.. Staley was made
n; $40 this morning when he appeared
a; his Office in the Army Building on
whitehall street 1t was stated tonight
81 the Department OF Justice that Lieut.
s,aley already had given the Department
important Information.
The arrest Of Lieut.. Staley. announced
tonight by Assistant Attorney -Geners al
Thompson. tended partially to confirm
the rumors that army officers had been
involved with contractors in the schemes
which the Government Is now seeking to
stop. 1t was admitted that while the
arrest was not directly connected with
the contingent fec system which led to
yesterdays raid, it nevertheless had a
very important relation to the general
investigation OF contracts. upon which
tho Government, through the Department
q Justice. has embarked.
Trapped bys1Gs1Uaa0tsrers.
According to information given ou, to-
risht. Lieut.. Staley was ordered to New
York several months ago to inspect rain
coats. 1t was in this work that he made
on inspection OF the True Fit Water
Troof Company. which had a contract
for supplying $4,000 coats to the army
ih.e contract IL understood to have been
contingent upon approval Of its plant by
! eut. Stalcy.
proprietors Of the company. Joshua
ESSENTIAL and Louis Werner. 1t was
f4ted, had informed the Government OF
va, was going on. and on Saturday
Vlen Lieut.. Staley went to the plant
tnesses were on hand who are alleged
g have seen money paid to him. At the
tame time Lieut.. Staley ID alleged to
ave made the remark that when the
contract was finally awarded to the Arm
h would be around for more.
Lieut.. Staley Is about SO years old and
:ered the army In Iowa. He went to
'e officers training camp at Fort SHELL
! : and later was sent to the Quarter
'asters' training school at Jackson
'iie, Before entering the army he was
salesman.
More Arrests Expected.
II was limited to-day that the Depart
rent Of Justice had only Just begun to
Uncover frauds and that other arrests
were likely to follow. Whether other
army officers are involved could not be
earned. Thousands upon thousands of
!eters, contracts and other papers Sc
cured in yesterdays raid are now being
sned hero for evidence regarding the
'ontingent fee system and also to show
"hether or not there had been bribery
IN inspection work. Assistant Attorney
General Thompson said tonight that
contractors in this case had cooperated
heartily with the Government and that
we same was true of many other con-
'rac,ors in New York city.
Inc Governments efforts to break up
me contingent fee system in Washing
ION and other cities. and an amended
'ofm Of contract suggested to all de-
iartments by the Attorney General,
were the principal topics Of discussions
81 to-day's Cabinet meeting. This
amended contract would provide that
II" fee be paid to agents or any third
PARTIES in consideration for the contract.
and It will be universally adopted. Of
meals hope that this will break the ef-
n shA o.
nave persisted despite all warnings.
Approved BY President.
President Wilson has taken a deep
interest in the situation and Is follow
Ing developments closely. The new
Warranty clause In all contracts was
approved by him. and II was sent out
by the Department OF Justice with the
statement that the President requested
Us adoption. This makes its use In
tery Government office ensured.
Sensational developments az a result
o. the raid are expected In many quar-
'ers. 1t became known to-day that the
names Of number Of Consressmen ana
fetretsr!es Of Congressmen appear In
correspondence and other papers now In
tAe hands Of the Department Of Justice.
IN most cares the names were used as
tose OF men Of influence" In depart
ments here.
30 far as can be learned there 10
nothing to show that members Of Con-
srcss actually Influenced the fctting OF
any contrsctS or that they wilfully lent
themselves to the activity Of the men
:. Co.ttsveS ss EvtA Psss.